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Disclosure, Ethics and the Natural Resources Attorney

Kenneth E. Barnhill, Jr., David G. Ebner, Proceedings of 26th Annual Rocky Mountain Mineral Law Institute (1980)

While every attorney must think long and hard before advising his client to disclose potentially adverse information, the natural resources attorney faces an especially troublesome ethical dilemma. The long odds, high stakes, and intense competition in the oil and mining industries create very special needs for confidentiality. Nonetheless, negotiations may force an attorney quickly to consider whether possibly misleading impressions may be left uncorrected. Even sales and financing presentations, planned well in advance of delivery, may raise difficult questions which the client would rather leave unasked.

The growing investment interest in precious metals and energy exacerbates these problems. The large public interest in natural resource development is not matched by a corresponding public knowledge and understanding. The superior knowledge of industry professionals creates a disparity of bargaining position, which may be equalized only through extensive disclosure.

Certain ethical dilemmas confronting the natural resources lawyer may be solved by reference to common law fraud concepts; a client generally has no desire to obtain a bargain through non-disclosure if that bargain likely will be lost through later litigation. The more difficult dilemmas arise when loss of the bargain is difficult to predict or when the client disagrees with his lawyer's [2] co