Richard W. Painter - Proposal to Amend the Model Rules to Provide for Advance Consent to Conflicts - Center for Professional Responsibility

Proposal to Amend the Model Rules to Provide for Advance Consent to Conflicts

The undersigned requests that this Committee consider making the following revisions to the Model Rules of Professional Conduct:

Model Rule 1.7 should be amended to add a paragraph (c) providing:

(c) a lawyer and a client independently represented by separate counsel, including an in-house counsel, may enter into a written agreement specifying one of more of the following:

(i) a definition of who the "client" is for purposes of this rule;

(ii) a time when a representation ends for purposes of this rule;

(iii) a definition of what is or is not "directly adverse" for purposes of this rule;

(iv) that conflicts between two concurrent clients shall only be grounds for disqualification if the matters are "substantially related" as well as a definition of what is or is not a "substantially related" matter; and

(v) that the client consents in advance to a specific type of conflict.

Model Rule 1.9 should be amended to add a paragraph (d) providing:

(d) a lawyer and a client independently represented by separate counsel, including an in-house counsel, may enter into a written agreement specifying one of more of the following:

(i) a definition of who the "client" is for the purposes of this rule;

(ii) a time after termination of the representation when the restrictions set forth in this rule shall cease to apply;

(iii) a definition of what is or is not a "substantially related" matter;

(iv) a definition of what is or is not a "materially adverse" interest; and

(v) that the client consents in advance to a specific type of conflict.

Model Rule 1.10 should be amended to add a paragraph (d) providing:

(d) A lawyer and a client independently represented by separate counsel, including an in-house counsel, may enter into a written agreement that imputed disqualification of a law firm will be avoided if the lawyers involved in a matter are screened from any participation in another matter to which this rule would otherwise apply.

The comment to Model Rule 1.10 should state that lawyers and clients can agree ex-ante on what the appropriate screening procedures will be.

The proposed amendments are set forth herein as revisions to the text of the Model Rules. Because none of these amendments conflicts with the current text of the Model Rules, each amendment could instead be made to the comments to the Rules.

Respectfully submitted,

 

Richard W. Painter
University of Illinois College of Law

 

 

Memorandum in Support of Proposal to Amend the Model Rules
to Provide for Advance Consent to Conflicts

Existing conflicts rules do not encourage lawyers and clients to agree at the beginning of a representation that the client will consent to future conflicts (commonly referred to in this context as "advance consent"). Most conflict waivers are instead obtained when the second client seeks representation. Because the words "consent after consultation" probably require the consenting client to know all or most of the relevant facts, advance consents may not even be enforceable.

Many courts are skeptical of advance conflict waivers. Some recent cases, however, endorse a more flexible approach. Some of these decisions, however, are not based on straightforward endorsement of advance consent, but instead on the murkier principle of estoppel, or a finding that confidential information was not conveyed to the lawyer by the client which consented to the conflict.

ABA Formal Opinion 93-372: Waivers of Future Conflicts of Interest, stated that it was permissible for lawyers to seek advance consents in some circumstances. The Opinion, however, makes no promises as to their enforceability. Indeed, many of the criteria that the Opinion suggests be used to determine whether an advance consent is valid are the same criteria used to evaluate whether there is a conflict in the first place, an approach that deprives the advance consent of actual significance. In concluding, Opinion 93-372 states that "[g]iven the foregoing analysis, one principle seems certain: no lawyer can rely with ethical certainty on a prospective waiver of objection to future adverse representations simply because the client has executed a written document to that effect." Under this approach, lawyers and clients gain relatively little from including advance consent terms in their retainer agreements.

The American Law Institute is more accommodating. Section 202 of the Restatement of the Law Governing Lawyers, comment d, provides:

d. Consent to future conflicts. Client consent to conflicts that might arise in the future is subject to special scrutiny, particularly if the consent is general. A client's open-ended agreement to consent to all conflicts normally should be ineffective unless the client possesses sophistication in the matter in question and has had the opportunity to receive independent legal advice about the consent. . . .

On the other hand, particularly in a continuing client-lawyer relationship in which the lawyer is expected to act on behalf of the client without a new engagement for each matter, the gains to both lawyer and client from a system of advance consent to defined future conflicts might be substantial. A client might, for example, give informed consent in advance to the types of conflicts that are familiar to the client. Such an agreement could effectively protect the client's interest while assuring that the lawyer did not undertake a potentially disqualifying representation.

The ALI approach is clearly preferable to that of the ABA, although it would be helpful to more clearly specify when advance consents are and are not enforceable. First, advance consents should be specific rather than general. The Model Rules should require the more important elements of a potential conflict to be addressed separately. For this reason, instead of a general waiver, the Model Rules should allow a lawyer and a client to make a binding agreement at the outset of the representation, or at any time during the representation, with respect to:

(i) a definition of who the "client" is in the representation;

(ii) a definition of what is and is not an "adverse" interest;

(iii) the time when a representation ends (for MR 1.7 only);

(iv) a time after termination of the representation when conflicts rules shall cease to apply (for MR 1.9 only);

(v) an agreement that conflicts between two concurrent clients shall only be grounds for disqualification if the matters are "substantially related" (for MR 1.7 only);

(vi) a definition of what is and is not a "substantially related" matter; and

(vii) an agreement whereby the client consents in advance to a specific type of conflict.

In addition, lawyers and clients should be allowed to agree ex-ante that imputed disqualification of a law firm will be avoided if the lawyers involved in a matter are screened from any participation in another matter to which the conflicts rules would otherwise apply (MR 1.10). The comment to MR 1.10 should state that lawyers and clients can agree ex-ante on what the appropriate screening procedures will be.

Second, advance waivers should only be permitted when the client is independently represented in the matter by a lawyer, including in-house counsel, who is unaffiliated with the lawyer receiving the consent. In such cases, the advance consent is unlikely to be unduly affected by asymmetry of information and bargaining power between the lawyer and client. This bright-line rule is preferable to conditioning enforceability of the waiver on the client being "sophisticated."

Third, the comments to Model Rules 1.7 and 1.9 should point out that advance waivers do not allow lawyers to disclose confidential client information (Model Rule 1.6). Use of confidential client information to the client's disadvantage without the client's consent should also continue to be prohibited (Model Rule 1.8(b)). The comments, however, should also state that, once a conflicting representation is consented to, the client giving consent (and any other complaining third party) will have the burden of showing specific facts establishing that the lawyer has misused confidential information in order for the lawyer to be disqualified or sanctioned for her conduct. Otherwise, specious claims of misuse of confidential information would eviscerate the advance conflict waiver. In addition, clients should be allowed to condition advance waivers on specific undertakings by the law firm, such as an undertaking to return or otherwise dispose of, at the conclusion of the firm's representation of the client, all relevant files, including internal law firm memoranda and computer records, concerning the matter.

Conclusion

For the reasons stated herein, the Model Rules of Professional Conduct should be amended to provide for advance consent to conflicts as set forth in the attached proposal.

Respectfully submitted,

 

Richard W. Painter
University of Illinois College of Law

 

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