The Unintended Costs of Advance Waivers of Future Conflicts
DOI:
https://doi.org/10.5195/lawreview.2024.1050Abstract
The American Bar Association (“ABA”) unenthusiastically recognized advance waivers of future conflicts for the first time in a 1993 formal opinion. These allow lawyers to take on prospective clients whose interests will be adverse to current clients at some point in the future. They also sidestep the ethics rule requirement of obtaining true informed consent from a client to waive a conflict of interest because, at the time of signing, the conflict is not yet ripe.
After a full-court press by its own Business Law Section Ad Hoc Committee during the Ethics 2000 Commission’s review of the Model Rules of Professional Conduct, the ABA repealed its limited approval in favor of a broader acceptance of advance waivers in 2005. After all, advance waivers mean lawyers and law firms can grow profits by not having to turn down clients with conflicting interests.
The intended consequences of such waivers are to allow larger law firms to keep as much business as possible, while also permitting large and sophisticated clients an unfettered choice of legal representation. They also come with some unintended consequences: keeping large clients condensed in a small number of large firms, thereby creating industry oligopolies where diversity among partners is staggeringly low; increasing the opportunity to exercise confirmation bias in Big Law; and placing the burden on courts to police these agreements in what has proven to be a disorderly fashion.
This Article asserts that advance waivers of conflicts should be carefully scrutinized and perhaps disallowed because they exist primarily to permit Mega Big Law firms to monopolize business and crowd out competition. The use of advance waivers by industry lawyers may also have a dampening effect on diversity efforts by increasing confirmation bias, and can prevent smaller and mid-sized law firms from establishing additional areas of expertise. Inconsistent opinions by courts across the country and the lack of guidance from ethics policymakers make crafting reliable rules about drafting enforceable advance waivers nearly impossible. Instead, Mega Big Law firms could simply seek informed consent from sophisticated clients at the time a potential conflict arises, but not before.
Delaying informed consent to the point at which there is a conflict could satisfy increasingly chaotic courts, as well as allow policymakers to show the rules of professional conduct apply to all law firms regardless of size or wealth.
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