Waive Your Worries Goodbye: The 4-step Process to Securing a Conflict of Interest Waiver.
A Liability Minute blog post on Conflicts of Interest written by ISBA Mutual Risk Management Counsel Jeremy N. Boeder of Tribler Orpett & Meyer P.C.
Conflicts of interest can present mere road bumps in the course of an engagement when addressed via appropriate conflict waivers. But lawyers too often fail to take proactive measures, or they take shortcuts that result in ineffective waivers. Though the process of obtaining a conflict waiver can seem daunting, valid waivers can be obtained by utilizing a simple four-step process.
1. Identify the Nature of the Conflict
The first step in obtaining an effective conflict waiver to identify the nature of the conflict via a conflict-check system and by reference to the Illinois Rules of Professional Conduct (the “Rules”). The following Rules should be consulted when seeking to identify the nature of a potential conflict:
Rule 1.7 Conflicts relating to direct adversity between current clients and conflicts based on material limitations on a lawyer’s ability to represent in an effective manner a current client due to the interests of another current client, a former client, or the lawyer’s own personal interests.
Rule 1.8 Conflicts arising from ongoing duties owed to former clients.
Rule 1.9: Specific conflicts scenarios.
Rule 1.10: Imputation of conflicts within a law firm.
Rule 1.11: Conflicts relating to work as a current or former government officer or employee.
Rule 1.12: Conflicts relating to employment as a third-party neutral, such as a judge, mediator or arbitrator.
Rule 1.18: Duties to prospective clients, upon which conflicts may arise.
2. Check the Rules to Determine Whether the Conflict Can be Waived and, If So, How
Each of the aforementioned Rules not only contains a description of the circumstances that will give rise to a conflict, but also identifies whether the conflict may be waived and, if so, how. In very limited circumstances, a conflict will be unwaivable, but most conflicts can be waived with the affected party’s informed consent.
Under the Rules, no conflict can be waived without the affected party’s informed consent. In some instances, that informed consent must be confirmed in writing. Sometimes the written confirmation must be signed by the client. Still other times the lawyer must recommend that the client have independent representation in relation to the waiver or, in very limited circumstances, the client must be independently represented in connection with the conflict. Such requirements can be easily identified by referencing the Rules.
3. Obtain Informed Consent
Informed consent serves as the foundation for every conflict waiver. Indeed, the Rules do not even mention conflict “waivers,” instead referring to the informed consent that must be given in order for a lawyer to act in the face of a conflict. But what does informed consent require? The Rules are instructive. Rule 1.0(e) defines informed consent as follows:
“Informed consent” denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.
Based on the foregoing, in order to obtain a client or former client’s informed consent, the lawyer must disclose all of the following to the affected party:
- The circumstances giving rise to the conflict or potential conflict;
- The lawyer’s assessment of the material risks to the affected party should the conflicted representation occur; and
- A discussion of reasonably-available alternatives to the proposed conflicted representation.
As with most aspects of the practice of law, shortcuts will not suffice. A failure to discuss in a thorough manner the circumstances, risks and alternatives will render a conflict waiver ineffective. When considering what information must be shared and how to explain the risks and alternatives, some lawyers find it helpful to put themselves in the client’s shoes. If you were in the client’s position, what would be important for you to know before making a decision as to whether to permit an admittedly-conflicted lawyer to continue to represent you? Remember, the objective is full disclosure.
4. Document the Waiver
After identifying the conflict and reading the relevant Rule(s), many lawyers will be surprised to note that most conflicts can be waived without a written memorialization of any sort. But the prudent lawyer will consider why a conflict waiver was sought in the first place: a conflict of interest exists that would disqualify the lawyer from representing the client absent the client’s informed consent. And the prudent lawyer will also recognize that acting in a conflict of interest without an appropriate waiver subjects the lawyer to potential ethical discipline, malpractice liability, disqualification, disgorgement of fees, and, in some cases, criminal liability. Given the serious consequences if a determination is made that the client did not offer informed consent to the arrangement, why would a prudent lawyer ever not document the waiver in a writing?
Don’t let a conflict of interest derail your practice. If you have questions about how to identify the types of conflicts of interest, how to implement a conflict of interest checking system, or want to see what an example conflicts waiver looks like, download our comprehensive guide here, or contact our Risk Management Consultation Service. We want to help you avoid one of the top causes of legal malpractice claims.