Ethics in Brief

Ethics in Brief is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association.


The New Rule 4.1 “Truthfulness in Statements to Others”

When the new and revised Rules of Professional Conduct become effective on November 1, 2018, California will finally join the other forty-nine states which have already adopted some version of American Bar Association [ABA] Model Rule 4.1 “Truthfulness in Statements to Others.”  California’s Rule 4.1 provides:

          “In the course of representing a client a lawyer shall not knowingly:

          (a) make a false statement of material fact or law to a third person; or

          (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Business and Professions

          Code §6068(e)(1) or rule 1.6.”

As used in Rule 4.1, the term “knowingly” means “actual knowledge of the fact in question” but such knowledge “may be inferred by circumstances.” (Calif. Rule of Prof. Conduct [CRPC] Rule 1.0.1 (f).) 

The term “material” is not defined by the rule 4.1 or its comments.  One court, however, has held that a fact is material to a negotiation “if it reasonably may be viewed as important to a fair understanding of what is being given up and, in return, gained by the settlement.” (Ausherman v. Bank of Am. Corp., 212 F. Supp. 2d 435, 449 (D. Md. 2002), aff'd 352 F. 3d 896 (2003).)[1]

The disclosure mandates of Rule 4.1(b) to avoid assisting in a criminal or fraudulent act by a client are severely limited by the exceptions prohibiting disclosure of client confidential information set forth in Business and Professions Code §6068(e)(1) which mandates lawyers “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client,” and new Rule 1.6 “Confidential Information of a Client,” (current CRPC rule 3-100) which provides that a lawyer shall not reveal information protected from disclosure by B&PC §6068(e)(1) without the informed consent of the client, or to prevent a criminal act that the lawyer reasonably believes is likely to result in death or substantial bodily  harm to an individual.

For related California law concerning a lawyer’s civil liability for incomplete statements and disclosures, and for inexcusable silence while a client makes untrue statements, see: Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, 293, 294 [“active concealment may exist where a party "[w]hile under no duty to speak, nevertheless does so, but does not speak honestly or makes misleading statements or suppresses facts which materially qualify those stated."]; Cicone v. URS Corporation (1986) 183 Cal.App.3d 194, 208 [“In California it is well established that an attorney may not, with impunity, either conspire with a client to defraud or injure a third person or engage in intentional tortious conduct toward a third person.” “One who is asked for or volunteers information must be truthful, and the telling of a half-truth calculated to deceive is fraud”]; and Pumphrey v. K.W.Thompson Tool Co. (9 Cir 1995) 62 F.3d 1128.       

There are four Comments to Rule 4.1 which provide guidance in interpreting or applying the Rule. Comment [1] provides:

“A lawyer is required to be truthful when dealing with others on a client’s behalf, but generally has no affirmative duty to inform an opposing party of relevant facts.  A misrepresentation can occur if the lawyer incorporates or affirms the truth of a statement of another person that the lawyer knows is false.  However, in drafting an agreement or other document on behalf of a client, a lawyer does not necessarily affirm or vouch for the truthfulness of representations made by the client in the agreement or document.  A nondisclosure can be the equivalent of a false statement of material fact or law under paragraph (a) where a lawyer makes a partially true but misleading material statement or material omission.  In addition to this rule, lawyers remain bound by Business and Professions Code section 6106 and rule 8.4.”

Business and Profession Code § 6106, referred to in Comment [1] to Rule 4.1, provides in relevant part:

“The commission of any act involving moral turpitude, dishonesty or corruption, whether the act is committed in the course of his relations as an attorney or otherwise, and whether the act is a felony or misdemeanor or not, constitutes a cause for disbarment or suspension. . . .”

New Rule 8.4 “Misconduct,” also referred to in Comment [1] provides, in relevant part that it is professional misconduct for a lawyer to:

“(a) violate these rules or the State Bar Act, knowingly assist, solicit, or induce another to do so, or do so through the acts of another;

(b) commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects;

(c) engage in conduct involving dishonesty, fraud, deceit, or reckless or intentional misrepresentation…”

Comment [2] to Rule 4.1 provides clarifying examples of non-material facts in the context of negotiations as follows:

“This rule refers to statements of fact.  Whether a particular statement should be regarded as one of fact can depend on the circumstances.  For example, in negotiation, certain types of statements ordinarily are not taken as statements of material fact.  Estimates of price or value placed on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim are ordinarily in this category, and so is the existence of an undisclosed principal except where nondisclosure of the principal would constitute fraud.”

Comment [2] to Rule 4.1 has been widely interpreted as explicitly legitimizing deceptive negotiation techniques euphemistically characterized as “puffing” or “posturing” as well as outright lies by lawyers about their reservation point (bottom line) prices, negotiation goals or willingness to compromise. [See ABA Formal Op. 06-439 “Lawyer’s Obligation of Truthfulness When Representing a Client in Negotiation: Application to Caucused Mediation” (2006).) Such statements are not considered statements upon which parties can be expected justifiably to rely, and must be distinguished from false statements of material fact. 

Examples of false statements of material fact that would be violate Rule 4.1(a) would be 1) where a lawyer representing an employer in labor negotiations stating to union lawyers that adding a particular employee benefit will cost the company an additional $100 per employee when the lawyer knows that it actually will cost only $20 per employee (ABA Formal Op. 06-439 pg.2); 2) understating the limits of defendant's insurance coverage (Id.); and 3) stating that there is an eyewitness to an accident when, in fact, no such witness exists (See generally Cal. State Bar Form. Op. No. 2015-194, agreeing with conclusions of ABA Formal Op. 06-439, supra, using similar examples).

An example of misrepresentation by omission is knowingly accepting a settlement offer without disclosing the death of the plaintiff [Virzi v. Grand Trunk Warehouse & Cold Storage Co., 571 FSupp 507 (EDMich 1983)].

Comment [3] alerts lawyers to the relationship of Rule 4.1 with Rules 1.2.1 [Advising or Assisting the Violation of Law) and 1.16 (Declining or Terminating Representation].

Comment [4] directs lawyers to Comment 5 of new rule 8.4 which notes that a lawyer’s participation in lawful covert activity in the investigation of violations of civil or criminal law or constitutional rights does not violate that rule’s prohibition against a lawyer engaging “in conduct involving moral turpitude, dishonesty, fraud, deceit or reckless or intentional misrepresentation” which would apply equally to Rule 4.1.

Rule 4.1 supplements other rules proscribing similar conduct in other settings such as rule 3.3 “Candor Toward the Tribunal” which, in part, prohibits knowingly making “a false statement of fact or law to a tribunal or fail[ing] to correct a false statement of material fact or law previously made to the tribunal” and Rule 1.2.1 (Advising a Client Regarding Criminal or Fraudulent Conduct). 

The language in Rule 4.1 is more precise than either Business and Professions Code sections 6068(d) or 6128 and therefore is expected to provide a clearer disciplinary standard than either of those statutes.  

Under Business and Profession Code § 6068(d) a lawyer has the duty “to employ, for the purposes of maintaining the causes confided to him or her such means only as are consistent with the truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law." 

Business & Professions Code § 6128 provides in part that "Every attorney is guilty of a misdemeanor who … (a) Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party…."

Richard D. Hendlin is an attorney at law.


[1]  In Aushermansupra, the court also stated: 
“In each instance the questions for the negotiating attorney, as well as a reviewing disciplinary committee or court if called upon to do so, is to determine: (1) what is the statement or omission in dispute? (2) is it untrue or deceptively incomplete in any significant respect? (3) reasonably viewed, is it important to the subject that is being negotiated? and (4) at the time it was made, did the attorney know or should have known under the circumstances that the statement was untrue?” (Ausherman v. Bank of Am. Corp., 212 F. Supp. 2d 435, 451 (D. Md. 2002)  

**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**