Unwaivable Conflicts of Interest
The rules provide for waivers, but not every conflict can be waived.
LACBA Update, August 2012
By Kevin Mohr, professor, Western State College of Law, in Fullerton, California. He serves as the Consultant to the State Bar’s Rules Revision Commission and is a member of LACBA’s Professional Responsibility and Ethics Committee. The opinions expressed are his own.
Is there such a thing as an unwaivable conflict of interest in California? The California Rules of Professional Conduct generally permit a lawyer to commence or continue a representation in the face of a conflict so long as the lawyer complies with certain requirements concerning disclosure and/or consent. For example, Rule 3-300 prohibits lawyers from entering a business transaction with a client unless the lawyer adheres to a rigorous disclosure protocol in obtaining the client’s consent.1 Similarly, Rule 3-310(C) prohibits a lawyer from accepting or continuing the representation of two or more clients where the clients’ interests potentially or actually conflict. The rule, however, expressly permits the lawyer to accept or continue the representation so long as the lawyer has obtained “the informed written consent of each client.”2 Other rules, for example, Rule 3-310(B), require that a lawyer need only provide “written disclosure” of certain personal or professional relationships—No client consent is required.3
The only apparent exception to the rules providing a waiver option appears to be Rule 3-120, which prohibits a lawyer from having sexual relations with a client.4 The rule is silent on a lawyer’s ability to obtain a client’s consent to the prohibition. Thus, a cursory reading of the rules suggests that the only unwaivable conflict under California law concerns sexual relations with a client. Reliance on that conclusion would be misplaced, however, as California courts have recognized several situations in which a lawyer would be precluded from seeking a client’s waiver of a conflict.
Current California law identifies five situations where a client’s waiver would be unavailing: 1) the lawyer is unable to provide competent representation to each client; 2) the representation is prohibited by law; 3) the representation involves assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; 4) the lawyer is precluded by duties to one client from making sufficient disclosure to the other, rendering the latter’s informed consent unobtainable; 5) the client lacks capacity to give informed consent.5 Each situation is described below.
1. Inability to provide competent representation. This first category should not be surprising. Current Rule 3-110 requires lawyers to deliver legal services competently. If a lawyer were unable to provide legal services competently to a client as a result of conflicting duties to another client, the lawyer should not be permitted even to seek consent from the former.6 Klemm v. Superior Court7 is the leading case for this proposition. Although Klemm held the lawyer, who represented a divorced couple who were both opposed to the government’s claim for child support, need not be disqualified, it stated:
As a matter of law a purported consent to dual representation of litigants with adverse interests at a contested hearing would be neither intelligent nor informed. Such representation would be per se inconsistent with the adversary position of an attorney in litigation, and common sense dictates that it would be unthinkable to permit an attorney to assume a position at a trial or hearing where he could not advocate the interests of one client without adversely injuring those of the other.8
Although the court’s concern with the undivided loyalty owed each client is evident, the infirmity in representing adverse interests in such situations is best characterized as rendering the lawyer incapable of providing competent representation to both.9
2. Prohibited by law. The second category concerns situations where the conflicted representation is prohibited by law.10 For example, under Business and Professions Code Section 6131, former prosecutors are prohibited from consulting with the defense in a matter in which they were personally involved as prosecutors.11
3. Advancing adverse interests before a tribunal. The third category concerns the representation of adverse interests in a matter before a tribunal. In an adversarial system whose integrity and effectiveness largely depends on parties being represented by loyal advocates similarly knowledgeable and skilled, permitting the same lawyer to advance directly adverse positions in a contested matter before a tribunal would be, in Klemm’s words, “unthinkable.”12
The prohibition does not apply only when a lawyer purports to represent both plaintiff and defendant, or cross-plaintiff and cross-defendant. For example, in Woods v. Superior Court,13 a lawyer represented a corporation owned by a husband and wife that was the subject of dispute in their marital dissolution. So far, so good. The lawyer, however, also represented the husband in the marital dissolution. The court concluded that even if the wife had not disclosed confidential information to the lawyer material to the marital dissolution, by virtue of the lawyer representing the wife’s interests in the family corporation, she continued to be the lawyer’s client to whom the lawyer owed a duty of loyalty. The court noted conflict rules are intended “not only to prevent dishonest conduct, but also to avoid placing the honest practitioner in a position where he may be required to choose between conflicting duties or attempt to reconcile conflicting interests.”14
Similarly, in Forrest v. Baeza,15 the court held in a shareholder derivative suit a lawyer may not represent both a closely held corporation and the directors/shareholders accused of wrongdoing. It would not be possible for the lawyer to obtain informed consent to representing both interests. The court reasoned that “where the only shareholders of the corporations are also the directors involved in the controversy, to allow the shareholders to consent on behalf of the corporation would render [the rule] meaningless.”16
4. Inability to provide adequate disclosure. The fourth category of unwaivable conflict goes to the very foundation underlying an effective conflict waiver—that a client who has received adequate disclosure concerning conflicts can make an informed decision whether to permit the conflicted representation. Under current Rule 3-310(A)(2), “informed written consent” means “the client's or former client's written agreement to the representation following written disclosure.” Under 3-310(A)(1), “disclosure” means “informing the client or former client of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to the client or former client.” Thus, whether a client’s consent is “informed” depends on the quality of the disclosure. What constitutes adequate disclosure in turn depends on the specific facts and circumstances.17
It should be apparent that if a lawyer is precluded from providing a client with sufficient disclosure because another client has prohibited the lawyer from disclosing to the first client information the first client needs to make an informed decision, the first client cannot give informed consent.
5. Client lacks capacity to give informed consent. This situation offers the opposite side of the coin from a lawyer’s inability to make a sufficient disclosure. Although diminished capacity presents a broad spectrum of abilities, a client with significantly diminished capacity would likely be unable to comprehend a lawyer’s disclosure concerning the risks associated with a conflicted representation and consequently would be unable to give informed consent to the representation.
The foregoing discussion shows that although the California rules generally provide lawyers with the ability to obtain a client’s informed consent to waive a conflicted or potentially conflicted representation, there are situations when a lawyer will be precluded from seeking such a waiver. Lawyers will be well served to familiarize themselves with these situations.
1 See http://rules.calbar.ca.gov/Rules/RulesofProfessionalConduct/CurrentRules/Rule3300.aspx. A recent article in this space discussed Rule 3-300’s requirements in detail. See Joan Mack, Written Disclosure Requirements: More Than a Technicality, L.A. County Bar Assn. County Bar Update (April 2012), available at https://www.lacba.org/news-and-publications/lacba-update/past-ethics-articles/2012-apr-ethics-mack.
2 See http://rules.calbar.ca.gov/Rules/RulesofProfessionalConduct/CurrentRules/Rule3310.aspx.
3 Rule 3-310(B) addresses the potential consequences to a client of what might generally be referred to as the personal or professional relationships of a lawyer.
4 See http://rules.calbar.ca.gov/Rules/RulesofProfessionalConduct/CurrentRules/Rule3120.aspx.
5 These five situations are identified in one of the proposed new rules drafted by the State Bar Rules Revision Commission, which has not yet been approved by the California Supreme Court. See Proposed Rule 1.7, available at http://ethics.calbar.ca.gov/Portals/9/documents/CRRPC/Proposed%20Rules%20of%20Professional%20Conduct.pdf
6 Compare Rule 3-400 (“Limiting Liability to a Client”), which provides in part that a lawyer shall not “(A) Contract with a client prospectively limiting the member's liability to the client for the member's professional malpractice.” A lawyer should not be able to circumvent the prohibitions in Rule 3-400 through a conflict waiver.
7 Klemm v. Superior Court, 75 Cal. App. 3d 893 (1977).
8 Id. at 899.
9 See also Gilbert v. National Corporation for Housing Partnerships, 71 Cal. App. 4th 1240, 1254 (1999); L.A. County Bar Assn. Ethics Op. 471 (12/21/92), available at http://archive.lacba.org/Files/Main%20Folder/Documents/%20Ethics%20%20%20Opinions/Files/Ethics_Opinion_471.pdf.
10 See Proposed Rule 1.7(b)(2) and Comment  of the proposed new rules drafted by the State Bar Rules Revision Commission.
11 See http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=06001-07000&file=6125-6133.
12 Klemm, 75 Cal. App. 3d, at 899.
13 Woods v. Superior Court, 149 Cal. App. 3d 931 (1983).
14 Id. at 936.
15 Forrest v. Baeza, 58 Cal. App. 4th 65 (1997).
16 Id. at 76.
17 For an example of disclosure required in the context of a joint representation of employer and employee, where lawyer has an established lawyer-client relationship with employer, see L.A. County Bar Assn. Ethics Op. 471 (12/21/92), pp. 6-9, which identified several factors that should be considered in obtaining the informed consent of both clients, cautioning that they were “neither exclusive nor all encompassing.” See http://archive.lacba.org/Files/Main%20Folder/Documents/%20Ethics%20%20%20Opinions/Files/Ethics_Opinion_471.pdf.