Of walls and waivers in conflict disputes

By Diane Karpman

Karpman

Lawyers worry about conflicts, as they should, just about all the time. Two of the best remedies, walls and waivers, were recently considered in a couple of decisions. Both of those provocative cases merit consideration.

Some authorities maintain that for a consent to be effective, a client’s “wet signature” must be affixed to the proposed consent to waive a conflict of interest. Rule 3-310 (A)(2) requires “the client’s or former client’s written agreement to the representation following written disclosure.”

In a recent case, there was a series of e-mails over months regarding the terms of an advance consent. The court construed consent by cobbling together the parties’ exchanged e-mail, without a traditional “wet signature.” UMG Recordings v. MYSPACE, (2007 CD Calif) 526 F.Supp. 2d 1046. The court also supported an ethics wall that was established before the conflict dispute arose. An unusual aspect of this case is that by dropping a particular defense, the firm was able to cure a substantially related conflict, although it was required to pay the fees incurred in the disqualification motion. That demonstrates that in these equitable disqualification motions, courts have tremendous power to fashion appropriate remedies.

This may be shocking, but there are cases where well-meaning lawyers have sent clients consents, but the clients didn’t return a signed copy. Then, the clients have asserted claims of legal malpractice against the lawyers, after fully accepting the lawyers’ good faith rendition of legal services. The clients held the consent hostage, so that if they didn’t like the outcome of the case or the attorney’s bill, they could play that “card” to the lawyers’ detriment. Thus, the “consent” was sort of an ace in the hole.

However, remember, “The Rules of Professional Conduct were . . . not intended as a protection for clients who wrong their lawyers.” In re Kirsh (9th Cir. 1992) 973 F 2d 1454, 1461. 

In another recent waiver case, the court clarified that in a class action, only the named plaintiffs need to consent, as opposed to all members of the class. This supports common sense, since it may be impossible for a lawyer to obtain the consents of hundreds of class members. Sharp v. Next Entertainment, Inc. (May 28, 2008, B194374)_Cal.App. 4th_).

When a client gives informed consent, fully apprized of the benefits and burdens, then the court effectuates the client’s freedom of contract and personal autonomy to “choose whatever champion the client feels is best suited to vindicate the client’s” rights. (Zador v. Kwan (1995) 31 Cal. App. 4th 1285, 1295). The justification for a writing is that it impresses the client with the seriousness of the decision and eliminates ambiguities that could arise without a writing. It protects the lawyers from clients who have “selective memory.”

Both of these recent cases had advance waivers and ethics walls. Incidentally, let’s use the term ethics “wall” as opposed to ethics “screen.” Our clients deserve something that is solid and impregnable, because we all know that screens have holes and that stuff leaks through them.

• Diane Karpman, a legal ethics expert, can be reached at 310/887-3900 or at karpethics@aol.com.