September 15, 1999
American Bar Association
Commission on the Evaluation of the
Rules of Professional Conduct
541 North Fairbanks, 14
th Floor
Chicago, IL 60611
Attention: Susan Campbell
Re: Proposed Rule 1.7—Public Discussion Draft
Ladies and Gentlemen:
This letter is being sent in response to the publication by the Ethics 2000 Commission of its Draft for Public Comment dated March 23, 1999 of Model Rule 1.7.
These comments have been prepared by the Drafting Group on Waivers of Future Conflicts of the Ad Hoc Committee on Ethics 2000, Section of Business Law of the American Bar Association. The Ad Hoc Committee on Ethics 2000 is composed of the members of the Section of Business Law listed at the end of this letter, including the Chairs of the principal Committees of the Section on practice, professionalism and ethics, the Committees on Conflicts of Interest, Counsel Responsibility, Law Firms, Lawyer Business Ethics, Corporate General Counsel and the Ad Hoc Committee on Multidisciplinary Practice, as well as other Section leaders and members knowledgeable in the field, including two members of the ABA Standing Committee on Ethics and Professional Responsibility (the "Ethics Committee"). A draft of this letter was circulated for comment among the members of the Ad Hoc Committee and the Officers of the Section. A substantial majority of those who have reviewed the letter in draft form have indicated their agreement with the views expressed. However, this letter does not represent the official position of the Section, nor does it necessarily reflect the views of all of those who have reviewed it.
We support the proposal to add a Comment to Rule 1.7 to address the question of the effectiveness of a consent to future conflicts. Views on the effectiveness of prospective waivers have evolved during the past 20 years. Earlier commentary on the validity of prospective waivers creates an uncertainty that we believe the Commission should address. However, we believe proposed Comment [13] is based on the wrong premise and would raise serious questions as to the efficacy of consents to future conflicts. Such uncertainty at the time lawyers and their clients are attempting to establish the terms of their relationship serves no one and impedes their ability to enter into agreements for the rendering of legal services. Moreover, uncertainty concerning the validity of prospective waivers can prejudice other clients of the lawyer, depriving them of legal services they expect to receive and their lawyer expects to be able to render.
We believe the restrictive approach taken by proposed Comment [13] is inconsistent with prior opinions of the Ethics Committee and the New York County Lawyers Association and the position of the American Law Institute’s Restatement of the Law Governing Lawyers. We recommend that a Comment dealing with the effectiveness of a consent to future conflicts:
- adopt the approach taken in Formal Opinion 93-372, dated April 16, 1993 , of the Ethics Committee that "so long as the client agrees, and the agreement is freely given, why should such an arrangement not be permissible and effective?"
- recognize the principle that sophisticated clients are capable of giving informed general consents to future conflicts, as articulated in New York County Lawyers Association Opinion No. 724 (January 28, 1998), and that the same principle should apply where the client is not necessarily sophisticated in legal matters but is independently represented.
- permit the lawyer and the client to enter into a binding agreement that neither could abrogate under a "second look" concept.
- address the issue of the impact of advance waivers on the receipt of client confidential information, as set forth in Illustration 2 under Comment d to § 202 of the American Law Institute Restatement of the Law Governing Lawyers, Proposed Final Draft No. 1, dated March 29, 1996.
It should be emphasized that the principle advanced here is the freedom of clients, particularly well-advised organizational clients, to make informed and effective decisions concerning the lawyers they wish to engage and the terms of the engagement, not a rule, normative standard, or principle that mandates or even encourages waivers in any particular circumstances or any circumstances. There are many circumstances where clients have customarily or often concluded that waivers of future conflicts are appropriate, for example in financial transaction work for investment banks and other financial institutions, or organizations seeking specialized advice (e.g., tax advice in a particular state or foreign country from a large firm practicing in a number of jurisdictions). To state or imply that these decisions are impermissible or ineffective as a matter of public policy is wrong.
For the foregoing reasons, we urge the Commission to replace Proposed Comment [13] to Rule 1.7 with the following:
[13] Whether a lawyer may properly request a client to waive conflicts that might arise in the future is subject to the test of paragraph (b). Informed consent may be readily demonstrable where the waiver relates to future conflicts of a specific nature, such as conflicts with a particular client or conflicts involving a discrete practice area. A client that has not retained a lawyer for general representation may also agree to a waiver of future conflicts in other matters that are not substantially related to those matters for which the client has retained the lawyer. Whether a client who has given such a general waiver of future conflicts with respect to unrelated matters will be deemed to have given informed consent to a waiver of a specific type of conflict within the meaning of paragraph (b) will depend upon evaluation of such factors as the business sophistication of the client, the client’s familiarity with the nature of the lawyer’s practice, the degree of adversity involved (e.g., whether the waiver obtained referred to litigation in a case where the lawyer later seeks to represent another client in litigation with the client giving the waiver), and whether the client was represented by independent counsel (either the General Counsel, a member of the Law Department of the client, or outside counsel) when the waiver was granted. Ordinarily, an advance waiver given by a client who is independently represented by counsel in connection with giving the waiver should be presumed to be an informed consent.
Consent to future use of client confidential information will not be implied from the grant of a waiver of future conflicts unless expressly agreed to by the client.
A determination as to whether the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client within the meaning of paragraph (b)(1) must be determined by the lawyer at the time the waiver is sought to be enforced as well as at the time the waiver is first obtained from the client.
A client who has previously executed a general waiver of future conflicts may require the lawyer to agree to modify or terminate the general waiver as a condition to the client continuing to use the lawyer’s services. However, once a valid general waiver of future conflicts is obtained from a client, it may be relied on by the lawyer so long as the lawyer reasonably believes that the lawyer will be able to continue to provide competent and diligent representation to that client in those matters in which the lawyer is performing legal services for that client, notwithstanding the lawyer’s representation of another client covered by the conflict waiver. The client may revoke a waiver of future conflicts, but the client may not withdraw its consent as to conflicts arising prior to the revocation. In addition, the lawyer is entitled to treat the revocation as a termination of the lawyer-client relationship, with the effect that Rule 1.9 rather than Rule 1.7 would apply to conflicts arising thereafter.
We appreciate the opportunity to submit comments and are available to meet with the Commission or your Reporter to respond to any questions.
Respectfully submitted,
Larry P. Scriggins, Chair
Ad Hoc Committee on Ethics 2000
Drafting Group on Waivers
of Future Conflicts:
Bruce Alan Mann
Marshall L. Small
Ann Yvonne Walker
By ____________________
Members of the Ad Hoc Committee
on Ethics 2000:
Larry P. Scriggins, Chair
David Albenda
Harold S. Barron
Robert L. Berner, Jr.
Robert A. Creamer
Richard E. Gutman
Richard E. V. Harris
Dennis J. Lehr
Simon M. Lorne
Bruce A. Mann
Frank D. Mayer, Jr.
Charles E. McCallum
M. Peter Moser
Robert E. O’Malley
Marshall L. Small
A.A. Sommer, Jr.
Charles H. ("Hank") Still
Ann Yvonne Walker
Michael E. Flowers, Ex Officio
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