A Perspective on Prospective Waivers

Volume 40 Number 3


About the Author

Marian C. Rice is the chair of the Attorney Liability Practice Group at the New York law firm of L’Abbate Balkan Colavita & Contini LLP, where she represents attorneys in professional liability matters and provides advice to attorneys on risk management and ethical issues. She is a member of the Standing Committee on Lawyer’s Professional Liability.

Law Practice Magazine | May/June 2014 | The Marketing IssueWHETHER A LAW FIRM may ask a client to waive a conflict that does not yet exist has garnered significant debate over the past three decades. Proponents of the concept tout the changing landscape of large law firm life and the client’s right to select counsel of choice. Opponents cite the erosion of the attorney’s obligations of loyalty and confidentiality as diminishing the honor of our profession.

Before 2002, the ABA Model Rules of Professional Conduct did not take a position on the propriety of seeking an advance waiver of conflict from a client. In 2002, Comment 22 to Rule 1.7 provided that a lawyer may properly request a client to waive conflicts that might arise in the future provided the waiver satisfies the same test employed in waiving a current conflict. It became generally accepted that a law firm may ethically request that the client waive future conflicts of interest if (1) the law firm has effectively and appropriately disclosed the implications, advantages and risks involved so the client can make an informed decision whether to consent; and (2) a disinterested lawyer would believe that the lawyer can competently represent the interests of all affected clients.

In reality, law firms will ordinarily try to avoid being adverse to a client even if the firm is ethically allowed to proceed. It simply is not good business. But circumstances arise in which the ability to continue to represent one client necessitates the law firm’s rejection of another client, impeding the second client’s ability to retain its counsel of choice. In those circumstances, it becomes critical to obtain an effective waiver of an advance conflict documenting the parties’ understanding of their agreement.

As difficult as it is to secure an effective waiver based upon a known conflict, obtaining an effective advance waiver of a conflict is complicated by the need to substantively disclose facts and circumstances regarding events that have not yet occurred in sufficient detail to constitute informed consent.

Determining whether a client has the requisite understanding to render an advance waiver effective again depends upon an examination of case-specific factors and the sophistication of the client. Detailed descriptions of possible future conflicts and the potential adverse consequences that may arise because of the conflicts are key. Vague and broad advance waivers, including the ability to represent adverse clients in substantially related matters, are less likely to be upheld. When possible, the disclosure should describe the areas of practice in which the conflict waiver is sought or identify specific potentially adverse clients the firm already represents. For instance, the attorney may be retained by Client A to provide employment advice yet, as a condition of retention, asks Client A to waive any future conflict regarding patent litigation that may be adverse to Client A. The attorney may also ask Client A to waive the concurrent conflict if an unrelated claim involving Client B arises.

The advance waiver should include (1) that the client recognizes that the attorney may be adverse to the client in other matters, but (2) that the client still wants to enter into the engagement for identified reasons. This provides a court later reviewing the efficacy of the waiver with a reason the client knowingly agreed to the advance waiver. Again, disclosure must not include confidential client information, yet still must be specific enough to satisfy the informed consent standard.

Where the client’s sophistication is readily apparent, the effectiveness of an advance waiver is more likely. Regardless of the sophistication of the client, the advance waiver should (and in some jurisdictions, must) articulate the recommendation that the client seek the advice of independent counsel before agreeing to the advance waiver. If waiver of the prospective conflict is critical to the law firm’s agreement to represent the client and the client lacks sophistication or does not have access to sophisticated in-house counsel, the firm should consider offering to pay the legal fees incurred by the client in securing the advice of independent counsel on the advisability of agreeing to the advance waiver.

To minimize the possibility that a client will later revoke an advance waiver when faced with the actual conflict, consider including a provision that while the client may prospectively terminate the advance waiver, the decision to do so will cause the termination of the attorney-client relationship and the client consents to transfer the engagement to new counsel. The advance waiver should also specify that the client waives the right to seek disqualification of the attorney from any representation assumed in reliance upon the client’s advance waiver. Such a provision should minimize any prejudice to the attorney and the other clients who presumably relied upon the waiver.

It is the rare client willing to assume the cost of defending a disqualification motion. If the law firm is not willing to absorb the cost (and I suggest that to foster the client relationship the law firm should not take this position when the conflict claim has any colorable merit), the issue should be addressed at the outset. Failing to do so will court client dissatisfaction when the client’s representation is not only delayed by the attorney’s conflict, but the client is now being asked to fund the cost of defending the disqualification application.

Asking a client to waive a future conflict requires serious discussion and should not be a practice employed as a matter of course with all engagements. Public perception of lawyers is adversely impacted when a client contests the effectiveness of any waiver—particularly where the conflict sought to be waived did not even exist when the waiver was obtained. Yet sometimes it may make sense for both the law firm and the client to waive a prospective future conflict. To increase the likelihood that the prospective waiver will be upheld, the waiver should (1) be sought only from sophisticated clients; (2) have an articulated benefit to both the law firm and the client; (3) be specific as to the breadth, scope and time frame of the waiver; (4) spell out the extent of the discussion between the client and attorney as to the potential future conflict and likely adverse risks and consequences; (5) when possible, limit the waiver to unrelated disputes; and (6) afford the client the opportunity to consult counsel. Remember that when any conflict waiver fails—and the potential for the failure of a prospective waiver remains significant—both clients and the law firm lose. Before seeking to enforce an advance waiver, carefully examine whether the conflict that has now arisen was effectively waived by the information exchanged when the waiver was obtained. If it was not, then the advance waiver is ineffective and the engagement creating the conflict should be rejected.




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