"I take that back!" Revocation of a Conflict of Interest Waiver

Among the many ethical obligations attorneys face, addressing conflicts of interest stands out as a cornerstone. Conflicts sit at the dangerous crossroads of attorney ethics and legal malpractice.

While waivers can provide a workable solution, the revocation of such waivers introduces unique challenges. The reality remains that clients can take back their waiver at any time.

Proper risk management can ensure that attorneys effectively navigate these issues, ensuring the trust and confidence of their clients.

Understanding Conflict of Interest Waivers

A conflict of interest arises when an attorney’s duty to one client might compromise their duty to another or when their personal interests interfere with their professional obligations. To address such conflicts, under the Rules clients can often provide waivers, giving informed consent for the attorney to continue representation despite the potential conflict.

For better or worse, waivers are not eternally binding. Clients have the autonomy to revoke their previously granted waivers, introducing a host of complexities.

At the outset, it is important to advise clients (in writing) of their right to withdraw the waiver at any time AND that their withdrawal does not necessarily mean you can continue to represent them at the expense of the conflicted client.

Grounds for Revocation of Waivers

A client may opt to revoke a waiver for various reasons:

1. New Info: A client may learn of new facts or circumstances that make the conflict more palpable or untenable.

2. New Circumstances: As cases and deals evolve, what was once a benign conflict can transform into a more serious one.

3. Trust Issues: The client may feel that the attorney is favoring the interests of another client over their own.

Risk Management Strategies

The revocation of a waiver can create operational, reputational, and legal risks. As such, law firms must be proactive in managing these risks.

1. Open Communication: From the outset, have clear channels of communication with the clients involved. Regularly apprise them of any developments which might exacerbate the conflict. If a client senses that information is being withheld, it might trigger mistrust and lead to revocation. Verbal and written communication together should be used but it is important to memorialize the ongoing dialogue in writing to the client throughout the process.

2. Document Everything: Documentation serves as evidence of the discussions and the client's understanding of the situation when they granted the waiver. If a dispute arises, well-maintained records can be invaluable. By memorializing conversations in writing you also allow the clients to note any inconsistencies and get ahead of any misunderstandings early.

3. Review Waivers Periodically: Circumstances change. Periodic reviews can preempt issues before they escalate. If you anticipate a worsening conflict, consider discussing with the client ahead of time. Set periodic review periods (both based on time and milestones in the case or deal). Conduct small random audits of waivers.

4. Avoid Dual Representation: In situations where the conflict could severely affect your judgment, it might be wise to avoid representing both parties, even if waivers are obtained. While this can often lead to increased expense for the clients, it is often the best course of action.

5. Use Outside Counsel: An outside perspective, protected by the attorney-client privilege can help. Consider seeking the advice of a legal ethics expert or outside General Counsel to assess the situation.

6. Insurance Considerations: Ensure that your malpractice insurance covers disputes arising from conflicts of interest. It's a prudent step to mitigate potential financial repercussions.

Handling a Revocation

If a client does choose to revoke their waiver, immediate action is necessary:

1. Immediate Notification: Inform all involved parties about the revocation. This transparency will ensure that no one is blindsided by the client's decision.

2. Assess Continued Representation: Depending on the severity of the conflict and the nature of the revocation, determine if continued representation of any impacted client is feasible or if withdrawal is the most ethical route.

3. Protect Client Interests: Regardless of the decision to continue or withdraw, your duty is to the clients. Ensure that all clients' interests are protected throughout the transition phase.

4. Seek ADR: If the revocation leads to disputes, consider mediation as a way to resolve disagreements amicably.

Conflict of interest waivers are invaluable tools, allowing attorneys to serve clients even when potential conflicts exist. However, the dynamic nature of legal proceedings and client relationships means that waivers, though granted, can be revoked.

For attorneys, understanding the grounds for revocation and implementing comprehensive risk management strategies is critical. These proactive measures not only uphold the integrity of the profession but also ensure that clients' interests remain paramount.

By keeping communication channels open, regularly reviewing waivers, and being prepared for possible revocations, attorneys can effectively navigate the complexities of conflicts of interest, fostering trust and transparency in their professional relationships.

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