Conflict of Interest Toolkit: Tips for Recognizing, Avoiding, and Responding to Conflicts

by Robins Kaplan LLP
Contact

Organizational conflict of interest abounds. On any given day, news media often report at least one story about a potential conflict of interest. And no industry or type of employer has a monopoly on conflicts. They arise in government and in private industry. We are all familiar with accusations that city officials “voted their pocketbook.” We have all also read about financial advisors recommending investments to clients that benefit the advisor. These kinds of conflicts take a toll. Protecting the workplace starts with defining conflicts, recognizing risks, determining origins, and creating effective strategies to handle conflict of interest challenges if and when they occur.

Conflict of Interest Defined

The term “conflict-of-interest" is of relatively recent origin. United States courts and legislatures did not begin tackling the subject until the 1950s. Black’s Law Dictionary did not include the term until almost 1980.1

Multiple definitions exist of the conduct, behavior, and circumstances that can create a conflict of interest.  Most cover a situation that has the potential to undermine the impartiality of a person because of the possibility of a clash between the person’s self-interest and the professional or public interest.” 2

Conflict of Interest Impact

People have not always considered taking personal advantage of one’s official position problematic. Historically, business leaders and government officials often did so to advance their personal interests without public complaint. Over the last 50-75 years, however, the public began to  take a dim view of conflicts of interest, seeing them as potential for damage and corruption.

Conflicts lead to questions about the impartiality, reliability, and confidence in the advice and service delivered to the client or customer, as well as create the potential for more egregious and potentially illegal behavior. For these reasons, most public and private employers require employees and agents to report potential conflicts.

Conflict of Interest Causes

Conflict of interest situations can arise in many different ways. Sometimes, individuals make a deliberate decision to engage in the behavior that constitutes a conflict of interest. Other times, however, the conflict arises without conscious choice. Some common causes of unintentional conduct include circumstances where individuals:

  • Lack understanding of governing rules
  • Think they can break some rules because they follow others (moral licensing) 
  • Belong to an organization with ineffective conflict controls
  • Believe they are immune from influence
  • Participate in an organizational culture which endorses personal gain as a privilege of office or employment

Conflict of Interest Prevention

While the creation of a robust conflict prevention program takes time and understanding of ethics law, industry demands, and organizational culture, effective prevention almost always includes several sound management practices, including:

  • Clear and effective policies and internal controls
  • Regular training on and communication of policies
  • Access to timely counseling and advice
  • Modeling by leadership
  • Creative problem solving
  • Consistent, transparent enforcement of policies

These practices will result in an open, accessible process to discuss, vet, and resolve potential conflicts.

Conclusion

Almost every employer faces the possibility of having to address an employee—or company leader-whose workplace conduct gives rise to a real or perceived conflict of interest.  Just as the break-room first aid kit acknowledges the inevitability of workplace injuries, companies need a conflict of interest toolkit that honestly addresses conflict of interest risk and prevention and a consistent policy of enforcement if and when violations occur.

See Conflict of Interest in Four Professions for a more complete etymology.

E.g., businessdictionary.com

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Robins Kaplan LLP | Attorney Advertising

Written by:

Robins Kaplan LLP
Contact
more
less

Robins Kaplan LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!