Waivers of Future Conflicts of Interest May Be Valid
Depending on the circumstances, clients may
validly waive future conflicts of interest if they fully understand the
types of future representations that might arise and the actual and
reasonably foreseeable adverse consequences of those representations.
by Dean R. Dietrich
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Dean R. Dietrich, Marquette 1977, of Ruder, Ware
& Michler L.L.S.C., Wausau, is chair of the State Bar Professional
Ethics Committee.
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Question
Our firm has been asked to defend a company in an environmental
matter. We would like to ask this company to waive any future conflicts
of interest if we are asked to sue the company by another client. Can
the company agree to this waiver of conflict?
Answer
Waivers of future conflicts of interest is an item being discussed
and used on a limited basis by large law firms throughout the country.
Very few state ethics committees have rendered opinions as to whether
clients may waive future conflicts of interest.
There are significant questions as to whether a waiver of this type
would be considered reasonable and knowing. Much will depend on the
exact circumstances involved. The New York County Lawyers Association
issued an opinion in 1998 that acknowledged the possibility of a waiver
of a future conflict of interest, but suggested that several conditions
must be met. NYCLA Ethics Opinion No. 724. The New York County Lawyers
Association summarized its opinion about a client waiving a future (and
unknown) conflict of interest by stating:
"A lawyer can seek and a client or prospective client can give an
advance waiver with respect to conflicts of interest that may arise in
the future. The lawyer must first evaluate whether the future
representation is likely to give rise to a nonconsentable conflict. If
the lawyer determines that the prospective conflict is consentable, he
or she can proceed to make full disclosure to the client or prospective
client and obtain that person or entity's consent. The validity of the
waiver will depend on the adequacy of disclosure given to the client or
prospective client under the circumstances, taking into account the
sophistication and capacity of the person or entity giving consent."
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Opinions and advice of the Professional Ethics
Committee, its members, and assistants are issued pursuant to
State Bar Bylaws, Article IV, Section 5. Opinions and advice are limited
to the facts presented, are advisory only, and are not binding on any
court, the Office of Lawyer Regulation, or State Bar members.
Attorneys with questions on professional ethics issues may contact
the Ethics Hotline at (800) 444-9404, ext. 6168; or (608) 250-6168 (all
day Wednesday); and (608) 629-5721 on Monday, Tuesday, Thursday, and
Friday mornings. Send written requests for Professional Ethics Committee
opinions to:
Professional Ethics Committee,
c/o Keith Kaap,
State Bar of Wisconsin,
P.O. Box 7158,
Madison, WI 53707-7158.
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In Wisconsin, the provisions of SCR 20:1.7 and 1.9 do not directly
envision the waiver of a future and unknown conflict of interest. Our
Supreme Court Rules do acknowledge that a client may waive a conflict of
interest, but each waiver will depend upon the specific circumstances
involved and requires consultation between the lawyer and client. Thus,
there is a question whether the waiver of a future conflict, when the
exact nature of the conflict is unknown and may not be identified, could
be made by a client because of the lack of specificity of the facts and
circumstances of the conflict. In the terminology section of Chapter 20,
the word "consultation" is defined as "communication of information
reasonably sufficient to permit the client to appreciate the
significance of the matter in question." Again, the exact circumstances
of a specific request to waive a future conflict of interest will depend
upon the ability to meet this definition.
The American Bar Association Ethics 2000 Commission Draft Report
acknowledges the concept of waiver of future conflicts in its proposal
to modify ABA Model Rule 1.7. In the commentary to its proposed rule
amendment, the commission stated:
"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).
The effectiveness of such waivers is often determined by the extent to
which the client reasonably understands the material risks that the
waiver entails. If the consent is general and open-ended (i.e., the
client agrees to consent to any future conflict that might arise), then
the consent ordinarily will be ineffective, because it is not reasonably
likely that the client will have understood the material risks involved.
If, however, the client is independently represented by other counsel in
giving consent, such a waiver is more likely to be effective. On the
other hand, if the client is a sophisticated user of the legal services
involved and agrees to consent to a particular type of conflict with
which the client is already familiar, then the consent should be
effective with regard to that type of conflict. For example, a bank that
hires a lawyer to defend it in litigation might be willing to agree in
advance to have the lawyer represent borrowers in loan transactions with
that same bank, but not in resisting collection proceedings brought by
the bank. The more comprehensive the explanation of the types of future
representations that might arise, and the actual and reasonably
foreseeable adverse consequences of those representations, the greater
the likelihood that the client will have the requisite understanding.
The validity of the client's consent must be determined not only at the
time it is first given but also at the time the waiver is sought to be
implemented to determine if the circumstances at the time of the
conflict are what were earlier expected."
If a lawyer follows the considerations identified in the commentary
to the proposed model rule, a strong case can be made that the client
has made a valid waiver of a future conflict of interest based upon the
consultation that has occurred between the lawyer and the client. The
lawyer must take special caution, however, to ensure that the client
clearly understands the waiver of a future conflict in order to avoid a
problem when and if the future conflict arises.
Wisconsin
Lawyer