If one client revokes a conflict waiver after a falling out, must the lawyer drop the other client too?

Plain-English summary

The opinion addresses whether a lawyer may rely on a written conflict waiver signed with informed consent by two or more parties after an unforeseen falling out, so that the lawyer need not give up a long-term client just because another signatory revokes the waiver and objects to the continued representation.

Starting from comment [21] to Rule 1.7, the opinion confirms a client who consented to a conflict may revoke that consent at any time. But revocation does not necessarily end the other representation. Whether one client's revocation of consent to his own representation bars the lawyer from continuing to represent the other client depends on the nature of the conflict, whether the client revoked because of a material change in circumstances, the reasonable expectations of the other client, and whether material detriment to the other client or the lawyer would result.

The opinion draws on the Restatement (Third) of the Law Governing Lawyers section 122. Under it, if one client revokes consent without good reason, the lawyer may continue representing the other client where the lawyer and that client have already relied on the consent to their detriment. A joint client may be justified in revoking when a material change occurs, for example the clients develop antagonistic positions, the lawyer favors the other client, or the other client takes harmful action. Detrimental reliance includes substantial investment of time and money, disclosure of confidential information, the development of a relationship of trust with the non-revoking client, and forgoing other opportunities in reliance on the consent. The opinion notes the consent agreement itself may specify the effect of one client's repudiation, quoting the model language the DC Bar suggests (DC Bar Legal Ethics Committee Opinion 317 (2002)). Absent such language, a lawyer is not required to withdraw from representing one client if the other revokes consent without good reason and the comment [21] and Restatement factors favor continued representation.

In practice

Under the North Carolina rules as they stood at the time of the opinion, a conflict waiver is revocable, but revocation by one client does not automatically force the lawyer off the matter. Per the opinion, the outcome turns on the comment [21] factors and the Restatement: the nature of the conflict, whether the revocation followed a material change, the non-revoking client's reasonable expectations, and detrimental reliance.

Per the opinion, where one client revokes without good reason and the lawyer or the non-revoking client has relied on the consent to their detriment, the lawyer is not required to withdraw, and the consent agreement may set out in advance what happens on repudiation, as the DC Bar's model language illustrates.

Common questions

Q: Can a client take back a conflict waiver after signing it?

A: Yes. The opinion concludes, per comment [21] to Rule 1.7, that a client who has consented to a conflict may revoke that consent at any time.

Q: If one client revokes, does the lawyer have to drop the other client too?

A: Not necessarily. The opinion concludes whether the lawyer must stop representing the other client depends on the nature of the conflict, whether the revocation followed a material change, the other client's reasonable expectations, and whether material detriment would result.

Q: When can the lawyer keep representing the non-revoking client?

A: When the revocation lacks good reason and there was reliance. The opinion concludes that, under the Restatement, if one client revokes without good reason and the lawyer or the non-revoking client relied on the consent to their detriment, the lawyer may continue the representation.

Q: Can the waiver say in advance what happens if a client repudiates it?

A: Yes. The opinion concludes the consent agreement may specify the effect of one client's repudiation on continued representation, citing the model language suggested by DC Bar Opinion 317.

Background and rules framework

The opinion applies North Carolina Rule 1.7 and its comment [21] (revocation of consent to a conflict and its effect on a co-client's representation), the analogue of Model Rule 1.7. It relies on the Restatement (Third) of the Law Governing Lawyers section 122 comment f for the standard governing revocation, good reason, and detrimental reliance, and cites DC Bar Opinion 317 for sample advance-waiver language.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NC Rule 1.7, cmt. [21] (revocation of consent to a conflict; effect on a co-client's representation)

Other authorities cited:

• Restatement (Third) of the Law Governing Lawyers section 122, cmt. f (2000): good reason for revocation and detrimental reliance.
• DC Bar Legal Ethics Committee Opinion 317 (2002): suggested advance-waiver repudiation language.

See also

• DC Bar Op. 317: Repudiation of Conflict-of-Interest Waivers
• ABA Formal Op. 05-436: Informed Consent to Future Conflicts
• NC 2007 FEO 7: Joint Chapter 13 Representation After Divorce

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2007-formal-ethics-opinion-11/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

May a lawyer rely on a written waiver of conflict regarding the matter at hand signed, with informed consent, by two or more parties, after a subsequent, unforeseen falling out among those parties? (So that the lawyer is not required to relinquish representation of a long-term client/party to the original waiver due to one of the other party/signees revoking the waiver and objecting to the lawyer's continuing to represent the long-term client.

Opinion

Pursuant to Rule 1.7 comment [21], a client who has given consent to a conflict may revoke the consent at any time. According to comment [21], whether one client's revocation of consent to his own representation precludes the lawyer from continuing to represent the other client depends on the nature of the conflict, whether the client revoked consent because of a material change in circumstances, the reasonable expectations of the other client, and whether material detriment to the other client or the lawyer would result.

The Restatement of the Law Governing Lawyers indicates that if one client revokes his consent to representation without good reason, the lawyer may continue representing the other client in the matter if the lawyer and other client have already relied on the consent to their detriment. The Restatement provides that a joint client may be justified in revoking consent to multiple representation when a material change occurs in the factual basis on which the client originally gave informed consent, such as when the clients develop antagonistic positions; the lawyer favors the other client; or the other client takes harmful action. Restatement (Third) of the Law Governing Lawyers §122 cmt. f (2000). Examples of detrimental reliance by the non-revoking client or the lawyer include the investment of substantial time and money in the representation; the disclosure of confidential information; the development of a relationship of trust and confidence between the lawyer and the non-revoking client; and the election by the lawyer or the non-revoking client to forego other opportunities in reliance on the consent.

The consent agreement may specify the effect of one client's repudiation upon the other client's right to continued representation and the lawyer's right to continue to represent the other client. The DC Bar suggests the following language:

You have the right to repudiate this waiver should you later decide that it is no longer in your interest. Should the conflict addressed by the waiver be in existence or contemplated at that time, however, and should we or the other client(s) involved have acted in reliance on the waiver, we will have the right--and possibly the duty, under the applicable rules of professional conduct--to withdraw from representing you and (if permitted by such rules) to continue representing the other involved client(s) even though the other representation may be adverse to you.

DC Bar Legal Ethics Committee Opinion 317 (2002).

In the absence of specific language in the consent agreement addressing the effects of repudiation, a lawyer is not required to withdraw from representing one client if the other client revokes consent without good reason and an evaluation of the factors set out in comment [21] and the Restatement favors continued representation.