A recent published opinion in federal district court illustrates how an advance waiver can defeat a disqualification motion. The client, Galderma Labs, agreed to and signed the following waiver in Vinson & Elkins’ engagement letter:
We understand and agree that this is not an exclusive agreement, and you are free to retain any other counsel of your choosing. We recognize that we shall be disqualified from representing any other client with interest materially and directly adverse to yours (i) in any matter which is substantially related to our representation of you and (ii) with respect to any matter where there is a reasonable probability that confidential information you furnished to us could be used to your disadvantage. You understand and agree that, with those exceptions, we are free to represent other clients, including clients whose interests may conflict with yours in litigation, business transactions, or other legal matters. You agree that our representing you in this matter will not prevent or disqualify us from representing clients adverse to you in other matters and that you consent in advance to our undertaking such adverse representations.
When Vinson & Elkins later began representing a client adverse to Galderma in an unrelated matter, Galderma filed a motion to disqualify the firm. In discerning whether Galderma gave its informed consent to this adverse representation, the court looked to essentially five factors:
(1) whether the waiver’s language covered the adverse representation;
(2) whether the materials risks of waiving the future conflict were explained;
(3) whether the client’s reasonably available alternatives were explained;
(4) whether the client was sophisticated enough to understand the risks and alternatives as explained; and
(5) whether the client was independently represented on the waiver (here, it was).
Applying this five-pronged analysis, the court found that Galderma had given informed consent to the conflict and denied the motion to disqualify on that basis. The case is Galderma Labs v. Actavis Mid Atlantic LLC, 927 F. Supp. 2d 390 (N.D. Tex. 2013). For an insightful article discussing this case (among others) and suggesting advance waiver language that will likely withstand later court scrutiny, see Peter Jarvis, Allison Martin Rhodes & Calon Russell, Clearly Enforceable Future Conflicts Waivers, ABA/BNA Lawyers’ Manual on Professional Conduct (Oct. 23, 2014).