The Borat Problem in Negotiation: Fraud, Assent, and the Behavioral Law and Economics of Standard Form Contracts

There is only one specific course that the American Bar Association requires that law schools mandate for all law students: a course in professional responsibility that includes both “substantial instruction[s] in rules of professional conduct, and the values and responsibilities of the legal profession and its members.” For admission to the bar, nearly all states require that applicants pass not only the general bar examination that covers a broad range of subjects, but also the separate Multi-state Professional Responsibility Exam. Many jurisdictions also require that a certain fraction of continuing legal education hours required of practicing attorneys, which otherwise may usually be in any subject area, be specifically devoted to education in ethics.

For admission to the bar, nearly all states require that applicants pass not only the general bar examination that coversa a broad range of subjects, but also the separate Multistate Professional Responsibility Exam.

Given the concern of the bar with the subject of professional ethics, and the fact that negotiation is a core activity of most attorneys engaged in either litigation or transactional practice, negotiation ethics is an extremely important subject for members of the legal profession. Yet the ABA’s Model Rules of Professional Conduct refer directly to negotiating behavior in only a single provision, which is accompanied by minimal commentary. The law journal literature specifically focused on negotiation ethics is also relatively sparse, especially in light of the huge quantity of law journal articles published each year.

This Article contributes to this literature by viewing legal negotiation through the lens of social science research in the field of “behavioral ethics.” The core finding of body of research is that much unethical behavior is not attributable to the classic Holmesian “bad man,” who is consciously amoral—that is, interested only in his own gratification and completely unconcerned with the interests of other individuals or societal norms and expectations. Rather, cognitive and motivational biases often enable and even encourage people who care about other individuals and society more generally, rather than just themselves, to act in ways neutral observers would view as unethical, without ever recognizing their behavior as such.This Article explores how the findings of behavioral ethics can help to better understand, predict, and potentially com-bat unethical behavior in legal negotiation.

The focus of my inquiry is negotiating behavior that is deceptive, meaning that the negotiator intentionally attempts to create or reinforce an incorrect belief on the part of his counterpart in order to create an advantage for himself or his client. Although negotiation behavior can raise ethical concerns for other reasons (coercion, for example), deception is the category of behavior that pushes ethical boundaries most frequently and routinely in negotiation. I will further assume the context of arms-length negotiations between parties who owe no relationship-specific duties to one another, as is most common in legal negotiation settings. Ethics might impose additional requirements on negotia-tors who owe fiduciary duties to one another based on their relationship status or professional obligations, such as family members, business partners, or clients, but those duties are beyond the scope of this Article.