Opinion 2064

Question Presented:
The inquirer has provided a copy of an “advance conflicts waiver” form and asks whether or not (1) the Bar has taken any position with regard to such advance waivers and (2) whether it would be appropriate to include the same in the firm’s standard fee agreement. The form provided reads as follows:

“As we have discussed, this firm represents many other companies and individuals. It is possible that during the time we are representing you, some of our current or future clients will have disputes or transactions with you. . . . You agree that we may continue to represent, or undertake in the future to represent, existing or new clients in any matter, including litigation, even if the interests of such other clients in such other matters are directly adverse to yours, so long as those matters are not substantially related to our work for you.”

Response:
In regard to your inquiry, the Board of Governors has not taken any position with regard to promulgating a form related to advance waiver of conflicts.

With regard to the form you present, the Committee offers no opinion as to what you should or should not include in your standard fee agreement.

With regard to conflicts, RPC 1.7 provides in part as follows:

(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer`s responsibilities to another client or to a third person, or by the lawyer`s own interests, unless:
(1) The lawyer reasonably believes the representation will not be adversely affected; and
(2) The client consents in writing after consultation and a full disclosure of the material facts (following authorization from the other client to make such a disclosure). When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.

While the “advance waiver of conflict” form you present would appear on its surface to encompass some of the provisions of RPC 1.7, the advance waiver is by no means dispositive of all potential conflicts. For example, under RPC 1.7, the lawyer must make a judgment that the representation being undertaken “will not be adversely affected”. This responsibility on the lawyer cannot be waived in advance and the lawyer must continuously assess his representation of clients with potentially conflicted interests.

Second, RPC 1.7 requires a written consent (which the advance conflict waiver seeks to address) but also requires that such waiver in writing be “after consultation and a full disclosure of the material facts”. Such an informed consent cannot, we believe, be obviated by an advance waiver form.

While there is nothing to suggest that the use of such a form in a standard fee agreement is violative of the RPC’s in any way, attorneys using such a form should be cautious and not be lulled into an assumption that such an advance waiver resolves all the potential issues under RPC 1.7. It should also be noted that some conflicts simply cannot be waived. We refer the inquirer to RPC 2.2 as well as 1.7. There is also valuable discussion on this point to be found in the WSBA Deskbook “Conflicts of Interest in Business Law” at §3.2.

Analysis:
There is a section in the “Deskbook” relating to ethics that comments on “advance waivers”. The reasoning therein is fairly clearly stated at §3.2(c):

“(c) Advance consent
“Lawyers should consider, in the proper circumstances, seeking advance consent from clients or prospective clients. “Advance consent” is consent to particular conflicts that do not exist at present but may arise in the future. For example, a lawyer might condition his willingness to serve as tax counsel on an isolated matter for Bank X to the agreement of Bank X that the lawyer and the lawyer’s firm may represent specific borrowers in lending transactions with Bank X in the future.

“There is some debate on the efficacy of advance consent. The ABA Committee, in Formal Opinion 93-372, concluded that advance consent was permitted under the Model Rules but expressed a “guarded view.” The Committee’s concern was whether the client was truly informed.

“Informed consent by the client is as necessary for effectiveness of a prospective waiver as for a contemporaneous waiver, but in the nature of things the consent is much less likely to be fully informed. Given the importance that the Model Rules place on the ability of the client to appreciate the significance of the waiver that is being sought, it would be unlikely that a prospective waiver which did not identify either the potential opposing party or at least a class of potentially conflicting clients would survive scrutiny. Even that information might not be enough if the nature of the likely matter and its potential effect on the client were not also appreciated by the client at the time the prospective waiver was sought.

“Keep in mind that an advance consent ideally should address both current client conflicts under rule 1.7 and potential former client conflicts under rule 1.9. Again, the level of sophistication of the client should have direct bearing on whether the consent sought was sufficiently informed.

“In addition, the nature and scope of the consent must be clearly set forth. As the ABA Opinion noted:

“For example, a prospective waiver from a client bank allowing its lawyer to represent future borrowers of the bank could not reasonably be viewed as permitting the lawyer to bring a lender-liability or a RICO action against the bank, unless the prospective waiver explicitly identified such drastic claims.” ABA Formal Opinion 93-372. See also OSB Legal Ethics Opinion 1991-122 (re efficacy of prospective waiver).