Wednesday, April 15, 2015

Advanced Waivers – On the Offensive

University of California, Hastings College of the Law professor Richard Zitrin takes to the pages of The Recorder to take great offense: "Viewpoint: Law Firms Put Themselves Before Clients With Advance Waivers" --
  • "Despite the [California] rules, which clearly prohibit almost all such waivers, clients—particularly big, institutional clients—are routinely being asked by law firms, principally larger firms, to agree to broad, open-ended advance waivers."
  • "By the new millennium, large law firms were pushing for a liberalization of the advance waiver concept. They reasoned that given the wide-ranging list of clients and possible future clients in their books of business, it was more than reasonable to ask their clients to consent to an open advance waiver, even though neither the firm's future client, nor the future case, would be discernible to the current client."
  • "In 2002, the American Bar Association modified its own conflicts rule, Model Rule 1.7, to require 'informed consent, confirmed in writing.' But it also gave substantial recognition to the concept of a broad advance waiver by adding Comment 22, which, edited, says in part: 'If the consent is general and open-ended, [and] 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.' The ABA followed this broad comment with Formal Opinion 05-436, which liberalized prospective waivers substantially, particularly where the client is a "sophisticated" user of legal services."
  • "Yet, over the past five to seven years, I have seen what seems like innumerable advance waivers presented routinely to so-called 'sophisticated' clients by California law firms. These waivers take the 'substantial relationship test,' long used to determine whether a firm could be adverse to a former client, whether the former representation is "substantially related" to the new representation, and use it to define law firm adversity against a current client."
  • "These law firms have conflated a never-accepted proposal for a comment to a rule—not even in the rule itself—into a broad conflicts waiver they see as an enforceable document. But the problem of informed consent does not go away merely by signing a consent that does not inform. The waivers I have seen generally ask clients to consent to the firm representing any new client in any matter against the current client, so long as the representations are not substantially related."
  • "At this point, matters have not gone nearly that far. And, at least from a de jure perspective, advance waivers have still not been widely approved, with only a few jurisdictions formally accepting a broad formulation. But it is clear that in day-to-day practice, many law firms with "sophisticated clients" have jumped the gun on the rules. That may mean the best interests of clients, big and small, sophisticated or not, are taking a back seat to the best interests of law firms."

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