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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.
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