Are Differences Among the Attorney Conflict of Interest Rules Consistent with Principles of Behavioral Economics?

Georgetown Journal of Legal Ethics, The, Winter 2006 by Gross, Leonard E

One possible explanation for the apparent differences among these rules is the framers' assessment of the risk of Type II error (false negative) versus the risk of Type I error (false positive).107 In instances where the conduct is barred with no waiver possible-for example, representing a client while simultaneously negotiating an agreement giving a lawyer media rights; drafting a will for a non-relative in which a lawyer is the beneficiary of a substantial gift; or having sex with a client-the framers of the Model Rules might believe that the danger of a Type 1 error (not permitting a representation that a client would want and which would prove beneficial to the client) would be outweighed by the danger of a Type 2 error (mistakenly permitting a representation to occur in which the lawyer will take advantage of her client). Certainly, the sale of media rights and having sex with clients present lawyers with tremendous opportunities to take advantage of potentially vulnerable clients to further their own personal interests.108 According to the Restatement (Third) of the Law Governing Lawyers, publication rights contracts "give the lawyer a financial incentive to conduct the representation so as to increase the entertainment value of the resulting book or show."109 Arguably, Rule 1.7 (the general conflict of interest rule which permits client waiver) is not adequate in those situations because attorneys will not be able to objectively determine when they will be able to adequately represent their clients notwithstanding the conflict. Moreover, it likely will be difficult to obtain fully informed consents from clients in those situations.110 An attorney may skew the disclosure to obtain consent from the client. Also, as discussed in more detail above,111 clients, particularly unsophisticated ones, are often very quick to waive a conflict whenever the lawyer asks them to do so. It is therefore not surprising that courts have routinely disciplined lawyers who have conflicts of interest for which they have obtained client consent where the conflict was viewed by the court as unwaivable.112

However, if these conflicts are unwaivable, the question we must address is whether there is any meaningful difference in the risk of Type II error versus Type I error for other rules which permit lawyers to represent clients despite the obvious danger of attorneys taking advantage of their clients. For example, we must address why Rule 1.8(a) permits lawyers to have business dealings with clients (subject to disclosure and waiver and provided that the transaction is "fair") and why Rule 1.8(c) permits lawyers to draft documents on behalf of clients who are relatives, thereby leaving themselves substantial bequests. One cannot plausibly argue that there is little danger of the lawyer taking advantage of the client in those situations. The cases are legion in which attorneys have exerted undue influence over relatives while drafting wills or inter vivos bequests which leave them or other relatives substantial amounts of money.113 Likewise there are many cases in which attorneys who engaged in business dealings with their clients put their own interests ahead of those of their clients. '14