Wisconsin Lawyer: Ethics: New Clients & Future Conflicts of Interest:

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Format: MM/DD/YYYY
    April
    12
    2021

    Ethics: New Clients & Future Conflicts of Interest

    Clients can waive conflicts of interest before they occur, but for the waiver to be effective, the client must understand the specific risks of the possible conflicting representations.

    Dean R. Dietrich

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    Question

    I have been asked to represent a new client in a transactional matter, but other lawyers in my firm represent clients that may bring suit against this new client. Can I ask the new client to waive those conflicts?

    Answer

    You are faced with a common situation in which you want to represent a client but there is a possibility (or a likelihood) that other clients may bring suit against this potential new client (hereinafter “new client”) at some point in the future. Asking for a waiver of a potential or future conflict of interest is not uncommon; however, responses from the new client often vary. This is called an “advanced waiver” or “waiver of a future conflict,” although the real notion is that the new client is consenting to a future conflict of interest that may arise because of your representation of other clients (or representation of other clients by members of your firm).

    Dean R. DietrichDean R. Dietrich, Marquette 1977, of law firm of Dietrich VanderWaal Law Group SC, Wausau, is past chair of the State Bar Professional Ethics Committee.

    Waiver of a future conflict of interest is a valid concept and is something that the lawyer can ask a new client to agree to. Some clients are willing to agree to this in order to be represented by your firm while other clients insist on absolute loyalty; either you represent the new client without a waiver or you do not engage in the representation.

    The concept of a waiver of a future conflict of interest is embraced in SCR 20:1.7 of the Wisconsin Rules of Professional Conduct but is not recognized as a specific black-letter provision of that rule. Rather, the analysis is like any other conflict analysis: the lawyer must determine whether the lawyer can provide a proper level of representation to the new client, recognizing that there might be a time in the future when the lawyer or law firm will be suing the new client. The lawyer or law firm must then engage in a discussion of the risks and benefits of the waiver of a future conflict and provide the new client with alternatives and then have the client provide informed consent, “confirmed in a writing signed by the client” as required by SCR 20:1.7.

    The comment to SCR 20:1.7 provides further clarification of the “consent to future conflict.” Comment 22 provides guidance for lawyers when seeking this type of consent and notes:

    “The effectiveness of such waivers is generally determined by the extent to which the client reasonably understands the material risks that the waiver entails. 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. … If the consent is general and open-ended, then the consent ordinarily will be ineffective, because it is not reasonably likely that the client will have understood the material risks involved. On the other hand, if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent is more likely to be effective, particularly if, e.g., the client is independently represented by other counsel in giving consent and the consent is limited to future conflicts unrelated to the subject of the representation.”

    The above description of how to obtain consent (waiver) to a future conflict gives guidance to a lawyer on the steps that must be taken if the lawyer desires the consent to be effective. The drafting of a consent (waiver) to a future conflict of interest must be very specific and will only be effective in those instances in which the new client clearly understands the risks and consequences of the consent to a future conflict.

    Need Ethics Advice?

    As a State Bar member, you have access to informal guidance and help in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys.

    Ethics Hotline: To informally discuss an ethics question, contact State Bar ethics counselors org tpierce wisbar Timothy Pierce or org akaiser wisbar Aviva Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m to 4 p.m.

    » Cite this article: 94 Wis. Law. 46 (April 2021).




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