Advance Conflict Waivers–Viable or Problematic?
In 2021, the State Bar of Nevada Standing Committee on Ethics and Professional Responsibility published Formal Opinion No. 58, addressing the permissibility of prospective conflict waivers (also known as “future conflict waivers” or “advance conflict waivers”) under Nevada Rule of Professional Conduct 1.7
Under Nevada Rule 1.7(b), a client may waive a conflict of interest if: “(1) The lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) The representation is not prohibited by law; (3) The representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) Each affected client gives informed consent, confirmed in writing.”
According to the Opinion, future conflict waivers may be permitted under Rule 1.7, so long as the attorney “undertake an independent assessment of each client and each situation consistent with the attorney’s ethical obligations in order to ensure the client fully appreciates the significance of the waiver being sought.”
If “the lawyer can properly explain to the client all of the material risks associated with the future conflict[,]” then the future waiver will be considered effective in obtaining consent to a future conflict. By contrast, waivers that are open-ended will most likely not be considered effective enough to explain such material risks, and therefore will not be considered effective valid conflict waivers.
Though each case will present a fact-specific inquiry, the validity of a future conflict waiver will likely depend on the existence of informed consent by the client, and “may also depend on whether the client was represented by independent legal counsel in determining whether to give consent and whether the consent is ‘limited to future conflicts unrelated to the subject of the representation.’”
To meet the “unrelated” threshold, a matter should not “involve the same transaction or legal dispute that is the subject of the lawyer’s present representation of the consenting client.” Further, in order to protect the confidentiality of client information, the representation should not be “of such a nature that the disclosure or use by the lawyer of information relating to the representation of the consenting client would materially advance the position of future clients.”
Additionally, the Opinion stresses that a future conflict waiver may be deemed invalid if the scope of the original representation changes in a material way.
The Opinion references an Eighth Circuit case in which a law firm sought to represent a mortgagee in a foreclosure action on a mortgagor’s tax credit bond that the law firm had previously prepared for the mortgagor.
The court found a future conflict waiver inadequate because it did not explain to the mortgagor the risks, benefits, advantages, or disadvantages the mortgagor might face if the firm represented the mortgagee. See Cedar Rapids Bank & Tr. Co. v. Mako One Corp., 919 F.3d 529, 536 (8th Cir. 2019), cert. denied, 140 S. Ct. 848, 205 L. Ed. 2d 468 (2020).
The court held: “Because there was no informed consent and because the firm represented the mortgagee against the very same work it conducted for the mortgagor, there was no valid waiver.”
In support of its decision, the Nevada Committee cites to Colorado Formal Ethics Opinion 135 (2018) and Opinion 724 from the New York County Lawyers Association, which have likewise opined that whether a future conflict waiver is permissible depends on the client’s reasonable understanding of the risks of such a waiver, and on the individual circumstances of each case. For some of our earlier coverage on advance waivers click here.
