Vol. 34, No. 3, 46. Ethically Speaking.

• Author: by John M. Burman Carl M. Williams Professor of Law and Ethics University of Wyoming College of Law

Wyoming Bar Journal

2011.

Vol. 34, No. 3, 46.

Ethically Speaking

Wyoming Bar JournalIssue: June, 2011Ethically Speakingby John M. Burman Carl M. Williams Professor of Law and Ethics University of Wyoming College of LawWaiving a Conflict of Interest and Revoldng tliat Waiver: Part III - Conflicts Involving Prospective and Former Prospective Clients

The last two Ethically Speaking columns addressed waiving and revoking waivers of conflicts of interest involving current clients,(fn1) future conflicts,(fn2) and conflicts with former clients.(fn3) Part II (future conflicts and conflicts involving former clients) noted that "conflicts involving prospective and former prospective clients will be addressed in the next issue."(fn4)

As observed in last issues column, there are two reasons for dividing the subject of waiving conflicts and revoking those waivers into three columns:

First, one column that combined these topics .. . would have been far too long. .... Second, although conflicts of all kinds and the issues that arise overlap, the conflicts addressed in [April's] column, and those to be discussed in the next issue [this one], are treated significantly differently than conflicts involving current clients.(fn5)

Conflicts Involving Prospective Clients

Before discussing the waiver of conflicts involving prospective clients, it is useful to define "prospective client." After all, before a client becomes a current client, he, she or it has to be something else. That something else is a "prospective client."

The Rules of Professional Conduct ("the Rules") define a "prospective client" as "[a] person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter ... "(fn6) Naturally, it is generally necessary for the prospective client "to reveal information to the lawyer during an initial consultation prior to the decision about formation of a client-lawyer relationship."(fn7) Similarly, "[t]he lawyer often must learn such information to determine whether there is a conflict of interest with an existing or former client and whether the matter is one that the lawyer is willing to undertake.(fn8) While there must be some communication between a lawyer and a prospective client, that communication should be limited. "[A] lawyer considering whether or not to undertake a new matter should limit the initial interview to only such information as reasonably appears necessary for that purpose."(fn9)

The information learned by a lawyer from a prospective client may create an actual or potential conflict of interest. Such a conflict may both require the lawyer to decline representation of the prospective client and discontinue representation of a current client (the interview may reveal information that could be used to the disadvantage or advantage of a current client-and information that a current client would like to know.(fn10))

To avoid being potentially disqualified from representing a current client by learning such information, a lawyer may condition the interview on the prospective client's agreement that the lawyer will not be disqualified from representing any current clients.(fn11) Even with such an agreement, however, the lawyer still owes a duty of confidentiality to the former prospective client and may not disclose the information the lawyer learned to a current client.(fn12)

A person or entity is not a "prospective client" simply by virtue of meeting with or providing confidential information to a lawyer. "A person who communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship ... is not a "prospective client."(fn13) (A person may not, in short, disqualify another lawyer simply by unilaterally furnishing confidential information, even potentially damaging information, to that lawyer.) Furthermore, since the communications between a lawyer and a prospective client are "usually ... limited in time and depth ... "(fn14)a prospective client "should receive some but not all of the protection afforded clients."(fn15)

Among the duties owed to a prospective (or former prospective) client are the duties of confidentiality(fn16) and loyalty.(fn17) Those duties mean, inter alia, that a lawyer must either avoid certain conflicts of interest or obtain proper waivers.

When a prospective client discusses a matter ("matter" is the word often used in the Rules to describe a legal issue(fn18)) with a lawyer, the discussion may suggest a possible conflict of interest. Rule 1.18, the Rule about prospective clients, addresses waivers of conflicts of interest, and refers to waiver by "the affected client and the prospective client ... "(fn19) As discussed below, the former reference, to "the affected client," seems to refer to either an "affected" current client or an "affected" former client. The latter reference, to "prospective client," seems to refer to either a prospective client who is going to become a client, or to a former prospective client (a prospective client that never became a current client).

If the meeting with the prospective client indicates a possible "concurrent conflict" (the term used in the Rules to describe a conflict involving a current client(fn20)), the lawyer should do two things. First, determine whether the current client may waive the conflict(fn21) (if the conflict may not be waived, the lawyer may not ethically ask for a waiver, and a waiver will not be efiective if given.(fn22)) If so, the second task for a lawyer is to follow the steps outlined in this column two issues ago with respect to the current client,(fn23) and, as discussed below, with respect to the prospective client, too.(fn24) If, by contrast, the potential conflict involves a former client, the lawyer should determine whether the conflict may be waived, and, if so, follow the standards for waiving conflicts involving a former client, as set forth in the April issue of the Wyoming Lawyer.(fn25) The remaining question, then, is how to address the issue of the prospective client waiving the conflict.

A prospective client that is being asked to waive a potential or actual conflict with a current or former client is about to become a current client. It makes sense, therefore, to require a waiver by a prospective client that is about to become a client to meet the standards that apply to the waiver of conflicts by current clients, and that is what the Rules require. "[B]oth the afiected client and the prospective client have made an informed decision to allow the representation, confirmed in writing signed by the affected client and the prospective client ... ."(fn26) Two phrases are in bold. The first, "informed decision," because it is a defined term. The second, "in writing signed by the afiected client and the prospective client," to emphasize the requirement in Wyoming, that is not in the ABA's Model Rules,(fn27) or the rules of many jurisdictions (such as Colorado(fn28)), to have the client and the prospective client personally sign the waiver.

The term "informed decision" is defined in Wyoming, but not in the Model Rules, to mean: "the decision 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."(fn29) (The requirement to obtain a client's or a prospective client's "informed decision" to waive a conflict is really just a restatement of a lawyer's general obligation "to explain a matter to the extent reasonably required to permit the client to make informed decisions regarding the representation ... ."(fn30))

To make an informed decision about whether to waive a conflict of interest, a person needs to know any material information about the conflict. Information is "material" (the term is not defined by the Rules) if it might change the decision(fn31) (of whether to waive the conflict). The material information about a conflict is essentially the same for a prospective client, a current client, or a former client. Any of the foregoing should, therefore, be informed (with an appropriate explanation) of the following:(fn32) 1. What is a conflict of interest, in general? (Many clients will not know; a conflict of interest exists if there is something (anything) which might prevent the lawyer from putting the client's interests first); 2. What is the particular conflict, actual or potential, in th.is matter? 3. How the particular conflict of interest may afiect the lawyer's actual or potential representation; 4. That the person being asked to waive the conflict of interest has the right and is encouraged to seek the advice of an independent lawyer in determining whether to waive the conflict; 5. If the conflict has arisen or may arise because of the lawyer's representation of multiple clients, the effect of such representation on the ethical duty of confidentiality and on the attorney-client privilege (comments [29] through [31] to Rule 1.7 are very helpful in explaining this); and 6. The person...