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I tell my clients up front that they have to waive their right and that it is not really an option to not do so.

Not waiving your right could tell the adcom that you don’t trust your recommenders.  It  could tell them that you are paranoid or overly anxious.

It could tell them that this applicant is a liability.  What happens if he doesn’t get in?  Is he going to go after his recommenders for throwing him under the bus?  Is he going to create more headaches for all involved?  Is the applicant going to create reputational risk for the school?

The adcom would rather just not deal with it.

Specifically, when an applicant waives their right to see the rec in legal terms it bascially means that you voluntarily and intentionally relinquish their known right, claim or privilege to view the rec at any time.  Also, with this and when an applicant is admitted, they will still not be able to see this rec if they waived their rec.
I have never heard of a student actually viewing their rec once they got it (waived or not waived).  They got in and most are satisfied with that.
Keep in mind, I do not consider not waiving to be a deal breaker.  It looks bad to the adcom but it only part of the whole applicantion package.  An applicant can have compensating factors that made up for your “non-waive”.
At a high level it is important to remember that an applicant is competing against a subset of applicants when they apply to b-school.  If you do anything to differentiate yourself in a negative way from these demographics (like not waiving), the adcom will notice the red flag.

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