Legal Ethics Opinion No. 1470

Zealous Representation--Settlement Negotiation Tactics: 
Disclosure of Client's Position 

You have presented a hypothetical situation in which an attorney
represents a bank.  A customer of the bank has alleged certain
facts which, if true, will make the bank liable to the customer
for a given sum.  However, if true, the bank will also then have
a claim against a company for that money under the UCC.  The
bank's attorney feels that the customer will likely prove the
facts if the matter goes to court and that, therefore, the bank
has a strong probability of liability.  No facts, however, have
been proven and the costs of litigation would likely far exceed
the dollar amount involved.

You have asked the committee to opine whether, under the facts of
the inquiry, the bank's attorney, in attempting to resolve
liability issues outside of litigation, must indicate to the
company that the facts are alleged and unproven. You also ask to
what extent the bank's attorney must reveal the probability of
the customer's success. The committee cautions that it is not
empowered to opine as to the propriety of litigation strategy.  

Disciplinary Rules pertinent to the issue you raise are DR
7-l02(A)(5) which prohibits a lawyer from knowingly making a
false statement of law or fact in the representation of a client;
DR 4-l0l(A) which defines "secret" as information [other than
that protected by the attorney-client privilege] which has been
gained in the professional relationship and which would be likely
to be detrimental to the client; DR 4-l0l(B) which precludes a
lawyer from knowingly revealing a secret of his client, using it
to the disadvantage of the client, or to the advantage of the
lawyer or a third person; and DR 6-l0l(D) which requires that a
lawyer inform his client of facts pertinent to the matter and of
communications from another party that may significantly affect
settlement or resolution of the matter.  Further guidance is
available through EC 7-5 which urges a lawyer to give to his
client his professional opinion as to what the lawyer believes
would likely be the ultimate decision of the courts on the matter
at hand and the practical effect of such decision. 

The committee believes that it is axiomatic that facts are
considered to be alleged and unproven until trial, at which time
the fact-finder, judge or jury, weighs the evidence supporting or
attacking the alleged facts.  Therefore, the committee is of the
opinion that the bank's attorney is not obligated to indicate to
the company's attorney that the customer's facts are alleged and
unproven.  The committee is of the opinion, however, that since
such facts have not been proven, the bank's attorney should not
posit them with certainty to the company's attorney, since to do
so might rise to the level of a violation of DR 7-l02(A)(5).

Committee Opinion
August 24, 1992