“For large law firms to be able to take on a wide range of clients, they believe that they need to have advance waivers,” explains Merri A. Baldwin, San Francisco, cochair of the Attorneys’ Liability Subcommittee of the ABA Section of Litigation’s Professional Liability Litigation Committee. “The reason why is that many large clients, as in this case, are using multiple law firms, and the potential for conflicts has expanded.”
In 2012, almost 10 years after Galderma signed the firm’s waiver, the firm still represented the company in employment matters. Using different counsel, Galderma filed an intellectual property suit against drug manufacturer Actavis. When Actavis served its answer, Galderma learned that the firm was serving as Actavis’s counsel. Galderma asked the firm to withdraw. After the firm decided to end its relationship with Galderma instead, Galderma brought a motion to disqualify the firm from representing Actavis.
“This case just seemed like vengeance,” remarks Bruce A. Rubin, Portland, OR, cochair of the Legal Ethics Subcommittee of the Section of Litigation’s Corporate Counsel Committee. “There’s absolutely nothing to suggest that [the firm] would use confidential information. It wasn’t necessary for [the firm] to resign.”
Court Finds Informed Consent
The Dallas judge denied Galderma’s motion, finding that Galderma gave informed consent to the firm’s representation of adverse clients in matters such as the one at issue. The court examined whether the firm’s waiver was reasonably adequate for a client generally and for Galderma particularly. As for a client in general, the court found that the waiver met the test for informed consent in ABA Model Rule of Professional Conduct 1.0(e). The waiver established a proposed course of conduct, explained material risks, and proposed reasonable alternatives.
The court applied the Model Rules rather than Texas’s professional conduct rules, which do not require informed consent to simultaneous representation of adverse clients in unrelated matters. “To give weight to the Texas Rule over the Model Rule in this case would vitiate the cornerstone of the national standard, the requirement of informed consent,” the court decided. Model Rule of Professional Conduct 1.7(b) includes an informed consent requirement for concurrent conflicts.
The court next examined whether the firm’s waiver was adequate for Galderma specifically. Comment 22 to Model Rule 1.7(b) instructs that open-ended waivers are more likely to be effective “if the client is an experienced user of the legal services involved and is reasonably informed . . . particularly if, e.g., the client is independently represented by other counsel in giving consent.” Relying on Comment 22, the ABA’s Committee on Ethics and Professional Responsibility made similar pronouncements in Formal Opinion 05-436.
Galderma, the court found, had retained multiple law firms, signed advance conflict waivers at least two other times, and was involved in approximately a dozen lawsuits nationwide at the time of the court’s decision. In addition, an experienced general counsel represents the company. “Another lawyer, who is familiar with the ethical requirements of practicing law,” the opinion states, “is inherently more informed than even the most sophisticated layperson.”
Although the court upheld the general waiver here, Section leaders advise drafting conflict waivers with as much detail as possible. If the firm’s waiver did not include the word “litigation, it would have been a closer question,” warns Thomas G. Wilkinson Jr., Philadelphia, cochair of the Conflicts of Interest Subcommittee of the Section’s Ethics and Professionalism Committee. The waiver should also list the specific types of cases that it covers, Rubin suggests.
When a client lacks independent counsel, “expressly state that you’re recommending that they have a lawyer review the scope of the waiver and afford them the opportunity to do so,” Wilkinson adds.
If a conflict arises, consider telling your client before filing a pleading against the client, Baldwin says. “That way if the client has concerns, you can try to address them, and at the very least you will take away the element of surprise. It’s hard to have your lawyer show up all of a sudden on the other side, even if the matter is unrelated. However, you would need your new client’s consent to make this disclosure, and that will not always be possible.”
Lisa R. Hasday is an associate editor for Litigation News.