Legal Ethics: Advance Waivers of Conflicts of Interest
From Washington Lawyer, January 2002
By Eric L. Hirschhorn
That clients may waive their lawyers’ conflicts of interest has long been an accepted rule of American legal ethics. Charles Wolfram has suggested that the basis for the rule is either freedom of contract or the philosophy that the client’s personal autonomy permits him or her to choose who shall champion his or her interests.
Whatever the rationale, however, the rule is premised on the client’s understanding of what he or she is waiving. What, then, of advance waivers, which are given before the conflict actually arises and generally before such details as the identity of the particular adverse party and the specific nature of the matter in which the adversity arises are known?
Courts in other jurisdictions, the American Bar Association, several prominent local bar associations, and the American Law Institute have indicated that advance waivers of conflicts of interest are permissible—within certain limits and subject to certain client protections. In Opinion 309, which is available at www.dcbar.org/for_lawyers/ethics/ legal_ethics/opinions.cfm, the D.C. Bar Legal Ethics Committee has concluded that the D.C. Rules of Professional Conduct are consistent with that view.
Advance waivers are permissible, though, only if the prerequisites of the rules—"full disclosure of the existence and nature of the possible conflict and the possible adverse consequences of such representation"—are satisfied. See Rule 1.7(c). Thus the client must have "information reasonably sufficient to permit the client to appreciate the significance of the matter in question," D.C. Rules, Terminology, ¶ , and to make "a fully informed decision" with awareness "of the possible extra expense, inconvenience, and other disadvantages that may arise if an actual conflict of position should later arise and the lawyer be required to terminate the representation." Rule 1.7, Comment . Ordinarily this will require that either the consent be specific as to types of potentially adverse representations and types of adverse clients (e.g., a bank client for whom the lawyer performs corporate work waives the lawyer’s future representation of borrowers in mortgage loan transactions with that bank) or the waiving client have available in-house or other current counsel independent of the lawyer soliciting the waiver.
Further, the lawyer must make full disclosure of facts of which he or she is aware, and hence cannot seek a general advance waiver where the lawyer knows of a specific impending adversity unless that specific instance also is disclosed. See id.; City of El Paso v. Salas-Porras, 6 F. Supp. 2d 616, 625–26 (W.D. Tex. 1998). A corollary is that if the lawyer cannot disclose the adversity to one client because of his or her duty to maintain the confidentiality of another party’s information, the lawyer cannot seek a waiver and hence may not accept the second representation. Rule 1.7, Comment .
A conflict arising from the lawyer’s appearance on both sides of the same matter cannot be waived. Rule 1.7(a) & Comment . Opinion 309 concludes that because of the greatly increased potential for misuse of client confidences—inadvertently or otherwise—when the two matters in question are related to each other, advance waivers also should exclude from their coverage any substantially related matter. For this reason advance waivers ordinarily will not come into play in former-client situations under Rule 1.9 because disqualification under that rule extends only to matters that are the same as, or substantially related to, the initial matter.
Further, although the Rules of Professional Responsibility do not require that waivers be in writing, Rule 1.7, Comment , the Ethics Committee joined the ABA Committee on Ethics and Professional Responsibility in recommending that, for the protection of lawyers as well as clients, advance waivers be written. See ABA Comm. on Prof’l Responsibility, Formal Op. 372 (1993).
Finally, Opinion 309 cautions that any decision to act on the basis of an advance waiver should be informed by the lawyer’s reasoned judgment. For example, a prudent lawyer should be loath to rely upon an advance waiver when the adversity will involve allegations of fraud or is a litigation in which the fundamental health of the other client is at stake.
A footnote to the opinion notes that waivers permitting the adverse use or disclosure of client secrets or confidences, see Rule 1.6(c)–(d), may not be implied from waivers of conflicts of interest. Advance waivers of confidentiality are more controversial than advance waivers of conflicts of interest.
Because of their considerable potential for mischief, confidentiality waivers may be invalid even when granted by sophisticated clients with counsel (in-house or outside) independent of the lawyer seeking the waiver. See Westinghouse Electric Corp. v. Gulf Oil Corp., 588 F.2d 221, 229 (7th Cir. 1978) (expressing doubt as to the efficacy of "a vague, general" advance waiver of confidentiality); In re Boone, 83 F. 944 (N.D. Cal. 1897) (prohibiting waiver-of-confidentiality requirement). But see ABA Comm. on Prof’l Responsibility, Formal Op. 415 (1999) (suggesting that a more flexible standard may apply where the waiving client is sophisticated or has in-house counsel); Brian J. Redding, The "Confidential Information" Conflict—Is It Time for the ABA to Rethink Its Position on Waiver?, Prof. Law., Winter 1999, at 10 (same).
The opinion notes that the waivers of confidentiality (as well as those of conflicts of interest) that commonly are found in joint and "intermediary" representation situations, see Rules 1.7, 2.2, should be viewed as constituting current, rather than advance, waivers.
In summary, according to Opinion 309, a client not independently represented by counsel (including in-house counsel) generally may waive conflicts of interest in advance only where specific types of potentially adverse representations or specific types of adverse clients are identified in the waiver correspondence. A client who is independently represented by counsel, on the other hand, generally may agree to such a waiver even where those specificity requirements are not satisfied.
Eric L. Hirschhorn is a partner with Winston & Strawn and vice chair of the D.C. Bar Legal Ethics Committee.