Ethics of Negotiation: Managing Conflicting Obligations
•Download as PPTX, PDF•
2 likes•306 views
How to manage conflicting obligations during negotiations. Discusses ethical obligations owed by landmen to clients, employers, and others in the oil & gas industry and Texas attorneys.
More Related Content
What's hot
What's hot (12)
Similar to Ethics of Negotiation: Managing Conflicting Obligations
Similar to Ethics of Negotiation: Managing Conflicting Obligations (20)
Recently uploaded
Recently uploaded (20)
Ethics of Negotiation: Managing Conflicting Obligations
- 1. Ethics in Negotiations: Managing Conflicting Obligations Cassie McGarvey Sanders Willyard LLP
- 2. The purpose of the presentation is to address competing obligations: - obtain the best result for your client but need to be fair and honest with opposing party. - Ethical obligations impose on landmen duties to clients AND third parties. - Most have a general desire to do what is “right” – but what is that?
- 4. Characteristics and Qualities of a Good Negotiator Adequately prepared Knowledgeable Ability to think clearly and rapidly under pressure and uncertainty Good communication skills; able to express thoughts Good listener Uses good judgment Integrity Persuasive Patient Decisive Open-minded Intuitive - aware of the process and style of the other person Flexible Considers multiple areas of agreement
- 5. Importance of Honesty and Trustworthiness - Context - Right thing at the right time - “A person is considered trustworthy and a truth teller is actually a person who tells the trust at the right or necessary time.”
- 13. American Association of Professional Landmen Code of Ethics Section 1 “It shall be the duty of the Land Professional at all times to promote and in a fair and honest manner, represent the industry to the public at large with the view of establishing and maintaining goodwill between the industry and the public and among industry parties.”
- 14. American Association of Professional Landmen Code of Ethics Section 1, cnt. “The Land Professional, in his dealings with landowners, industry parties, and others outside the industry, shall conduct himself in a manner consistent with fairness and honesty, such as to maintain the respect of the public.”
- 15. American Association of Professional Landmen Code of Ethics Section 2 “Competition among those engaged in the mineral and energy industries shall be kept at a high level with careful adherence to established rules of honesty and courtesy.”
- 16. American Association of Professional Landmen Code of Ethics Section 2, cnt. “A Land Professional shall not betray his partner’s, employer’s, or client’s trust by directly turning confidential information to personal gain.”
- 17. American Association of Professional Landmen Code of Ethics Section 2, cnt. “The Land Professional shall exercise the utmost good faith and loyalty to his employer (or client) and shall not act adversely or engage in any enterprise in conflict with the interest of his employer (or client). Further, he shall act in good faith in his dealings with the industry associates. “
- 18. Texas Discp. Rules of Professional Conduct Preamble 2. “… As advocate, a lawyer zealously asserts the client’s position under the rules of the adversary system. As negotiator, a lawyer seeks a result advantageous to the client but consistent with requirements of honest dealing with others.”
- 19. Texas Discp. Rules of Professional Conduct Preamble 3. “… A lawyer should keep in confidence information relating the representation of a client except so far as disclosure is required or permitted by the Texas Disciplinary Rules of Professional Conduct or other law.”
- 20. Texas Discp. Rules of Professional Conduct Rule 1.06 (a) “A lawyer shall not represent opposing parties to the same litigation.”
- 21. Texas Discp. Rules of Professional Conduct Rule 4.02 “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 making the lawyer a party to a criminal act or knowingly assisting a fraudulent act perpetrated by a client.”
- 22. Considerations on Rule 4.02 - The rule only applies to material statements - No definition of material provided. - Does this rule prohibit a lawyer from deliberately misrepresenting non-material facts or law? - Does this rule impose an affirmative duty to inform the opposing party of the relevant facts?
- 23. Texas Discp. Rules of Professional Conduct Rule 4.04(a) “In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such person.”
- 24. Texas Discp. Rules of Professional Conduct Rule 8.04 A lawyer shall not: “Engage in conduct involving dishonesty, fraud, deceit or misrepresentation.”
- 26. Classes of People for Landmen 1) Partner, employer, and clients 2) Those engaged in mineral and energy activities – everyone who isn’t included in the first group. ** NB: This is why an agreement between the landman and an employer/client is important in establishing whether the higher standard applies. **
- 27. Duties Owed to Partner, Employer, Client as a Landman - Confidentiality - Non-disclosure - Exercise good faith - Loyalty - Shall not act in conflict with the interest of his client
- 28. Duties Owed to Everyone Else - Honesty - Fairness - BUT – you must do this by maintaining confidentiality and loyalty to client/employer
- 29. Fraudulent Inducement in Negotiations Caused by puffery and embellishment. When does one cross the line between puffery and making misstatements?
- 30. Elements To avoid a contract because of fraudulent inducement requires proof of: The defendant made a material representation to the plaintiff; The representation was false; When the defendant made the representations, it: Knew the representation was false; or Made the representation recklessly, as a positive assertion, and without knowledge of its truth; The defendant made the representation with the intent that the plaintiff act upon it; The plaintiff relied upon the representation; and The representation caused the plaintiff injury.
- 31. Statements of Fact vs. Statements of Opinion False statements of fact are actionable while statements of opinion are not. A false statement of fact is an untrue, deceptive, or misleading statement concerning a past or present fact. How to distinguish: The specificity of the statement The parties’ relative levels of knowledge; and Whether the statement relates to the present or future.
- 32. Dos and Dont’s 1) Do DISCLOSE. 2) Do be HONEST. 3) Don’t make MISREPRESENTATIONS. 4) Don’t make CREATIVE EDITS.
- 33. Cassie McGarvey Sanders Willyard LLP 12 Greenway Plaza, Suite 210 Houston, Texas 77046 713.242.1746 cmm@sanderswillyard.com www.sanderswillyard.com Questions?
Editor's Notes
- Because we have conflicting obligations: Desire to get the best result for our client but need to be fair and honest with the opposing party. Ethical obligations impose upon us duties to our client AND to third parties. General desire to do what is “right” – but what really is “right” anyway…
- Relationships Puffery and embellishment
- preparation and planning skill knowledge of the subject matter being negotiated ability to think clearly and rapidly under pressure and uncertainty ability to express thoughts verbally listening skill judgment and general intelligence integrity ability to persuade others patience decisiveness considers lots of options aware of the process and style of the other person is flexible thinks and talks about possible areas of agreement
- Example: Wife says, “Do I look fat in this.” - Dinner guests
- Rule only applies to “material” statements but it does not define material. It does not prohibit lawyers from deliberately misrepresenting non-material facts or law to anyone nor does it impose an affirmative duty to inform the opposing party of relevant facts.
- Rule only applies to “material” statements but it does not define material. It does not prohibit lawyers from deliberately misrepresenting non-material facts or law to anyone nor does it impose an affirmative duty to inform the opposing party of relevant facts.
- Code of Ethics has two classifications of people: Partner, employer, client; Those engaged in the mineral and energy industries – basically, everyone that isn’t in the first group. Importance of an agreement to determine when the higher standard applies Conflicting clients – can you represent two different operators in the same play?
- Code of Ethics has two classifications of people: Partner, employer, client; Those engaged in the mineral and energy industries – basically, everyone that isn’t in the first group. Importance of an agreement to determine when the higher standard applies Conflicting clients – can you represent two different operators in the same play?
- Code of Ethics has two classifications of people: Partner, employer, client; Those engaged in the mineral and energy industries – basically, everyone that isn’t in the first group. Now, the balancing act begins… Honesty does not require giving away confidential information The landman cannot have a duty to provide interpretive analysis and advice to the opposing party.
- Fraudulent Inducement
- Puffery Embellishment Where does one cross the line
- Statements of fact: Maintained continuous operations No cessation of operations for more than 60 days Statements of opinion Concerning future price of oil and the estimated return on capital are statements of opinion. BUT: EXCEPTION if the statement of opinion is known to be false.
- Disclosure. Not saying always full or partial disclosure but practical disclosure. NOTE: We aren’t talking about times when you need to disclose everything – but we are talking about how to be honest during negotiations with third parties / owners. Example: During negotiations, disclose to the landowner/mineral owner that you don’t have authority to bind. Explain that they will negotiate with you – but your authority is limited to the negotiation. Honesty. Do not incorporate deception into your presentation. DO not suppress, cover up, distort, or twist the facts in your presentation. Client wants anonymity. Lessor’s first question is “Who are you leasing for?” “Anonymity could be good to the overall development program in the area which in the longrun could be beneficial to the Lessor.” What if the Lessor says, I won’t lease to XYZ Oil Company? Get permission to disclose who they are not. Next Question: “When are you going to drill?” Very broad time frame, discuss delay drilling, etc. “I want the highest royalty interest and bonus that you are paying… what are they?” Most favored nations clause Be honest Don’t make misrepresentations. “All of your neighbors have already signed up… you’ll be left out.” If you don’t sign then all of your oil will be captured by your next door neighbor’s well. Once you sign, we can drill that well and you’ll be receiving some very nice royalty checks. Don’t make CREATIVE EDITS. Don’t be tempted to cure documents by editing them after signed. Documents signed by parties not in their respective capacities – or in their wrong capacity.