WAIVERS/CONSENTS
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This
article has several significant sections. They are listed immediately
below, and to go to any one of them, just click on the title.
"Consent"
vs. "waiver." The core rule on conflicts of interest, Model
Rule 1.7. uses "consent." So does the Restatement, when
discussing conflicts. Many cases and writers use the terms
interchangeably. "Waiver" seems slightly broader. For
example, when one considers passage of time as precluding a conflict objection,
one thinks of "waiver," rather than "consent." We will use "waiver" throughout this article.
Non-Waivable Conflicts
Need for Writing
Components of Effective Waiver
Advance Waivers
Implied Waivers
Passage of Time as Waiver
Revocation of Waiver
Waiver Forms
Non-Waivable Conflicts
The focus of this section
will be to identify conflicts that simply may not be waived. The new
version of Model Rule 1.7(b)(3), adopted by the ABA House of Delegates in
February 2002, specifically declares that being on both sides of litigation is
not waivable. Neither the new Rule 1.7 nor its Comment
does much to clarify the buyer-seller, lender-borrower situation.
Restatement. The
black letter of § 122(2) makes the same clarification as to litigation as new
Model Rule 1.7(b)(3). As to non-litigation, the Restatement,
likewise, does
little to clarify things.
Cases. A
handful of cases discuss the litigation prohibition. Those of which we are
aware are: Sapienza v. New York News, 481 F. Supp. 676 (S.D.N.Y.
1979) (dicta); Klemm v. Superior Court, 142 Cal. Rptr. 509 (Cal. App.
1977) (uncontested divorce); Florida Bar v. Feige, 596 So.2d 433
(Fla. 1992) (attorney could not defend client and himself in lawsuit, despite
client's consent); Zarco Supply Co. v. Bonnell, 658 So.2d 151 (Fla. App.
1995) (law firm's representation of wife and children against husband and
husband's insurer in personal injury lawsuit was improper where law firm also
represented husband in medical malpractice action, despite husband's consent;
client consent is insufficient where "the fair administration of
justice" is called into question); Kelly v. Greason, 244 N.E.2d 456 (N.Y. 1968);
Walden v. Hoke, 429 S.E.2d 504 (W. Va. 1993); and Jedwabny v.
Philadelphia Transportation Co., 135 A.2d 252 (Pa. 1957), cert. denied,
355 U.S. 966 (1958). As to non-litigation, go to "Commercial
Negotiations," by clicking here.
N.Y. City Op.
2001-2 (2001) deals primarily with transactions, but touches on litigation
as follows:
In litigation, the
answer is clear-cut. As Professor Simon states, "Obviously, a
lawyer cannot represent both sides in the same litigation. That is one
of the few per se rules in the field of conflicts." Simon's
New York
Code of Prof.
Resp. Ann., DR 5-105, at 337 (West 2000); accord Wolfram,
§ 3.7.2 ("Almost without exception, a lawyer may not represent adverse
parties in the same litigation.").
Unduly Severe Opinion. Va.
Op. 1408 (1991). The issue was
whether a law firm could, with a waiver, oppose a bank’s real estate loan
division in litigation, and, at the same time represent the bank’s commercial
finance division in a bankruptcy matter. The
committee said the conflict could not be waived and the representation would be
improper.
Bond Lawyers in Iowa. Iowa Op. 06-03 (November 6, 2006).
This opinion softens Iowa’s position on conflicts for municipal bond
lawyers. It provides that a law firm may represent an issuer when it
is already representing the underwriter in other, unrelated, transactions,
provided waivers are obtained, and the parties signing the waivers are
sophisticated. Earlier Iowa Op.
95-20 (February 22, 1996), would have prevented such a waiver and would have
barred a law firm from representing an issuer where the firm represents the
underwriter currently, or had represented the underwriter in the past.
Vt. Op. 2004-3 (undated) holds that a lawyer cannot represent the seller of real
estate and prepare the title policy for the buyer, even with full disclosure and
consent.
Van Kirk v. Miller, 869 N.E.2d 534 (Ind. App. 2007)
.
The court held that with a waiver a lawyer could represent the seller and buyer
of a tavern.
Robertson v. Wittenmyer,
736 N.E.2d 804 (Ind. App. 2000) Wittenmyer was driving, and
Robertson was a passenger. They rear-ended a truck, and a station wagon
rear-ended them. McGlone represented Wittenmyer and Robertson against the
station wagon. They settled. Robertson's share was less than his
medical bills. McGlone then sued Wittenmyer on behalf of Robertson.
During all this time McGlone was representing Wittenmyer in a workmen's
compensation matter. The court held that McGlone should be disqualified
and that the conflict was non-waivable. See, too, Ill. Op. 96-06
(1996), dealing with a lawyer who attempted to represent and injured minor as
well as his parents.
Additional Note on
Litigation. In footnote 12 to Rotunda & Dzienkowski § 1.7-2(c), the authors make the common sense observation that a lawyer may be able to handle a
simple, uncontested divorce for both parties. Many lawyers would agree
with him. That was the ruling in Klemm, above. But, see Hazard & Hodes § 11.4, Illus.
11-1 and N.C. Op. 2002-6 (2003).
In In re Egedi, 105 Cal. Rptr. 2d 518 (Cal. App.
2001), the court held that a marital support agreement drafted by one lawyer for
both parties was enforceable. The lawyer had obtained a written conflicts
waiver and agreed to act only as a scrivener. But,
see Vinson
v. Vinson, 588
S.E.2d 392 (Va. App. 2003).
The wife went to a lawyer about a divorce.
The lawyer drafted a retainer agreement stating that both the wife and
her husband were clients of the lawyer. In
later litigation between the husband and the lawyer the trial court said that
the retainer “on its face” constituted a “gross conflict of interest.”
The appellate court did not use that language but did affirm the trial
court’s entry of relief against the lawyer. One could infer that the
court would have found the conflict non-waivable.
Treatise.
Hazard & Hodes § 11.6.
Law Review.
Fred C. Zacharias, Waiving Conflicts of Interest, 108 Yale L.J. 407,
416-429 (1998).
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Need for Writing
Before getting into what the rules
require, it should be noted that written waivers are always a good idea. A
case in which the court rejected a claim of waiver, the court noted that there
was nothing in writing, In Re Corn Derivatives Antitrust Litigation, 748
F.2d 157 (3d Cir. 1984).
New Model Rule 1.7,
adopted by the ABA House of Delegates in February 2002, which
governs most conflict situations, requires that waivers be in writing.
Model Rule 1.8(a), on
doing business with clients, requires that both the disclosures to the client
and the waiver from the client be in writing.
Restatement. See § 122, which is the rule that deals with waivers. It does not require
writings where the Model Rules do not. Doing business with clients
is dealt with at § 126. Oddly, the black letter does not mention a
writing. However Comment g refers to the fact that state codes require
it. Thus, the Restatement seems to be saying in a back-handed way
that the Model Rule 1.8(a) requirements for writings do apply, after all.
The States.
Almost all states have requirements for writings that track the current Model Rules. That is, in
Rule 1.7 situations (most situations), there is no requirement for a writing, and in 1.8(a)
situations (doing business with clients) a writing of some sort is required. Caution, a few states
may have additional writing requirements. You must check a state's
version of Model Rule 1.7 to be sure. California's core conflicts rule,
Rule 3-310, requires writings under almost all conflict circumstances, as does Rule
3-300, California's
version of Model Rule 1.8(a). In
re Robin, 2002 Cal. App. Unpub.
LEXIS 3042 (Cal. App. March 15, 2002) (Cal. App. 2002) (recital in court and
"on the record" did not satisfy California's writing requirement).
Washington's version of Rule 1.7 requires
that waivers be in writing. Washington's version of Rule 1.8 has the Model Rule requirement that disclosures
to the client be in writing, but drops the Model Rule requirement that the
client's waiver also be in writing. Wisconsin's version of Rule 1.7 requires waivers to be in writing.
Former Government
Lawyers. Model Rule 1.11 applies to lawyers leaving governments for
private employment. Subsection (a)(2) requires written notice to the
government where a lawyer is going to be screened from a matter. The
Ethics 2000 version of Rule 1.11 contains the same requirement.
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Components
of Effective Waiver
Comment [10] to New Model
Rule 1.7, adopted by the ABA House of Delegates in February 2002, contains one
of the better descriptions of what constitutes an effective waiver.
[20] Paragraph (b) requires the lawyer to obtain the informed
consent of the client, confirmed in writing. Such a writing may consist of a
document executed by the client or one that the lawyer promptly records and
transmits to the client following an oral consent. See Rule 1.0(b). See also
Rule 1.0(n) (writing includes electronic transmission). If it is not feasible
to obtain or transmit the writing at the time the client gives informed
consent, then the lawyer must obtain or transmit it within a reasonable time
thereafter. See Rule 1.0(b). The requirement of a writing does not supplant
the need in most cases for the lawyer to talk with the client, to explain the
risks and advantages, if any, of representation burdened with a conflict of
interest, as well as reasonably available alternatives, and to afford the
client a reasonable opportunity to consider the risks and alternatives and to
raise questions and concerns. Rather, the writing is required in order
to impress upon clients the seriousness of the decision the client is being
asked to make and to avoid disputes or ambiguities that might later occur in
the absence of a writing
Restatement.
The black letter of § 122 (the waiver section) contains the following:
Informed consent requires that the client or former client
have reasonably adequate information about the material risks of such
representation to that client or former client.
Cmt. c(i) to § 122 is a detailed treatment of what constitutes
adequate information, and cmt. c(ii) discusses the capacity of the
consenting person to give the consent. The Reporter's Note to those
comments reviews cases and other authorities on what constitutes an effective
waiver. The cases are so numerous and so fact-specific, we will
not undertake listing or discussing them here. When a notable case on
consent does come down, we will post it both at the What's New
page and in this article.
In Welch v.
Paicos, 26 F. Supp. 2d 244 (D. Mass. 1998), there was an issue about
how much "consultation" had occurred. The court refused to
disqualify counsel because the former client had been represented by other
counsel at the time of the waiver. A similar result occurred in Lease
v. Rubacky, 987 F. Supp. 406 (E.D. Pa. 1997).
In Image
Technical Services v. Eastman Kodak Co., 820 F. Supp. 1212 (N.D. Cal.
1993), a cursory mention of the conflict was deemed not adequate. A
disciplinary case in which the lawyer's disclosure was considerably
greater, but still found wanting, is In re Brandt, 10 P.3d 906
(Ore. 2000).
Good
Discussion of Effective Waiver in Derivative Action. In re Cerberus Capital Management, L.P., 164 S.W.3d 379 (Tex. 2005).
Lawyer Needs
Client Permission to Waive Conflict. In
re Dawn Gayken, 2005 Tex. App. LEXIS 4688 (Tex. App. June 16, 2005).
Flores v.
Skaro, 2005 Tex. App. LEXIS 9162 (Tex. App. Nov. 3, 2005).
This began as a suit for the wrongful death of a mother.
That case was settled for $6.5 million.
Under the terms of the distribution agreement the bulk of the
settlement went to the decedent’s minor daughter and the plaintiffs’
lawyer. The father received a
relatively small amount. One
lawyer represented all the parties aligned with the decedent’s estate,
including the father. When it
came time to agree on a distribution, the lawyer warned the father in
writing that the lawyer had a conflict and that the father ought to get
independent counsel. The
father did not do so, did not then object to the distribution, and even
initialed each page of the document describing the distribution.
Three years later the father sued the lawyer. The trial court granted the lawyer summary judgment.
The appellate court affirmed, in part because the father had waived
the lawyer’s conflict of interest.
The court based its holding upon the fact that the lawyer notified
the father of the conflict in writing, the lawyer suggested the father get
other counsel, the father initialed the distribution document, and the
father at no time during the distribution discussions objected.
While the appellate court did not focus on it, the evidence was
that after the mother’s death the father was romancing a 17-year-old
girl.
Iowa S. Ct.
Att’y. Disc. Bd. v. Clauss, 711 N.W.2d 1 (Iowa 2006). Lawyer represented a
collection agency (“Creditor”), and Lawyer represented Debtor.
Lawyer seemed to feel that if he could help Debtor stay in
business, by defending Debtor in an unrelated matter, he could help
Creditor collect from Debtor. He
discussed this multiple representation with each of them and wrote them
letters merely pointing out the fact that he represented both of them.
Neither letter spelled out ways in which this “conflict” could
harm Creditor or Debtor. The
Iowa Supreme Court said these waivers were not good enough.
Court
Impliedly Approved Lame Waiver in Estate Planning Context. Bishop v. Maurer, 823 N.Y.S.2d 366 (N.Y. App. 2006).
In
Close Corporation All Shareholders Must Agree to Conflicts Waiver. Williams
v. Stanford, 2008 Fla. App. LEXIS 4242 (Fla. App. March 25, 2008).
Van Kirk v. Miller, 869 N.E.2d 534 (Ind. App. 2007)
. In this case the lawyer
sought to represent the seller and purchaser of a tavern. He had
both parties sign a written waiver and explained the waiver to them.
The court found the waiver to be effective.
Treatise.
Hazard & Hodes § 10.9; Wolfram, Modern
Legal Ethics § 7.2.4 (1986);
Rotunda & Dzienkowski § 1.7-1(b).
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Advance Waivers
The situation is as follows: A lawyer takes
on a single piece of business for a very large company that will result in fees totaling
$20,000. The lawyer has little reason to believe that the company will
give the lawyer any other business. May the lawyer ask the company to waive an
objection to future matters in which the lawyer is asked to represent some other
client against the company on some completely unrelated matter – even before
the original matter is completed?
Almost all authorities agree that such an arrangement is
not per se unethical, at least as to private entities (as to public
entities see the paragraph entitled "Governments,"
below). The problem is that, depending upon the facts and
the tribunal, any number of things can result in such a waiver not being
enforceable. The key issues will be (1) whether the future "unrelated"
matter is adequately identified, (2) whether the party giving the waiver is
adequately sophisticated, (3) whether the waiver is recent enough, and (4), in
some cases, whether the waiving party had an opportunity to seek independent
counsel’s advice on giving the waiver. So far, no two courts have treated
these issues the same.
Comment [22] to new Model Rule
1.7, adopted by the ABA House of Delegates in February 2002, provides as
follows:
[22] 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 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. Thus, if the client agrees to consent to a particular
type of conflict with which the client is already familiar, then the consent
ordinarily will be effective with regard to that type of conflict. 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. In any case, advance consent
cannot be effective if the circumstances that materialize in the future are such
as would make the conflict nonconsentable under paragraph (b).
A number of courts and ethics committees have addressed the efficacy of such
waivers. We will attempt to
separate them into two basic categories: opinions favorable to advance waivers;
and opinions not favorable.
Courts
Favorable.
In re Agouron Pharmaceuticals, Inc.,
194 F.3d 1329 (Fed. Cir. 1999) (district court had denied a motion to
disqualify, citing, in part, an adance waiver; here appellate court denied
mandamus on procedural grounds)
; Unified Sewerage
Agency of Washington County v. Jelco Corp., 646 F.2d 1339 (9th
Cir. 1981); City of Cleveland v.
Cleveland Elec. Illuminating Co., 440 F. Supp. 193 (N.D. Ohio 1976, aff'd
mem., 573 F.2d 1310 (6th Cir. 1977); Wolk v. Flight Options, Inc., 2005 U.S. Dist. LEXIS
19891 (E.D. Pa. Sept. 13, 2005) (not a disqualification matter; court implied
approval of advance waivers); In Visa U.S.A., Inc. v. First Data Corp.,
241 F. Supp. 2d 1100 (N.D. Cal. Jan. 29, 2003); Elonex I.P. Holdings, Ltd. v.
Apple Computer, Inc., 142 F. Supp. 2d 579 (D. Del. 2001);
In re Rite Aid Corp. Securities
Litigation v. Grass, 139 F. Supp. 2d 649 (E.D. Pa. 2001); Fisons Corp. v.
Atochem N.A., Inc., 1990 U.S. Dist. LEXIS 15284 (S.D. Cal. 1990); Kennecott
Copper Corp. v. Curtiss-Wright Corp., (S.D.N.Y.) (MacMahon, J) (Memorandum
and Order, April 10, 1978); Interstate Properties v. Pyramid Co.,
547 F. Supp. 178 (S.D.N.Y. 1982); Zador Corp. v. Kwan, 37 Cal. Rptr. 2d
754 (Cal. App. 1995);
Elliott v. McFarland Unified School
Dist., 165 Cal. App. 3d 562 (Cal. App. 1985); St. Barnabas Hospital v.
New York City Health & Hospitals Corp., 775 N.Y.S.2d 9 (N.Y. App. 2004)
(court enforced advance waiver in litigation even though it did not mention
litigation).
Advance
Waiver not Enforced. Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796
(N.D. Cal. 2004) (waiver not specific enough and not discussed with client); Goss
Graphics Systems, Inc. v. Man Roland Druckmaschinen Aktiengesellschaft, 2000
U.S. Dist. LEXIS 18100 (N.D. Ia. 2000) (conflict regarding which document
applied; court resolved in favor of disqualification); Worldspan L.P. v. The
Sabre Group Holdings, Inc., 5 F. Supp. 2d 1356 (N.D. Ga. 1998)
(waiver failed to mention litigation and too remote in time; court seemed highly
skeptical of such waivers); Florida Ins. Guaranty Ass'n. Inc. v. Carey
Canada, Inc., 749 F. Supp. 255 (S.D. Fla. 1990); Marketti v. Fitzsimmons,
373 F. Supp. 637 (W.D. Wisc. 1974) (mere knowledge by client of second
representation not a waiver); In re Boone, 83 F. 944 (N.D. Cal. 1897); Hasco,
Inc. v. Roche, 700 N.E.2d 768 (Ill. App. 1998).
In McKesson Information Solutions, Inc. v. Duane Morris LLP, No.
2006CV121110 (Super. Ct. Fulton Co. Ga. Nov. 8, 2006), the trial judge found an
advance waiver not enforceable even though the law firm did everything it could
have to document it properly. The
judge ignored ABA Op. 05-436 (2005), and cited Worldspan L.P. v. The Sabre
Group Holdings, Inc., 5 F. Supp. 2d 1356 (N.D. Ga. 1998). On
March 8, 2007, the court reversed herself because the offending representations
had ended. She did not retract her earlier position that the advance
waiver in question was ineffective.
ABA Op. 05-436 (May 11, 2005).
In this opinion the Committee has withdrawn ABA Op. 93-372.
In conformance with new Comment [22] to Model Rule 1.7 (see above), the
Committee said that an “open-ended” advance waiver may be effective where
the person giving it is sophisticated or represented by other counsel on the
waiver issue.
D.C.
Op. 309 (2001), N.Y.
City Op. 2004-02 (2004), and N.Y.
County Op. 724 (1998) follow the approach of ABA
Op. 93-372 (1993), which has been withdrawn in 2005 (see prior paragraph). See, too, Cal.
Op. 1989-115 (1989),.and L.A. Co. Op. 471 (1994). A relatively friendly
opinion on advance waivers is N.Y. City Op. 2006-1 (Feb. 17, 2006).
D.C. Rule 1.7 cmts. 31 & 32, effective February 1, 2007, recognize advance
waivers.
Restatement. See § 122,
cmt. d. It says that normally to be effective the client must be
sophisticated and have an opportunity to get the advice of another lawyer.
Treatises. Hazard
& Hodes § 10.9; Rotunda & Dzienkowski § 1.7-4(b).
Law Reviews. Alice
E. Brown, Advance Waivers of Conflicts of
Interest: Are the ABA Formal Ethics Opinions Advanced Enough Themselves? 19 Geo.
J. Legal Ethics 567 (2006); Eileen
Libby, Looking Ahead: ABA Ethics Opinion
Says Clients May Waive Objections to Future Conflicts of Interest, 91
A.B.A.J. 26 (Aug. 2005); Lerner,
Honoring Choice by Consenting Adults: Prospective Conflict Waivers as a
Mature Solution to Ethical Gamesmanship – A Response to Mr. Fox, 29 Hofstra L.
Rev. 971 (Summer 2001); Richard W. Painter, Advance
Waiver of Conflicts, 13 Geo. J. of
Legal Ethics 289 (2000); Note,
Prospective Waiver of the Right to Disqualify Counsel for Conflicts of
Interest, 79 Mich. L. Rev. 1074 (1981).
Governments.
We are aware of a few jurisdictions where a waiver from a state or local government
simply would not be enforced. New Jersey Rules of Professional Conduct 1.7(a)(2)
& 1.7(b)(2); State of West Virginia v. MacQueen, 416 S.E.2d 55
(W. Va. 1992); and City of Little Rock v. Cash, 644 S.W.2d 229
(Ark. 1982). This may be true in other states, as well.
"Sidebar," Nat.
L. J., May 22, 2000. According to this publication, a
prominent Philadelphia law firm recently tried to rely on an advance waiver that
was signed in 1990. Evidently, it did not work, and a state administrative
tribunal removed the firm from the matter in question. The brief article does
not say whether the age of the waiver was a factor.
The New York and Presbyterian
Hosp. v. New York State Catholic Health Plan, Inc., Index No. 04-603640
(N.Y. Sup. Ct. May 25, 2006). The trial court disqualified a law firm,
which attempted to rely on an advance waiver. In her oral ruling the judge
said that a law firm could not rely on an advance waiver to be adverse to a
current client in litigation. The court agreed with the other side's
argument that the law firm should have obtained another waiver after it was
asked to appear in this case. We believe this decision is inconsistent
with virtually all the cases approving advance waivers as well as the
Restatement and ethics opinions cited above.
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Implied Waivers
Passage of Time.
Many cases deal with the
concept of waiving a conflict by waiting too long to raise it. They are
the subject of a section of this article, "Passage of Time as
Waiver." To go there, click here.
Time not a Factor.
In the following cases the courts discussed implied waivers in contexts
other than a claim that the aggrieved party waited too long to bring a
motion to disqualify. In some cases the court made a distinction
between conflicting representations that were current as opposed to those
that were successor. In the current representation situations, those
courts said there could be no implied waiver.
FDIC v.
Frazier, 637 F. Supp. 77 (D. Kan. 1986) (court found implied waiver
where conflicting representations were current); and Conoco, Inc. v.
Hon. Pat M. Baskin, Judge, 803 S.W.2d 416 (Tex. App. 1991) (said trial
court could have justified denial of motion to disqualify by finding
the movant had impliedly waived the conflict, even where conflicting
representations were current).
In the
Matter of the Estate of Richard, 602 P.2d 122 (Kan. App. 1979),
involved a claim for specific performance of an oral contract. The
plaintiff lost and claimed on appeal that one of the lawyers should have
been disqualified. The appellate court agreed and remanded for a new
trial. However, the court approved the concept of implied waiver as
follows:
A client may also expressly or impliedly consent
to an attorney's representing adverse interests, but there is no
evidence in the record in this case that the client did so.
(emphasis added)
In McCann v.
ABC Ins. Co., 640 So. 2d 865 (La. App. 1994), a party had moved to
disqualify counsel on the other side on the eve of trial. The
appellate court noted the last-minute aspect of the motion, but the court
also looked at factors other than the passage of time, such as the fact
that confidences were not shared and no prejudice to the complaining party
had been shown. The court said:
Moreover the evidence strongly supports a finding that
Methodist implicitly
waived the condition of disqualification per Rule 1.10 (d).
Lazy Seven
Coal Sales, Inc. v. Stone & Hinds, P.C., 813 S.W.2d 400 (Tenn.
1991), involved successive representations and was a malpractice
case. But it contains language friendly to the concept of implied
waiver:
There is no evidence of demonstrated conflicts
or potential conflicts
not expressly or implicitly
waived that would prohibit the simultaneous representation of the
corporation and the parties involved in its organization.
* * * *
Had there been a conflict
of interests, Mehler's failure to raise the issue would have
created a reasonable belief on the part of Stone & Hinds that its
continued representation of the corporation was acceptable to Mehler.
While not a
disqualification case, the court in Glidden Co. v. Jandernoa, 173
F.R.D. 459 (W.D. Mich. 1997) expressed hostility to the concept of an
implied waiver of a conflict:
Where dual representation creates a conflict
of interest, the burden is on the attorney involved to approach
both clients with an affirmative disclosure and a request for express
consent. Independent consultation with another lawyer by the opposing
party is insufficient to satisfy the obligation of full disclosure.
Likewise, in In
re American Continental Corp./Lincoln Savings and Loan Securities
Litigation, 794 F. Supp. 1424 (D. Ariz. 1992), a securities class
action against lawyers, among others, the court said:
A client's implied consent is insufficient to waive a
potential conflict of interest.
California.
Several cases from California are clear that implied waivers will not be
recognized in cases of simultaneous representation, but might be
recognized in cases of successor representations. Blecher & Collins, P.C. v. Northwest
Airlines, Inc., 858 F. Supp. 1442 (C.D. Cal. 1994); State Farm Mut. Auto.
Ins. Co. v. Federal Ins. Co., 86 Cal. Rptr. 2d 20 (Cal. App. 1999); In re
Lee G., 1 Cal. Rptr. 2d 375 (Cal. App. 1991); Health Maintenance Network
v. Blue Cross of So. California, 249 Cal. Rptr. 220 (Cal. App. 1988).
Recall that in California conflict waivers must be in writing. See
"Need for Writing," above. The judge in Blecher,
referring to the Lee and Health Maintenance decisions, said
as follows:
Both of these cases held that an attorney's former
client can impliedly consent to his former attorney's decision to
represent his current adversary. Neither case holds or suggests that
current clients can impliedly consent to conflicted representation. Rule
5-102(B) [predecessor to California Rule 3-310] clearly requires
attorneys to obtain an informed written waiver of conflicts
before embarking on joint representation. Because obtaining a written
waiver requires little effort, informs and protects clients, and avoids
costly evidentiary and credibility disputes, the rule is inflexible.
(emphasis added)
Treatise.
Rotunda & Dzienkowski § 1.7-1(d).
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Passage of Time
as Waiver
Put simply,
when a motion to disqualify is filed, courts look at how long the movant waited
before filing it. Opinions where the court considered whether the movant
waited too long are too numerous to collect all of them here. We will list many of them. Anyone with an issue concerning waiver through
passage of time should start with Central Milk Producers Coop. v. Sentry Food
Stores, Inc., 573 F.2d 988 (8th Cir. 1978). (In Central Milk,
the court said that motions to disqualify must be made with "reasonable
promptness," and denied a motion to disqualify because the movant waited
too long.) Central Milk is frequently cited, and Shepardizing it
is a good way to find more recent cases in the relevant jurisdiction.
In many
cases, the court simply holds that the movant waited too long. In other
cases, the court will weigh the amount of time the movant waited with the
seriousness of the alleged conflict. For example, in State of
Arkansas v. Dean Foods Products Co., Inc., 605 F.2d 380 (8th Cir. 1979), the
delay was "more than two years" but the court refused to find a waiver
because of the seriousness of the alleged conflict. In all cases, the
courts recognize that delay in bringing a motion to disqualify can operate as a
waiver. They vary as to how much delay is necessary and how to weigh the
countervailing factors, such as the nature of the conflict.
Below are
two lists: one for cases in which the court found that the movant waived the
conflict by waiting too long, and another for cases in which the court found no
waiver. We had to build these lists
from the ground up, and have undoubtedly missed some, so, as stated in the "Ground
Rules," this site is no substitute for doing your own research.
Where the
length of the movant's delay is clear, we will note it. Some
courts will use the term "waiver." Other courts use
"estoppel." We are not aware of the significance of the
difference in this context.
Cases Denying
Disqualification Because of Delay. Stalnaker
v. DLC, Ltd., 376 F.3d 819 (8th Cir. 2004)
(raised first time on appeal); In re Valley-Vulcan Mold Co,
2001 U.S. App. LEXIS 3212 (6th Cir. 2001) ("less than one week before
trial" - length of delay unclear); Kafka v. Truck Ins. Exchange,
19 F.3d 383 (7th Cir. 1994) (after trial); Cox v. American Cast Iron Pipe Co.,
847 F.2d 725 (11th Cir. 1988) (eighteen months; one month before trial); Trust
Corp. of Montana v. Piper Aircraft Co., 701 F.2d 85 (9th Cir. 1983) ("more than two and a half years"); Central Milk Producers
Coop. v. Sentry Food Stores, Inc., 573 F.2d 988 (8th Cir. 1978) ("more
than two years"); Redd v. Shell Oil Co., 518 F.2d 311 (10th
Cir. 1975) (three days before trial); Picicco
v. City of Calumet City, 2007 U.S. Dist. LEXIS 88389 (N.D. Ill. Dec. 3,
2007) (16 months, but court also peeked at the merits); McIntosh
v. State Farm Fire & Cas. Co., 2006 U.S. Dist. LEXIS 96740 (S.D. Miss.
Sept. 12, 2007) (one year); Eon
Streams, Inc. v. Clear Channel Communications, Inc., 2007 U.S. Dist. LEXIS
23950 (E.D. Tenn. March 27, 2007) (court refused to recognize waiver by
delay); Lyon v. Goldstein, 2006 U.S. Dist. LEXIS 71274 (D.N.J. Sept. 29,
2006) (thirteen months and the case was “poised for final resolution”); Conley v. Chaffinch, 431 F. Supp. 2d 494 (D. Del. 2006) (nine months too long); Modanlo v. Ahan, 342 B.R. 230 (D. Md. 2006)
(five month delay); Magin v. Monsanto Co., 2005 U.S. Dist. LEXIS 19225 (N.D.
Ill. Sept. 1, 2005) (delay of "several years" mentioned, but not clear
that delay was decisive); Corso v. Suburban Bank & Trust Co.,
2005 U.S. Dist. LEXIS 423 (N.D. Ill. Jan. 12, 2005) (20 months); Mahtesian v. Snow, 2004 U.S. Dist.
LEXIS 25656 (N.D. Cal. Dec. 14, 2004) (waited until conclusion of case); Gross v. SES Americom, Inc.,
307 F. Supp. 2d 719 (D. Md. 2004) (approximately one year after suit
filed); In re
Internet Navigator, Inc., 293
B.R. 198 (N.D. Ia. 2003)
(too
late to object to fees after case in question settled); Dalleo v. River Construction, Inc., 2003 U.S. Dist. LEXIS 6545 (E.D.
La. April 14, 2003) (almost two-year delay); Safe-T-Products,
Inc. v. Learning Resources, Inc., 2002 U.S. Dist. LEXIS 20540 (N.D. Ill.
October 24, 2002) (six months did not save individual lawyer, but did save rest
of firm); In re Rite Aid Corp. Secs. Litig. v.
Grass, 139 F. Supp. 2d 649 (E.D. Pa. 2001) ("at least nine months (and more like thirteen)"); Geissal v. Moore Medical Corp., 92
F. Supp. 2d 945 (E.D. Mo. 2000); Universal City Studios, Inc. v. Reimerdes,
98 F. Supp. 2d 449 (S.D.N.Y. 2000) (less than two months before trial); In re: A&T Paramus Co., Inc., 1999
Bankr. LEXIS 1841 (D.N.J. 1999) ("nearly a year and a half"); Resolution Trust Corp. v. Fidelity and Deposit
Co. of Maryland, 1997 U.S. Dist. LEXIS 22180 (D.N.J. 1997) (five years); Szoke
v. Carter, 974 F. Supp. 360 (S.D.N.Y. 1997) (22 months); Abney
v. Wal-Mart, 984 F. Supp. 526 (E.D. Tex. 1997) (one year); Concerned
Parents of Jordan Park v. Housing Authority of the City of St. Petersburg,
934 F. Supp. 406 (M.D. Fla. 1996) (five months); Weeks v.
Samsung Heavy Ind. Co., LTD, 909 F. Supp. 582 (N.D. Ill. 1996) (two years); Chemical
Waste Mgm't., Inc. v. Sims, 875 F. Supp. 501 (N.D. Ill. 1995) (21 months); Alexander
v. Primerica Holdings, Inc., 822 F. Supp. 1099 (D.N.J. 1993) (three years and
four months before trial); Commonwealth Ins. Co. v. Graphix Hot Line, Inc.,
808 F. Supp. 1200 (E.D. Pa. 1992) (two years, and three weeks before trial); Medicine
Shoppe Int'l., Inc. v. Rebs Co., 737 F. Supp. 70 (E.D. Mo. 1990) (one
year); Employers Ins. of Wausau v. Albert D. Seeno Constr. Co., 692
F. Supp. 1150 (N.D. Cal. 1988) ("well over a year"); Zimmerman v.
Duggan, 81 Bankr. 296 (E.D. Pa. 1987) ("nearly three years"); Warpar
Mfg. Corp. v. Ashland Oil, Inc., 606 F. Supp. 852 (N.D. Ohio 1984) (21 months
and six weeks prior to trial); Glover v. Libman, 578 F. Supp. 748 (N.D.
Ga. 1983) (thirteen months); Jackson v. J.C. Penney Co., Inc., 521 F.
Supp. 1032 (N.D. Ga. 1981) (fifteen months); Amparano v. Asarco, Inc.,
93 P.3d 1086 (Ariz. App. 2004) (waited four years from
first learning that the lawyer was threatening to file this suit); Life Care Centers of America v. CalOptima, 35 Cal. Rptr. 3d 387 (Cal. App. 2005) (motion to disqualify amicus counsel after brief
filed, but did not object when amicus counsel earlier sought leave to file); Western Continental Co. v.
Natural Gas Corp., 261 Cal. Rptr. 100 (Cal. App. 1989); River West, Inc.
v. Nickel, 234 Cal. Rptr. 33 (Cal. App. 1987) (three years); Freedom Commerce Centre Venture v. Ranson,
823 So. 2d 817 (Fla.
App. 2002) (Fla. App. July 19, 2002) (365th day after
final judgment); Case v. City
of Miami, 756 So. 2d 259 (Fla. App. 2000) (seven years); Yates
v. Dublin Sir Shop, Inc., 579
S.E.2d 796 (Ga. App. 2003)
(conflict
not grounds for new trial when not raised for two years and after adverse
judgment); Georgia
Baptist Health Care System, Inc. v. Hanafi, 559 S.E.2d 746 (Ga. App. 2002) (25-month delay part of reason
for denial of motion); Head
v. CSX Transportation, Inc., 577
S.E.2d 12 (Ga. App.
2003) (conflict raised for first time in motion for new trial); Lau v.
Valu-Bilt Homes Ltd., 582 P.2d 195 (Haw. 1978) ("more than one
year"); In re Estate of Klehm, 842 N.E.2d 1177 (Ill. App. 2006) (four years); In re Estate of Kirk, 686 N.E.2d 1246 (Ill. App. 1997)
(three
and a half years); Corbello v. Iowa Production Co., 787 So. 2d 596 (La. App.
2001) (eight months and eve of trial);
In re Estate of Gillies v. Gillies,
830 So. 2d 640 (Miss.
2002) (Miss. November 14, 2002) (waited until lawyer sought award
of fees); Williams v.
Bell, 793 So. 2d 609 (Miss. 2001): Colson v. Johnson, 764 So. 2d 438 (Miss.
2000) (three
years; four months prior to trial); In
re Duvall, 67 S.W.3d 736 (Mo. App. 2002) (one year and after
other side awarded summary judgment); Terre Du Lac Prop. Owners' Assoc., Inc. v. Shrum, 661
S.W.2d 45 (Mo. App. 1983) (after trial); Pro-Hand
Services Trust v. Monthei, 49 P.3d 56 (Mont.
2002) (Mont. June 18,
2002) (five months); United Nuclear Corp. v. General
Atomic Co., 629 P.2d 231 (N.M. 1980); Marcus v. Marcus, 793 N.Y.S.2d
375 (N.Y. App. 2005) (one year and just prior to
trial); St. Barnabas Hospital v. New York
City Health & Hospitals Corp., 775
N.Y.S.2d 9 (N.Y. App. 2004) (one year delay contributed to denial of motion to disqualify); Spatz
v. Ridge Lea Associates, LLC, 765
N.Y.S.2d 84 (Oct. 2, 2003)
(time not stated); Alpert
v. Alpert, 741 N.Y.S.2d 869 (N.Y. App.
May 23, 2002) (eleven years); Eisenstadt v. Eisenstadt, 723
N.Y.S.2d 395 (N.Y. App. 2001); McDade v. McDade, 659 N.Y.S.2d
530 (N.Y. App. 1997) (two and a half years); Lewis v. Unigard Mut. Ins. Co.,
442 N.Y.S.2d 522 (N.Y. App. 1981) (six years); Young v. Oak Crest Park, Inc.,
428 N.Y.S.2d 69 (N.Y. App. 1980) (four years); Barberton Rescue Mission v. Hawthorn, 2003 Ohio App. LEXIS 1076 (Ohio App. March 12, 2003) (one day after
court's ordered deadline and five months after suit was filed); Sarbey
v. National City Bank, 583 N.E.2d 392 (Ohio App. 1990);
Hayes
v. Central States Orthopedic Specialists, Inc., 51 P.3d 562 (Okla.
2002) (eight
months); Digital
Design Group, Inc. v. Information Builders, Inc., 2000 Okla. Civ. App. LEXIS
1 (Okla. App. 2000) (one year); Lazy Seven Coal Sales, Inc. v.
Stone & Hinds, P.C., 813 S.W.2d 400 (Tenn. 1991); Seibers v.
Pepsi-Cola Bottling Co., 2000 Tenn. App. LEXIS 818 (Tenn. App. December 21,
2000); In
re Jameson, 2004 Tex. App. LEXIS 1220 (Tex. App. Feb. 9, 2004)
(after trial); Commissioner’s
Court v. Buster,
2003 Tex. App. LEXIS 10047 (Tex. App. Nov. 25, 2003) (three years and 30 days
before trial); Lehmberg v. Lehmberg, 2003 Tex.
App. LEXIS 3667 (Tex. App. April 30, 2003) (sixteen months and day of trial); Davis
v. Weatherston, 2002 Tex. App. LEXIS 3194 (Tex. App. May 8, 2002) (raised
after trial); Massey v. Columbus State Bank,
35 S.W.3d 697 (Tex. App. 2000) (raised first time on appeal); Jones v. Lurie,
32 S.W.3d 737 (Tex. App. 2000) (raised first time on appeal); FSBIC v.
Intercapital Corp. of Oregon, 738 P.2d 263 (Wash. 1987); Moss
v. Fahey, 2002 Wash. App. LEXIS 577 (Wash. App. 2002) (three years and after
judgment); Batchelor v.
Batchelor, 570 N.W.2d 568 (Wis. App. 1997) (three months).
Cases Upholding
Disqualification Although Delay Occurred. State of Arkansas v. Dean Foods
Products Co., Inc., 605 F.2d 380 (8th Cir. 1979) ("more than two
years"); Emle Industries, Inc. v. Patentex, Inc., 478 F.2d 562 (2d
Cir. 1973) (three years); Levi Strauss &
Co. v. Abercrombie & Fitch Trading Co., 2007 U.S. Dist. LEXIS 83150
(N.D. Cal. Oct. 29, 2007) (two month delay and no prejudice to other side);
Republic Services, Inc. v. Liberty Mut. Ins. Co., 2006 U.S. Dist.
LEXIS 77363 (E.D. Ky. Oct. 20, 2006) (three months); FMC Technologies, Inc. v. Edwards, 420 F. Supp. 2d 1153 (W.D. Wash. 2006) (waited 6 months, but was waiting for another motion to be
decided); HealthNet, Inc. v. Health Net, Inc., 289
F. Supp. 2d 755 (S.D. W. Va. 2003); Maturi
v. McLaughlin Research Corp., 2001 U.S. Dist. LEXIS
21893 (D.N.H. 2002) (delay of ten months "irrelevant"); Imbesi
v. Imbesi, 2001 U.S. Dist. LEXIS 17689 (E.D. Pa. 2001) (four months); Colorpix Systems of America v. Broan Mfg. Co.,
131 F. Supp. 2d 331 (D. Conn. 2001) (18 months); Loomis v. Consolidated Stores Corp., 2000 U.S. Dist. LEXIS 12391
(S.D.N.Y. 2000) (client knew for year and a half, but did not appreciate
significance of conflict; lawyer did not learn about conflict until much later);
Montgomery Academy v. Kohn, 82 F. Supp. 2d 312
(D.N.J. 1999) ("less than three months"); Islander East Rental
Program v. Ferguson, 917 F. Supp. 504 (S.D. Tex. 1996) (four months); Healy
v. Axelrod Construction Co. Defined Benefit Pension Plan and Trust, 155
F.R.D. 615 (N.D. Ill. 1994) ("no trial date"); British Airways, PLC
v. Port Authority of New York and New Jersey, 862 F. Supp. 889 (E.D.N.Y.
1994) ("only two years"); Image Tech. Services v. Eastman Kodak Co.,
820 F. Supp. 1212 (N.D. Cal 1993) (one year); Baird v. Hilton Hotel Corp.,
771 F. Supp. 24 (E.D.N.Y. 1991) (thirteen months); Little Rock School
Dist. v. Borden, Inc., 1979 U.S. Dist. LEXIS 13217 (E.D. Ark. 1979) ("short");
Richard B. v. State, 71
P.3d 811 (Alas. 2003) (two months); Borsuk v. Ryan,
2003 Cal. App. Unpub. LEXIS 9984 (Cal. App. Oct. 24, 2003) (approximately five
years); 2002 Cal. App. Unpub.
LEXIS 3042 (Cal. App. March 15, 2002)
(Cal. App. 2002) (four years but other
party "not prejudiced" by delay); Key Largo Rest., Inc. v. T.H. Old Town Assoc., Ltd.,
759 So. 2d 690 (Fla. App. 2000) (five years, but action stayed by bankruptcy -
vigorous dissent); Casco Northern Bank v. JBI Associates, Ltd.,
667 A.2d 856 (Me. 1995) (about a month, but court said that delay alone should
not be a reason to deny a motion to disqualify); In
re Dawn Gayken, 2005 Tex. App. LEXIS 4688 (Tex. App. June 16, 2005) (one or
two months); In re Marriage of Bal and Sahota, 2006 Wash. App. LEXIS 529 (Wash.
App. March 27, 2006) (party waited 18 months, but filed immediately after Bar
investigation closed).
Unique Cases;
Failed to Move in Another Case. In Ali v. American Seafoods Co., LLC, 2006 U.S. Dist. LEXIS 29880 (W.D.
Wash. May 15, 2006), the moving party waited only six weeks to make the
motion. The court said that was timely. The wrinkle was that the
moving party had not made such a motion involving the same opposing lawyer in
another similar case. The court said that was not a waiver as to this
case. Neither the court nor we are aware of this issue arising before.
More recently, in Javorski v. Nationwide Mut. Ins. Co., 2006 U.S. Dist. LEXIS 81490
(M.D. Pa. Nov. 6, 2006), the court relied in part on the fact that the moving
party had not made a motion in other cases in finding a waiver.
Client
"Waives" Civil Cause of Action against Lawyer for Conflict of Interest
by not Moving to Disqualify Lawyer in Earlier Matter.
Swilley v. Tipton, 2007 U.S. Dist.
LEXIS 7481 (E.D. Ky. Jan. 30, 2007). In Centra,
Inc. v. Estrin, 2007 U.S. Dist. LEXIS 31409 (E.D. Mich. April 30, 2007), the
court upheld dismissal of a malpractice case based on conflict because the
plaintiff knew about the conflict a year before filing the suit.
Remanded for More
Information. Lackow v. Walter E. Heller & Co. Southeast, Inc.,
466 So. 2d 1120 (Fla. App. 1985) ("months;" remanded for findings on
reason for delay); Douglas v. Jepson, 945 P.2d 244 (Wash. App. 1997)
(delay "more than six months" but remanded for further findings
on reason for delay).
Knowledge but not Joined. Richmond American Homes of Northern California,
Inc. v. Air Design, Inc., 2002 Cal. App. Unpub. LEXIS 6948 (Cal. App. July
25, 2002). The party moving to disqualify arguably knew about the
possibility of a conflict for some time. When
it was finally made a party in this case, it filed its motion to disqualify
along with its answer. In response
to the motion the law firm argued that the moving party should have filed an
injunction action to prevent the representation when it first learned of the
potential conflict. The Appellate
Court disagreed and ruled the motion should be granted.
Denial of Withdrawal Because of Delay. Irwin v. Mascott, 2006 U.S. App. LEXIS 18984 (9th Cir.
July 27, 2006). Law firm moved to
withdraw because it had a conflict of interest. The trial court denied the motion because the law firm waited
“several years” to bring the motion. In
this opinion the appellate court affirmed.
Treatise. Rotunda & Dzienkowski § 1.7-1(d).
[Top of Page]
Revocation of Waiver
A lawyer has
agreed to represent A and B in a business transaction and obtains a
written conflicts waiver from them. After several months A becomes
unhappy with the lawyer, objects to the "conflict of interest,"
and tries to fire the lawyer. Can she do that? A client can
almost always discharge her lawyer, Model Rule 1.16(a)(3) and Model Code
DR 2-110(B)(4). (Examples of situations causing us to say
"almost" are the civil rights laws, "whistle-blower"
situations, and the right of a tribunal to keep a lawyer in a case.)
So, as to her own representation, a client can always
"revoke" a conflicts waiver.
Can A also
revoke the waiver as to the lawyer's representation of B, the other
party? We have never seen a case that answers the question
directly. That is, can a client who has waived a conflict of
interest as to a lawyer's representation of someone else revoke that
waiver?
Restatement.
The ALI made a brave stab at describing situations in which a client may,
or may not, prevent a lawyer from continuing to represent another party by
revoking a waiver previously given, at cmt. f to § 122 (the
section dealing with waivers). The cases cited in the Reporter's
Note on cmt. f, while tangentially relevant, simply do not
purport to address the issue specifically. In none of them did the
party resisting the disqualification rely on the fact that a waiver had
been given. Cmt. f provides in pertinent part:
. . . Whether the lawyer may continue the other
representation depends on whether the client was justified in revoking
the consent (such as because of a material change in the factual basis
on which the client originally gave informed consent) and whether
material detriment to the other client or lawyer would result. . . .
* * * *
In the
absence of valid reasons for a client' revocation of consent, the
ability of the lawyer to continue representing other clients depends on
whether material detriment to the other client or lawyer would result
and, accordingly, whether the reasonable expectations of those persons
would be defeated. Once the client or former client has given
informed consent to a lawyer's representing another client, that other
client as well as the lawyer might have acted in reliance on the
consent. For example, the other client and the lawyer might
already have invested time, money, and effort in the representation.
In the
following cases cited in the Reporter's Note the representation started
out as joint (with implied or express waivers), then something changed -
the facts, the attitude of a party, the conduct of the lawyer, and so
forth. Again, in none of them did the court discuss the concept of a
party's revoking a consent to a lawyer's representing another party.
Brennan's, Inc. v. Brennan's Restaurants, Inc., 590 F.2d 168 (5th
Cir. 1979); Allegaert v. Perot, 565 F.2d 246 (2d Cir. 1977); Interstate
Properties v. Pyramid Co., 547 F. Supp. 178 (S.D.N.Y. 1982); In re
Lanza, 322 A.2d 445 (N.J. 1974); In re Braun, 227 A.2d 506
(N.J. 1967); In re Banks, 584 P.2d 284 (Ore. 1978); In re
Eltzroth, 679 P.2d 1369 (Ore. App. 1984).
While not
exactly on point, the Ohio Supreme Court addressed the issue in the
context of a conflicts waiver attendant to a divorce action.
In Sturm v. Sturm, 574 N.E.2d 522 (Ohio 1991), the court
said:
Therefore, we hold that where a party expressly waives a
conflict of interest by a written judgment entry signed by the party, such
waiver remains in effect as a matter of law when the action of which it
was a part is dismissed voluntarily and refiled in another county.
D.C.
Bar Op. 317 (November 2002) and N.C.
Op. 2007-11 (July 2007) adopt the position of Comment f to
Restatement § 122. This is also the gist of new Comment [21] to
Model Rule 1.7. See
also Richard Painter, Advance Waiver of
Conflicts, 8 Geo. J. Legal
Ethics 289-329 (Winter 2000).
Treatise.
Hazard & Hodes § 10.8.
CONFLICT OF INTEREST WAIVER
FORMS
By William Freivogel
DISCLAIMER: Lawyers
using these forms should do so very carefully to ensure that the language
finally used fits the particular situation for which they are designed.
It is not the intent of these forms to suggest or establish practice
standards.
Litigation - Beauty Contest
John Smith, Esq.
ABC Corp.
1 LaSalle Street
Chicago, Illinois 60603
Re:
Proposed Action against XYZ Corp.
Dear John:
This is to confirm that you will visit this firm August 1.
You wish to hire a law firm in this city to bring an action against XYZ
Corp., and the purpose of your visit will be to evaluate the ability of this
firm to handle the action for you. We
understand that you will be interviewing other firms here, as well.
On the telephone, we discussed the possibility that if you
do not hire us, XYZ or some other party in the action may seek to hire us in
your case. We have agreed that at
our meeting on August 1 you will not reveal any confidential information to us.
We further agreed that nothing that occurs at the meeting will form the
basis for an objection on your part to our representing one of the other parties
in the action.
Thank you very much, and we look forward to our meeting.
Very truly yours,
Sarah Barnes
(For a discussion of "Initial Interview - Hearing
too Much," click here.)
Litigation – Joint/Multiple Representation
John Smith, Esq.
ABC Corp.
1 LaSalle Street
Chicago, Illinois 60603
Mr. Morton Jones
1 LaSalle Street
Chicago, Illinois 60603
Re:
Newton v. ABC Corp. and Morton Jones – Joint Representation
Gentlemen:
This is to confirm that this law firm will represent both
ABC Corp. and Morton Jones in the captioned action. We have discussed the potential for a conflict of interest to
arise between you. Neither you nor
we have as yet detected a basis for a conflict.
You both wish this firm to represent ABC Corp. and Mr. Jones in order to
present a united front and to keep expenses down. ABC Corp. will pay all
legal fees and expenses. We do not believe that will in any way compromise
our ability to represent Mr. Jones fairly and effectively.
During this joint representation we will share with both of
you all information that we gather from either of you and from Mr. Newton and
from third parties. If we learn
something from one of you that we think the other needs to know, we will
disclose the information to the other. If
we learn something in confidence from one of you that we do not believe is
relevant to the other and that the other does not need to know, we will not
share the information with the other.
Conflicts under these circumstances sometimes arise.
One example would be where we discover evidence that one of you may have behaved
as alleged by the plaintiff. Others could be where you disagree on trial
strategy or the appropriateness of a settlement.
In the event a conflict does develop between ABC Corp. and
Mr. Jones, this law firm will have the right to terminate its representation of
Mr. Jones and continue on behalf of ABC Corp.
We will have the right to take positions adverse to Mr. Jones and use
information that we obtained from Mr. Jones during our representation of him.
There may be circumstances where this would not be appropriate, and a court
might not permit it.
This is further to confirm that we have urged Mr. Jones to
retain other counsel to review this letter and the arrangement proposed above.
Very truly yours,
Sarah Barnes
Agreed:
Morton Jones:
ABC Corp.
By:
(Caution: this is a highly aggressive
letter, particularly the part about being able to stay in the case.
It is based upon the discussion of In
re Rite Aid Corp. Securities Litigation v. Grass, 139 F. Supp. 2d 649 (E.D. Pa. April 17, 2001), and Zador
Corp. v. Kwan, 37 Cal. Rptr. 2d 754 (Cal. App. 1995). To go there,
click here. Obtaining
the agreement is one thing. Defeating
a motion to disqualify is quite another. The
tribunal will be most concerned about the sophistication of the individual party
and his or her ability to understand the implications of the agreement.)
Advance Waiver
John Smith, Esq.
ABC Corp.
1 LaSalle Street
Chicago, Illinois 60603
Re:
Advance Waiver for Other Matters
Dear John:
You are retaining us to handle a single property tax appeal
because property tax appeals constitute a major part of this firm's practice.
In the past we have been adverse to ABC Corp. in both litigation and
transactional matters. We expect to
be asked by other clients to be adverse to ABC Corp. in the future.
You agree to waive in advance any conflict that might
result from our representing another client adverse to ABC Corp. in a matter
unrelated to the property tax appeal matter.
This includes matters that might come up during the course of our
representation of ABC Corp. and includes litigation adverse to ABC Corp.
We will not take on a matter adverse to ABC Corp. that would involve
confidential information obtained from ABC Corp. in the property tax appeal
matter.
Thank you very much.
Very truly yours,
Sarah Barnes
Agreed:
ABC Corp.
By:
(While it is clearly not unethical to seek such a waiver, making it stick
when the conflict arises is not foregone. See
the discussion of advance waivers on this page.
To go there, click here.
New Comment [22] to Model Rule 1.7, quoted there, emphasizes the need to be
specific as to what the future adverse matters might be. The above letter
is not. If you know what the future matters might be, it would behoove you
to state them in the letter. Note the specific reference to litigation in the form.
Several of the cases disapproving an advance waiver turned upon the
failure of the waiver to include a specific reference to litigation.)
Representing Purchaser and Seller
(Caution!
This is rarely appropriate. Go to "Commercial
Negotiations" at this site for opinions and decisions on this
practice.)
Mr. Clyde Owen
100 Main Street
Jonesville, Illinois 60521
Ms. Molly Bright
222 Grant Street
Jonesville, Illinois 60521
Re:
Waiver for Joint Representation in Sale of Molly’s Hardware, Inc.
Dear Clyde and Molly:
This firm has for some years represented each of you and
your respective businesses. Now,
Clyde wishes to purchase Molly’s business.
You have both asked this firm to represent both of you in the
transaction. I explained it would
be best if you each sought another lawyer or law firm. This is particularly true because we have obtained much
confidential information from each of you over the years.
Some of the information from one of you may be important to other in
evaluating the terms of the sale.
You both have persisted in getting us to act for both of
you, because that will avoid the cost of educating new lawyers and the cost of
involving two law firms. We have
agreed to do so. We expect you to
agree on the principal terms of the sale without our involvement. This is particularly true as to price. We have explained to you that we must be forthcoming to each
of you about what we know about, or learn from, the other, to enable you to make
informed judgments about the transaction. There
cannot be any secrets among us relating to this transaction.
If, during the transaction, we believe we cannot represent
both of you fairly and effectively, we will have to withdraw from representing
both of you.
I urged you both to seek the advice of other lawyers about
the wisdom of proceeding on this basis. If
you agree to the above, please sign at the space below.
Very truly yours,
Sarah Barnes
Agreed:
Clyde Owen:
Molly Bright:
(Note:
most states adopted ABA Model Rule 2.2. It
appears to apply to most multiple representations in transactions.
It also appears to require that whenever multiple clients have a falling
out, the lawyer must withdraw completely. It
does not allow for a consent for the lawyer to continue on behalf of anyone in
the transaction. That is why the
letter says the lawyer will withdraw from representing both parties.
The ABA House of Delegates removed Model Rule 2.2 in February 2002, and
substituted more specific comments to new Rule 1.7.)
Estate Planning – Simultaneous Representation
of Husband and Wife
Mr. and Mrs. James Smith
1 Maple Street
Jonesville, Illinois 60521
Dear Mr. and Mrs. Smith:
We will be representing both of you in the preparation of your estate plans.
We encouraged you to obtain separate counsel, but for reasons of expense, you
asked us to represent both of you.
It is the policy of this firm to seek an agreement in such cases regarding
the sharing of confidential information. If
we learn anything from one of you that we believe the other needs to know in
connection with our representation, we will tell the other.
If we learn something in confidence from one of you that we do not
believe is germane to the representation of the other or that the other does not
need to know, we will not tell the other.
Very truly yours,
Sarah Barnes
Agreed:
James Smith:
Emily Smith:
(This provision would be less jarring if
tucked into an engagement letter containing the scope of the engagement and
provisions relating to fees.)
Estate Planning – Dealing with other Family Members
Mr. James Smith, Jr.
11 Elm Street
Jonesville, Illinois 60521
Re:
Representation of Your Parents
Dear Jim:
As you know we have been representing your parents on estate planning and other
matters for many years. You have
now, for the first time, retained us to revise your will and trust.
You and I have discussed the difficulties of representing multiple family
members and have agreed upon an approach to handling family information.
First, while we have no current information that would
suggest this would happen, one or both of your parents could ask us to make
changes in their estate plans to your disadvantage. You agree that we may
follow your parents' instructions in this regard.
Moreover, any information regarding your parents’ affairs will remain
confidential with us. That means,
for example, if either of them takes some action with respect to his or her
estate or property that is detrimental to you, we will not disclose that action
to you. We would hope and expect
that various members of your family will exchange information where appropriate.
This will not be our role, however.
Very truly yours,
Sara Barnes
Agreed:
James Smith, Jr.:
(Note: the above assumes the son already knows that
Barnes represents his parents. What if the son does not know? In
that case, Barnes could not get the son's consent without disclosing that she
represents the parents, something the parents may not want the son to
know. And, Barnes cannot go to the parents for consent to tell the son
without disclosing to them that she intends to represent the son, something the
son may not want the parents to know. Solution? There may not be one.)
Creation of New Business – “I Am not your Lawyer”
(Note: this is a very important letter,
and you should always write it, particularly where you have met with people
during planning meetings that you have no intention of representing.)
Mr. Owen Smith
999 N. Barksdale St.
Jonesville, Illinois 60521
Re: Who Will Be Clients,
and Who Will not Be
Dear Owen:
It was good to meet you yesterday. You and Ned Green are going to start a new business,
tentatively called Green’s Cards. It
will probably be a corporation; we are looking into that.
The purpose of this letter is to confirm our conversation yesterday,
during which I informed you that this firm will be representing Ned and the new
company. We do not represent you
personally. You will need to
consult with your own lawyer on issues relating to you.
We understand that you will be the COO of the new company.
We expect to have much contact with you in that role.
Please understand, however, that in that role you, personally, will not
be our client.
Thank you very much, and we look forward to working with you.
Very truly yours,
Sarah Barnes
Agreed:
Owen Smith:
(Go to "Joint/Multiple Representation" -
"Unintentional" Joint/Multiple Representation by clicking here.)
Creation of New Business –
Relationship with Minority Shareholders or Limited Partners
Mr. Ralph Newland
444 N. Vine St.
Jonesville, IL 60521
Re: Formation of Green’s Cards, Inc.
Dear Mr. Newland:
We understand that you will be one of several minority shareholders of Ned
Green’s new company. As Green’s
Cards’ counsel we will have to communicate with you from time-to-time.
While we have have never met you, we did want to make sure that there
were no misunderstandings about whom we are representing.
Our clients are, and will continue to be, Ned individually and Green
Cards, Inc. We do not represent,
and will not be representing, any of the minority shareholders, directors, or
employees of the company.
Very truly yours,
Sarah Barnes
(It is our view that personal
contact with “non-clients” creates the most potential for misunderstandings
about who represents whom. In the
case of closely held entities, misunderstandings may arise even
absent personal contact. Thus, a
letter like this would seem advisable, where there are
minority shareholders, limited
partners, minority members of L.L.C.s, and so forth. Go to "Joint/Multiple Representation" -
"Unintentional" Joint/Multiple Representation by clicking here.)
Doing Business with Client – Taking Second
Mortgage on House to Secure Fee –
Compliance with Rule 1.8(a)
Mr. Miles Prescott
666 N. Ross St.
Jonesville, Illinois 60521
Re: North
v. Prescott – Change in Fee Arrangement
Dear Miles:
In light of the slow-down at your business and your inability to pay our fees
when due, we have agreed that you will convey to us a second mortgage on your
home as security for the payment of our fees.
We have estimated that our remaining fees will be approximately $50,000,
so the mortgage will be in that amount. We
will charge interest at the rate of X% per year on fees for which payment is
late. We asked you to ask your
accountant what a fair rate would be, and that is the rate he gave you.
What this means is that if you are unable to pay our fees on the schedule we
have agreed upon, we could foreclose on the second mortgage.
If we did that, it would be financially disruptive for you and could even
cause you to lose your home.
We want you to consult with another lawyer before proceeding with the mortgage
transaction. Please do this within
the next two weeks, so that we can proceed.
If you need more time, let us know.
You have a right not to see another lawyer, but we believe you should.
When you are ready to do so, please sign the copy of the letter at the place
indicated on the bottom. Thank you
very much.
Very truly yours,
Sarah Barnes
I have read the above and I agree to it. I
believe that I understand it. I
(did) (did not) review this with another lawyer.
I had sufficient time to do so. Miles
Prescott
(We believe this letter complies
with Model Rule 1.8(a). Do not
attempt such a waiver without reviewing
the relevant state’s version of that rule.
It is our belief that all “mid-stream” fee changes should
comply with that rule.)
Termination of Representation Letter
Mr. Miles Prescott
666 N. Ross St.
Jonesville, Illinois 60521
Re: North
v. Prescott – Conclusion
Dear Miles:
Finally! All
the appeals are over, and you have paid our fees.
You have treated this firm very well, particularly in agreeing to give
the second mortgage. We are
grateful your cash position improved, and we were able to cancel the mortgage.
There is nothing left to be done, and our representation of you has ended.
We would very much like to serve you in the future, if that becomes
necessary. If you need our services
in the future, give us a call, and we will prepare a new engagement letter.
Very truly yours,
Sarah Barnes
(The purpose of the letter is to avoid the
inference that the firm is going to be looking out for the former client.
It is also to make clear that the former client is not a current client
for conflict of interest purposes. The
above form is not “perfect.” A
more effective letter would have said:
The case is over, you have paid our fees, and you are no longer a client.
That means we have no further duty to look after your interests on any
matters. That also means we are
free to sue you for other clients on matters not related to the completed
lawsuit