Comment of The Day…And An Ethics Quiz, Too! : “Ethics Quiz: The United Airlines Give-Away”

"Oh, this piece of junk? Yeah, who knows who its supposed to be---some guy named Veal or Beale or something painted it, I think. It's been in the attic. Make me an offer!"

“Oh, this piece of junk? Yeah, who knows who it’s supposed to be—some guy named Veal or Beale or something painted it, I think. It’s been in the attic. Make me an offer!”

The Ethics Quiz regarding whether or not it was unethical to take full advantage of United Airlines’  accidental fire sale on tickets spawned several good hypotheticals, including this one, from Tyrone T., an occasional Ethics Alarms commenter who, I happen to know, thinks about these matters as his occupation. I know the answer to this one (I’ve seen it before), so I’ll hold off until you’ve thought about it a while.

Here is Tyrone T.’s Comment of the Day on the post “Ethics Quiz: The United Airlines Give-Away”:

“So, if you are hired by your client to find the cheapest fare, can you act ethically and refuse to take advantage of the error? Consider the following:

“Alexander Mundy is a lawyer and an acknowledged expert in American painting. He has several clients who regularly retain him to negotiate the purchase of museum quality art. Recently, a client hired Mundy to negotiate the purchase of a portrait of George Washington as a young man.

“The client explained, ‘I saw it on a house tour five years ago and tried to buy it then, but the woman who owned it said it was a family heirloom and wasn’t interested in selling. I heard that she died recently and her husband is having an Estate Sale. You have authority to purchase the painting for up to $500,000.’

“Mundy goes to visit the old widower and asks whether he would be willing to sell ‘that picture of the young man there.’

“’I suppose so. My wife brought it with her when we got married. I think it’s a picture of some dead relative.’”

“’How much do you want for it?’”

“’I sure do need some cash. How about a thousand dollars?”’ It is clear to Mundy that the old gentleman has no idea what his painting is worth.

“What should Mundy do?”

a) Say, “Done!” and immediately write a check for $1,000.

b) Advise the old man to get a lawyer.

c) Tell the old man that he should really consider having it appraised before he sells it.

d) Offer $500 and close the deal at $750.

15 thoughts on “Comment of The Day…And An Ethics Quiz, Too! : “Ethics Quiz: The United Airlines Give-Away”

  1. I think the question asked by the agent is unethical in and of itself. “The picture of the young man there” seems to imply that the person wishing to make the purchase doesn’t know who the young man is.

    Had the question been “How much for that painting” or “How much for that painting of young George Washington” then the buyer wouldn’t be starting off from an unethical place. But the buyer is starting off in an unethical place by pretending to not know who the young man is and as such the rest of the transaction would be tainted, in my opinion.

    I am toying with some other thoughts on what I might think had he just said “how much for that painting of a young George Washington”. I will come back to it.

  2. C. Antique art is a particularly hazy arena. “Museum quality art” is a meaningless phrase, and an art collector’s thinking something is worth 500K (after a “home tour,” no less) isn’t an indication that 500K is the price it would actually fetch, as any viewer of Antiques Roadshow or frequenter of upscale art galleries can tell you. Mundy’s client could just be obsessed with images of young Washington and think money is no object, in which case Mundy has no ethical responsibility to pay top dollar. An appraisal – or really, two appraisals – would affix a less subjective value to the item than a need for cash or a love of our first Pres.

  3. This reminds me of why the Pawn Shop reality shows bother me- a good negotiation can be engaging, but it’s just plain disturbing to watch a store owner lie about value and salability to lowball someone.

    That being said, I did catch an episode where the owner flat refused an older woman the price (a few hundred dollars, if I recall) she was asking for some heirloom jewelry that was worth thousands, and told her to get it appraised. That was clearly good ethics- but he was acting on his own, and was not acting on behalf of someone else to get a good deal.

    I think I’d go with C on this one. I don’t buy “I’m just doing a job for someone” as a reason to act deceitfully.

  4. I agree with Dan. In context of the example given above, the buyer clearly chose words meant to convey that he didn’t know anything about the painting. It would be different if the buyer also had no idea of the value of the painting.

    I would recommend telling the old man that it’s a painting of young George Washington and he should have it appraised before selling it to make sure he gets a fair price. In the course of the conversation, he could give an offer for more than $1000 but less than the $500, 000 his client set as the maximum price. It will then be up to the seller to determine if he wants to go to the effort of having it appraised or sell it to Mundy for more than his asking price. It goes without saying that the offer Mundy makes for the painting should be a fair one.

    In the case of the United Airlines glitch, the buyers (or those working for them) had to know the price of the ticket was wrong. And, in the example above, Mr. Mundy knows the asking price of the painting is a mistake, too.

  5. I’ve got bad news for all of you. Tyrone T. and I have talked, and we agree: the right answer is D, if the client’s position is that he wants the best price, not the best fair price. A lawyer is only ethically obligated to meet the legal ethics rules and comply with the law, plus zealously representing his client. If he can’t stomach taking advantage of the old man’s ignorance, he can quit the representation, but he probably should quit the law too.

    He cannot help the opposing party, and it is an legal ethics violation to give him advice.

    The activity is not really the practice of law, so it is not the kind of situation where the lawyer is obligated to tell the other side to get a lawyer, and telling him to get the portrait appraised is disloyal, acting against the interests of his own client.

    The lawyer’s job is to do whatever legal task the client wants done, not to do what the lawyer would do if he or she were the client. Is it legal to buy the portrait for a low-ball price? Yes. Is less-than-full-disclosure negotiation tactics permitted by the legal ethics rules? Yes, they are, especially where value is involved (the Rule is 4.1.:, which says lawyers shouldn’t misrepresent facts or law:

    “Under generally accepted conventions 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…”

    Now, it is true that some state courts wouldn’t uphold such a deal, arguing that there was never a valid contract because the seller sold something that was materially different than what the buyer was buying without knowing it—that there was no “meeting of the minds,’ and thus no enforceable contract. The lawyer should also warn the buyer, his client, that these kinds of deal often end up in court, BUT..the lawyer not only doesn’t have to be fair, he is prevented from being fair, if his client doesn’t want to be, as long as no laws and no ethics rules are violated.

    Ethically, his job is to get the lowest price, not to make sure the seller isn’t screwed. The same with the United hypo: if you have hired a lawyer to get the cheapest seats, he may NOT alert United to the error. His ethical obligation is to snap the cheap tickets up.

    TT has provided a great example of where legal ethics diverges from normal;ethics. The prime directive is to do what the client wants. If that means being unethical to someone else but is still permissible under the ethics rules, then that’s the lawyer’s duty.

    • Wouldn’t the lawyer have the responsibility to his client to make sure that the item being purchased was what the buyer thought it was? In that case, wouldn’t a modified version of C be the correct answer? I mean, yes, the job of the lawyer is to get the attorney the painting desired at the best price. However, how can it be guaranteed that it is the actual painting that is desired without an appraisal? Or is the lawyer ok in getting the requested artwork even if it is not what the client actually wants?

    • I guess I wasn’t thinking about him acting in capacity as a lawyer in this hypo- even if one is a lawyer, would an art purchase cue the same legal ethics as a court case? It seems counterintuitive to me, as anyone with the proper knowledge of art could act in Mundy’s capacity here regardless of status as a lawyer, right?

    • Isn’t the non-disclosure of the full contents of the portrait in violation of the same rule of legal ethics you quoted ?

      I would propose in this hypothetical scenario that the following action be taken to maintain a full ethical stand.

      The lawyer should have disclosed specifically what he intended to obtain. Saying “that painting of the young man over there”, is not precise and is lacking in ethic given that it doesn’t contain enough information to fully identify the object. It is relative information, and is deliberately missing information which would be required in closing. Stating “I have a buyer interested in what we believe is an original painting of George Washington of early years, and in your possession. How much would you like for it ?” — would not be breaking legal ethics rules, and would be adequately identifying a specific object, after which if the owner says $1000, then it may be claimed for that. You are correct that the lawyer does not need to disclose the value of the object being obtained, however the object to be obtained must be clearly identified and both parties aware of the contents.

      It is this, that I feel the mechanisms of ethics (legal or otherwise), have been violated.

  6. Lawyer or no lawyer involved in the sale, something about the transaction unsettles me and causes me to link the circumstances to what I think of as “equality under the law.”

    Jack, I understand all your points fine; I just think they are incomplete, for the sake of justice as an ethical (or legal) consideration, given the circumstances.

    If equality under the law does not equally protect persons’ economic interests in a given transaction, then I think the concept is merely a mockery of its words.

    I have tried to think of an example; this might be only an approximation: a lottery jackpot, where the holder of the winning ticket discards the ticket in the presence of someone who knows the winning numbers. The winner reads correctly the numbers that are given as the winning numbers in the newspaper – but, there is one digit typed erroneously in the newspaper. The person who knows the winning numbers knows of the typo error, and knows why the winner discarded the winning ticket. I don’t care how much law or ethics the person who knows the winning number knows or practices, in that case. That is not a circumstance where the Golden Rule can be conveniently suspended or disregarded to the benefit of the person who knows the winning numbers (who is not also the holder of the winning ticket).

    In the same way, I cannot agree with a “client’s representative’s Golden Rule Pass.” I think that in a commercial transaction, the parties to the transaction deserve equal protection of their economic interests in the commodities involved in the transaction. I do not think a seller should accept an offer for what is for sale at a price that far exceeds the price that the seller expects, without understanding why the offer exceeds the expectation. Similarly, I do not think a buyer should knowingly low-ball an offer, whether making the offer directly or through an agent. The economic benefit of the transaction to buyer and seller ought to be “equal” in a manner that approximates equality of knowledge of the market at the time of the transaction, and of the value of commodities in the transaction in that market, on the part of both buyer and seller.

  7. In the example as given, the lawyer should choose option “E” – phone his client, explain the circumstances, and get new instructions. There are many people in the world who would NOT want to cheat an old widower merely because he could. Hopefully the client will instruct the lawyer to offer a fair price for the painting, or to advise the old man to get some professional advice before selling.

    If the client says “pay the thousand and get the heck out of Dodge!,” then the ethical thing is to tell the client to get a new lawyer.

    In our justice system, everyone, even murderers and rapists, needs to be represented or the entire system collapses. It is therefore highly ethical for lawyers to represent anyone, no matter how immoral, in service of making our adversarial justice system function correctly. If Hitler were discovered alive and arrested, I’d want him to have competent council.

    The same is not true of cheating old widowers who don’t have the benefit of good advice. That’s just assisting a rich con man in his latest con, without any mitigating value or good done for society. A law degree should not be a “get out of ethics free” card.

  8. Another view, from a Scots lawyer of my acquaintance (and winner of a recent Scots Law Society Essay contest)

    “Before you embark on a journey of revenge, first dig two graves.”

    This is the best bit of advice I’ve ever had: it came via my pupil-master, and differed from the “revenge is a dish best served cold” with which I was familiar as a wee girl.

    He always coupled it with a resonant respect for “the favor bank.” That is, no matter how large the dispute, sometimes it pays to help your opponent: whether it’s drawing his attention to a costly pleading error, or disclosing relevant documents without being asked. You never know when the boot may be on the other foot.

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