While it has long been apparent that an attorney may not make affirmative factual misrepresentations in settlement negotiations, a growing body of authorities and commentators has posited that an attorney is ethically obligated to correct misimpressions caused by half-truths or omissions which are relied upon by adversaries to their detriment.
Although most settlement negotiations take place in the absence of judicial supervision, an attorney is still bound by the requirements of the Code of Professional Responsibility and Model Rules of Professional Conduct to refrain from making false statements of law or fact. A lawyer is further prohibited from concealing or knowingly failing to disclose that which the lawyer is required by law to reveal. While a lawyer is not obligated to prevent an adversary from proceeding on an erroneous assumption of the adversary’s own making, a lawyer is not permitted affirmatively to contribute to an adversary’s misconception, either by misrepresentation or omission. This article argues that a lawyer who does not affirmatively misrepresent the truth in settlement negotiations should not have an obligation to correct an adversary's self-inflicted misperception, provided that it did not emanate from the former.
Available at: http://works.bepress.com/barry_temkin/2/