A district court in Texas concluded that a general, open-ended advance waiver of future conflicts in a law firm’s retainer agreement with a sophisticated client (represented by in-house counsel) makes it permissible for the firm to represent the client’s opponent in unrelated litigation. Galderma Labs., L.P. v. Actavis Mid Atlantic LLC, No. 12-2038 (N.D. Tex. Feb. 21, 2013). Applying the ethics standards set forth in the ABA Model Rules of Professional Conduct (instead of local Texas ethics rules), the court found that where a sophisticated client is represented by in-house counsel, its consent to an advance waiver to adverse representation may be considered “informed” even if the waiver does not specify which particular opponents or types of cases are covered. In 2003, Galderma retained Vinson & Elkins for legal advice on employment and benefit issues. The company’s longtime in-house counsel signed an engagement letter that included an advance waiver. In 2012, Galderma (represented by two other firms) filed this patent infringement suit against Actavis. Vinson & Elkins, which had been representing several Actavis entities in intellectual property matters for six years, began working on the case. When Galderma became aware of Vinson & Elkins’ representation of Actavis, it asked the firm to withdraws. Instead, Vinson & Elkins chose to terminate its attorney-client relationship with Galderma. Accepting Vinson & Elkins’ reliance on the advance waiver, the court denied Galderma’s motion to disqualify the firm. The court separated the informed consent issue into two questions: (1) whether information the law firm disclosed is reasonably adequate for a client to give informed consent; and (2) if so, whether the disclosure is reasonably adequate for the particular client involved in the case. The court found there was informed consent because the waiver: (1) stated that Vinson & Elkins has broad freedom to represent clients with whom it would otherwise have a conflict of interest, except in specifically identified situations; (2) explained the risks faced by Galderma, including that Vinson & Elkins will advocate for another client directly against Galderma; and (3) offered an alternative course of conduct: Galderma could choose other counsel rather than engaging Vinson & Elkins. As to the second question, the court explained that the principal considerations are the sophistication of the parties and whether the client was represented by counsel independent of the law firm seeking the waiver. The court noted that the ABA conflicts standards do not require additional consultation when a client already has sufficient information to make an informed decision.
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Advance conflicts waiver allows firm to represent one client against another
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