That is Cop Out #1 used by spammers and so-called link builders. Your link builders do not have your interests in mind, they're not thinking of how to overcome competitors. They're doing what's expedient.
What your link builders are doing is talking white hat but doing what is expedient (and easy). This is becoming endemic in certain circles. The other day I discovered a link selling network on a PR 6 website. Both the link seller and many of the so-called SEO Agencies partnered with that publisher are members of a popular SEO community that promotes so-called white hat tactics.
How a publisher and agencies can be members of such a community while engaging in link commerce? People rationalize what they do by saying things like Google likes it because it's relevant, we're bringing quality advertisers together with quality publishers, etc.
Meanwhile the bucks get passed under the table in exchange for links. The white-hat talk without the walk is endemic in certain circles. Crowing about white hat strategies is a marketing tactic.
If Google flagged your links that's because your link builders did a bad job. They can't excuse it by saying everyone else is doing it. That is not a strategy, it's a cop-out that reveals their lack of understanding of how to build links in a competitive environment.
still say using disavow is telling G that you've been link building and that you've made a mistake.
They made a mistake. Google knows they made a mistake. Google is telling you that they made a mistake. Now your link builders are telling you to put a leaf over it to hide the shame? Serious? How many Xanax a day are they taking to maintain their illusion that everything is fine? Everything is not fine. You've been busted, it's the worst-case scenario. Hiding is not an option.
First step is to see your situation as it is. The reality is that you're caught, you're busted, you have been found out. Honestly face the reality that you have spam links and your site is in a bad place because of it and that the situation is not going to change until you take positive actions.
Second step is to remove as many of those spam links as possible. Don't automate the process or put a newbie on the task and email all of your backlinks [seroundtable.com]. Just get rid of as many of the spammy links as possible.
Third step, submit the disavowal spreadsheet, name the names, explain that you were duped by an SEO agency. Tell Google who they were.
Fourth step is to start over with a better approach.