Conflict of interest - Wikipedia

A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one ... Conflictofinterest FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch Ethicallydisputedpractice Forotheruses,seeConflictofInterest(disambiguation). ForWikipedia'sguidelinesregardingeditingontopicswithwhichonehasanexternalrelationship,seeWikipedia:Conflictofinterest. Thisarticleneedsadditionalcitationsforverification.Pleasehelpimprovethisarticlebyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.Findsources: "Conflictofinterest" – news ·newspapers ·books ·scholar ·JSTOR(September2015)(Learnhowandwhentoremovethistemplatemessage) PartofaseriesonStatemonopolycapitalism Terms Coercivemonopoly Corporatepersonhood Corporatewelfare Government-grantedmonopoly Intellectualproperty License Limitedliability Regulatorycapture Regulation Subsidy Tariff Ideas Advocacygroup Lobbying Theory Conflictofinterest Principal–agentproblem Rent-seeking Issues Agriculturalsubsidy Military–industrialcomplex Military-entertainmentcomplex TheNewDealandcorporatism Ideologies Protectionism Seealso Cronycapitalism Neo-Corporatism Statecapitalism Statemonopolycapitalism vte Aconflictofinterest(COI)isasituationinwhichapersonororganizationisinvolvedinmultipleinterests,financialorotherwise,andservingoneinterestcouldinvolveworkingagainstanother.Typically,thisrelatestosituationsinwhichthepersonalinterestofanindividualororganizationmightadverselyaffectadutyowedtomakedecisionsforthebenefitofathirdparty. An"interest"isacommitment,obligation,dutyorgoalassociatedwithaparticularsocialroleorpractice.[1]Bydefinition,a"conflictofinterest"occursif,withinaparticulardecision-makingcontext,anindividualissubjecttotwocoexistingintereststhatareindirectconflictwitheachother.Suchamatterisofimportancebecauseundersuchcircumstancesthedecision-makingprocesscanbedisruptedorcompromisedinamannerthataffectstheintegrityorthereliabilityoftheoutcomes. Typically,aconflictofinterestariseswhenanindividualfindshimselforherselfoccupyingtwosocialrolessimultaneouslywhichgenerateopposingbenefitsorloyalties.Theinterestsinvolvedcanbepecuniaryornon-pecuniary.Theexistenceofsuchconflictsisanobjectivefact,notastateofmind,anddoesnotinitselfindicateanylapseormoralerror.However,especiallywhereadecisionisbeingtakeninafiduciarycontext,itisimportantthatthecontendinginterestsbeclearlyidentifiedandtheprocessforseparatingthemisrigorouslyestablished.Typically,thiswillinvolvetheconflictedindividualeithergivinguponeoftheconflictingrolesorelserecusinghimselforherselffromtheparticulardecision-makingprocessthatisinquestion. Thepresenceofaconflictofinterestisindependentoftheoccurrenceofinappropriateness.Therefore,aconflictofinterestcanbediscoveredandvoluntarilydefusedbeforeanycorruptionoccurs.Aconflictofinterestexistsifthecircumstancesarereasonablybelieved(onthebasisofpastexperienceandobjectiveevidence)tocreateariskthatadecisionmaybeundulyinfluencedbyother,secondaryinterests,andnotonwhetheraparticularindividualisactuallyinfluencedbyasecondaryinterest. Awidelyuseddefinitionis:"Aconflictofinterestisasetofcircumstancesthatcreatesariskthatprofessionaljudgementoractionsregardingaprimaryinterestwillbeundulyinfluencedbyasecondaryinterest."[2]Primaryinterestreferstotheprincipalgoalsoftheprofessionoractivity,suchastheprotectionofclients,thehealthofpatients,theintegrityofresearch,andthedutiesofpublicofficer.Secondaryinterestincludespersonalbenefitandisnotlimitedtoonlyfinancialgainbutalsosuchmotivesasthedesireforprofessionaladvancement,orthewishtodofavoursforfamilyandfriends.Thesesecondaryinterestsarenottreatedaswronginandofthemselves,butbecomeobjectionablewhentheyarebelievedtohavegreaterweightthantheprimaryinterests.Conflictofinterestrulesinthepublicspheremainlyfocusonfinancialrelationshipssincetheyarerelativelymoreobjective,fungible,andquantifiable,andusuallyinvolvethepolitical,legal,andmedicalfields. Aconflictofinterestisasetofconditionsinwhichprofessionaljudgmentconcerningaprimaryinterest(suchasapatient'swelfareorthevalidityofresearch)tendstobeundulyinfluencedbyasecondaryinterest(suchasfinancialgain).Conflict-of-interestrules[...]regulatethedisclosureandavoidanceoftheseconditions.— DennisF.Thompson,TheNewEnglandJournalofMedicine,1993[3] Contents 1Relatedtothepracticeoflaw 1.1Concurrentconflictsofinterest 1.1.1Directadversitytocurrentclient 1.1.1.1Identityoftheclient-corporations 1.1.1.2Materiallimitationconflicts 1.1.2Consenttoconcurrentconflictsofinterest 1.1.2.1Consenttocurrentconflicts 1.1.2.2Prospectiveconsenttofutureconflicts 1.1.2.3Thehotpotatodoctrine 1.1.3Successiveconflictsofinterest 1.1.3.1Thesubstantialrelationshiptest 1.1.3.2Imputationofconflicts 2Generally(unrelatedtothepracticeoflaw) 3ConflictofinterestinUNSecurityCouncil 4Organizational 5Conflictofinterestinthehealthcareindustry 6Types 7Examples 7.1Environmentalhazardsandhumanhealth 7.2Self-regulation 7.3Insuranceclaimsadjusters 7.4Purchasingagentsandsalespersonnel 7.5Realestateagents 7.6Governmentofficials 7.7Financeindustryandelectedofficials 7.8Financeindustryandeconomists 7.9Stockbrokers 7.10Media 8Mitigation 8.1Removal 8.2"Blindtrust" 8.3Disclosure 8.4Recusal 8.5Third-partyevaluations 9Seealso 10References 11Furtherreading 12Externallinks Relatedtothepracticeoflaw[edit] Professionalresponsibility Dutiestotheclient Confidentiality Avoidingconflictofinterest DuediligenceandCompetence(law) Avoidcommingling Avoidself-dealing Effectiveassistance Avoidfeesplitting Withdrawalfromrepresentation Dutiestothecourt Disclosureofperjury Disclosureofadverseauthority Dutiestotheprofession Limitationsonlegaladvertising Reportmisconduct Sourcesoflaw ABAModelRules Penaltiesformisconduct Disbarment Judicialmisconduct vte Conflictofinterestshavebeendescribedasthemostpervasiveissuefacingmodernlawyers.[4]Legalconflictsrulesareattheircorecorollariestoalawyer'stwobasicfiduciaryduties:(1)thedutyofloyaltyand(2)thedutytopreserveclientconfidences.[5]Thelawyer'sdutyofloyaltyisfundamentaltotheattorney-clientrelationshipandhasdevelopedfromthebiblicalmaximthatnopersoncanservemorethanonemaster.[6]Justasfundamentalisthelawyer'sdutytomaintainclientconfidences,whichprotectsclients'legitimateexpectationsthattheycanmakefulldisclosureofallfactstotheirattorneyswithoutfearofexposure.[7] Thebasicformulationoftheconflictsofinterestruleisthataconflictexists"ifthereisasubstantialriskthatthelawyer'srepresentationoftheclientwouldbemateriallyandadverselyaffectedbythelawyer'sowninterestsorbythelawyers'dutiestoanothercurrentclient,aformerclient,orathirdperson."[8]Thedutyofloyaltyrequiresanattorneynottoactdirectlyadversetoanexistingclient,evenonanunrelatedmatterwherethelawyerhasnoclientconfidences.[9]Suchaloyaltyconflicthasbeenlabeledaconcurrentconflictofinterest.[10]Thedutyofconfidentialityisprotectedinrulesprohibitingso-calledsuccessiveconflictsofinterest,whenalawyerproposestoactadverselytotheinterestsofaformerclient.[11]Alawyerwhohasformerlyrepresentedaclientinamatterisprecludedfromrepresentinganotherpersoninthesameorasubstantiallyrelatedmatterthatismateriallyadversetotheformerclient.[11]Thesetwobasicformulations–thatalawyermaynotactdirectlyadversetoacurrentclientoradversetoaformerclientonasubstantiallyrelatedmatter–formthecornerstoneofmodernlegalconflictsofinterestrules.[12] Concurrentconflictsofinterest[edit] Directadversitytocurrentclient[edit] Anattorneyowestheclientundividedloyalty.[13]Thecourtshavedescribedthisprincipleas"integraltothenatureofanattorney'sduty."[14]Withoutundividedloyalty,irreparabledamagemaybedone"totheexistingclient'ssenseoftrustandsecurity–featuresessentialtotheeffectivefunctioningofthefiduciaryrelationship…"[15]Akeyfeatureofthedutyofloyaltyisthatanattorneymaynotactdirectlyadversetoacurrentclientorrepresentalitigationadversaryoftheclientinanunrelatedmatter.[16]Thedamagedoneistotheclient'sconfidencethatthelawyerisservinghisorherinterestsfaithfully.[17]Themostobviousexampleofalawyeractingdirectlyadversetoaclientiswhenthelawyersuestheclient.[18]Attheotherendofthespectrumiswhenalawyerrepresentsbusinesscompetitorsoftheclientwhoarenotadversetoitinalawsuitornegotiation.Representingbusinesscompetitorsofaclientinunrelatedmattersdoesnotconstitutedirectadversitynorgiverisetoaloyaltyconflict.[19]Asonestatebarethicscommitteehasnoted: Anattorney'srepresentationofoneclientwilloftenhaveindirecteffectsonotherexistingclients.Forexample,simultaneouslyrepresentingbusinesscompetitorsonunrelatedmattersmayindirectlyimpairtheinterestsofeach.Itwillberareindeedwhenanattorney'srepresentationofaclientwillnothavenumerousindirectadverseeffectsonothers.Obtainingabenefitforaclientwilloftenmeandisadvantaginganotherpersonorentity,andindirectconsequencesmayfollowtoallwhomaybedependentsorownersoftheattorney'sopponents. Theattorney'sdutyofloyalty,however,extendsonlytoadverseconsequencesonexistingclientswhichare'direct.'…Ofthenumerousandvariedconsequenceswhicharepresentationofoneclientmayhaveonotherclients,well-establishedlegalauthorityinterpretingthedutyofloyaltylimitsthescopeofethicalinquirytowhethertheotheraffectedclientsarepartiestothecaseortransactioninwhichtheattorneyisacting. --CALIFORNIASTATEBARETHICSOPINION1989-113. Directadversitymayariseinlitigationwhenanattorneysuesaclientordefendsanadversaryinanactionhisorherclienthasbrought.[20]Itmayalsoariseinthecontextofbusinessnegotiations,whenalawyernegotiatesonbehalfofanadversaryagainstacurrentclient,evenifthematterisunrelatedtoanymatterthelawyerishandlingfortheclient.[21]However,merelyadvocatingoppositesidesofthesamelegalissuedoesnotgiverisetodirectadversity.[22]Evenifalawyer'sadvocacyinanunrelatedmattermaymakeunfavorablelawforanotherclient,sucheffectsareonlyindirectandnotsubjecttotheconflictsrules.[23]Thereisnoconflictinadvocatingpositionsthatmayturnouttobeunfavorabletoanotherclientsolongasthelawyerisnotdirectlylitigatingornegotiatingagainstthatclient.[23] Identityoftheclient-corporations[edit] Oneofthemostfrequentlyarisingquestionsincorporatepracticeiswhetherparentcorporationsandtheirsubsidiariesaretobetreatedasthesameordifferententitiesforconflictspurposes.[24]ThefirstauthoritytoruleonthisquestionwastheCaliforniaStateBarEthicsCommittee,whichissuedaformalopinionrulingthatparentcorporationsandtheirsubsidiariesaretobeconsidereddistinctentitiesforconflictspurposes.[25]TheCaliforniacommitteeconsideredasituationwhereanattorneyundertookarepresentationdirectlyadversetothewhollyownedsubsidiaryofaclient,whenthelawyerdidnotrepresentthesubsidiary.[25]RelyingontheentityasclientframeworkinModelRule1.13,[26]theCaliforniacommitteeopinedthattherewasnoconflictaslongastheparentandsubsidiarydidnothavea"sufficientunityofinterests."[24]Thecommitteeannouncedthefollowingstandardforevaluatingtheseparatenessofparentandsubsidiary: Indeterminingwhetherthereisasufficientunityofintereststorequireanattorneytodisregardseparatecorporateentitiesforconflictpurposes,theattorneyshouldevaluatetheseparatenessoftheentitiesinvolved,whethercorporateformalitiesareobserved,theextenttowhicheachentityhasdistinctandindependentmanagementsandboardofdirectors,andwhether,forlegalpurposes,oneentitycouldbeconsideredthealteregooftheother. -CALIFORNIASTATEBARETHICSOPINION1989-113. Asonecommentatorhasnoted,"Forastateethicsopinion,CaliforniaOpinion1989-113hasbeenunusuallyinfluential,bothwithcourtsthere,withethicscommitteeselsewhere,andthroughthelattersetofethicscommitteeopinions,with…recentdecisionsinotherjurisdictions."[27]TheCaliforniaopinionhasbeenfollowedbyethicscommitteesinsuchjurisdictionsasNewYork,IllinoisandtheDistrictofColumbia,andservedasthebasisofABAFormalEthicsOpinion95-390.[28]Thelawinmostjurisdictionsisthatparentcorporationsandtheirsubsidiariesaretreatedasdistinctentities,exceptinlimitedcircumstancesnotedbytheCaliforniaethicscommitteewheretheyhaveaunityofinterests.[29] TheSecondCircuithasadoptedavariationoftheCaliforniastandard.InGSICommerceSolutions,Inc.v.BabyCenterLLC,[30]thecourtruledthatparentcorporationsandtheirsubsidiariesshouldbetreatedasthesameentityforconflictspurposeswhenbothcompaniesrely"onthesamein-houselegaldepartmenttohandletheirlegalaffairs."[31]However,thecourtruledthatthelawyerandclientcancontractaroundthisdefaultstandard.[32]ThecourtquotedwithapprovaltheopinionoftheCityofNewYorkCommitteeonProfessionalandJudicialEthics,whichstated,"corporatefamilyconflictsmaybeavertedby...anengagementletter...thatdelineateswhichaffiliates,ifany,ofacorporateclientthelawfirmrepresents..."[33] Materiallimitationconflicts[edit] Aconcurrentconflictwillalsoexistwhen"thereisasignificantriskthattherepresentationofoneormoreclientswillbemateriallylimitedbythelawyer'sresponsibilitiestoanotherclient,aformerclientorathirdpersonorbyapersonalinterestofthelawyer."[34]Comment8toModelRule1.7states,bywayofexample,thatanattorneyrepresentingmultiplepersonsformingajointventuremaybemateriallylimitedinrecommendingthecoursesofactionthatanyjointlyrepresentedclientmaytakebecauseofthelawyer'sdutytotheotherparticipantsinthejointventure.[35] TheSupremeCourtofMinnesotafoundamateriallimitationconflictinInrePetitionforDisciplinaryActionAgainstChristopherThomasKalla.[36]InKalla,anattorneywasdisciplinedforrepresentingaborrowerbringingsuitagainstherlenderforchargingausuriousinterestratewhilesimultaneouslyrepresentingthemortgagebrokerwhoarrangedtheloanasathirdpartydefendantinthesamelawsuit.Althoughneitherclienthadbroughtanactionagainsttheother,thecourtfoundamateriallimitationconflict:"AdvocatingforClientAwouldpotentiallyharmClientB,whowaspotentiallyliableforcontribution.Kalla'sabilitytofullyadvocateforbothwasmateriallylimitedbyKalla'sdualrepresentation."[37] Consenttoconcurrentconflictsofinterest[edit] Consenttocurrentconflicts[edit] Aconcurrentconflictofinterestmayberesolvediffourconditionsaremet.Theyare: thelawyerreasonablybelievesthatthelawyerwillbeabletoprovidecompetentanddiligentrepresentationtoeachaffectedclient; therepresentationisnotprohibitedbylaw; therepresentationdoesnotinvolvetheassertionofaclaimbyoneclientagainstanotherclientrepresentedbythelawyerinthesamelitigationorotherproceedingbeforeatribunal;and eachaffectedclientgivesinformedconsent,confirmedinwriting.[38] Informedconsentrequiresthateachaffectedclientbefullyadvisedaboutthematerialwaysthattherepresentationcouldadverselyaffectthatclient.[39]Injointrepresentations,theinformationprovidedshouldincludetheinterestsofthelawyerandotheraffectedclient,thecoursesofactionthatcouldbeforeclosedduetothejointrepresentation,thepotentialdangerthattheclient'sconfidentialinformationmightbedisclosed,andthepotentialconsequencesifthelawyerhadtowithdrawatalaterstageintheproceedings.[40]Merelytellingtheclientthatthereareconflicts,withoutfurtherexplanation,isnotadequatedisclosure.[41]Thelawyermustfullydisclosethepotentialimpairmenttothelawyer'sloyaltyandexplainhowanotherunconflictedattorneymightbetterservetheclient'sinterests.[42] Prospectiveconsenttofutureconflicts[edit] Itisnotunusualinthecurrentlegalenvironmentoflargemultinationalandgloballawfirmsforthefirmstoseekadvanceorprospectivewaiversoffutureconflictsfromtheirclients.[43]Alawfirmisparticularlylikelytoseekaprospectivewaiverwhenalargecorporationseeksthespecializedknowledgeofthefirminasmallmatter,withoutahighlikelihoodofrepeatbusiness.[43]AstheABAstatedinitsEthicsOpinion93-372: whencorporateclientswithmultipleoperatingdivisionshiretensifnothundredsoflawfirms,theideathat,forexample,acorporationinMiamiretainingtheFloridaofficeofanationallawfirmtonegotiatealeaseshouldprecludethatfirm'sNewYorkofficefromtakinganadversepositioninatotallyunrelatedcommercialdisputeagainstanotherdivisionofthesamecorporationstrikessomeasplacingunreasonablelimitationsontheopportunitiesofbothclientsandlawyers.-ABAFormalOpinion93-372(1993). Prospectivewaiversaremostlikelytobeupheldbythecourtswhentheyaregivenbysophisticatedcorporateclientsrepresentedbyindependentcounselinthenegotiationofthewaiver.[44]However,inSheppard,Mullin,Richter&Hampton,LLPv.J-MManufacturingCo.,[45]theCaliforniaSupremecourtheldthataprospectivewaiverthatdidnotmakespecificdisclosureofanactualcurrentconflictwasnoteffectivetowaivethatconflict.[46]Asthecourtsaid, ByaskingJ-Mtowaivecurrentconflictsaswellasfutureones,SheppardMullindidputJ-Monnoticethatacurrentconflictmightexist.ButbyfailingtodisclosetoJ-Mthefactthatacurrentconflictactuallyexisted,thelawfirmfailedtodisclosetoitsclientallthe'relevantcircumstances'withinitsknowledgerelatingtoitsrepresentationofJ-M.6Cal.5th59(2018)atp.84. TheSheppardMullincasedoesnotinvalidateprospectivewaiversinCalifornia.[47]Itonlyholdsthatwaiversofcurrentandactualconflictsmustspecificallydisclosethoseconflicts,anunremarkableconclusion.[48] Thehotpotatodoctrine[edit] Ifaclientwillnotconsenttoaconflictandallowalawyertotakeonanotherrepresentation,thelawyercannotthenwithdrawfromtheexistingrepresentation,thusturningtheexistingclientintoaformerclientandendingthedutyofloyalty.[49]Asthecourtshavestated,thelawyercannot"dropaclientlikeahotpotato"tocureaconflict.[50]Thislabelhasstuck,andthedoctrineisnowaptlycalledthe"hotpotato"doctrine.[51]However,asonecommentatorhaspointedout,thereasoningunderlyingthislineofcaseshasbeensparse,andfewcourtshaveattemptedtojustifythisresultthroughananalysisoftheethicsrules.[52]TheunstatedrationalebehindtheHotPotatodoctrineisthatawithdrawalattemptedwithoutgoodcauseunderModelRule1.16(b)isanineffectivewithdrawal,whichdoesnotsuccessfullyterminatetheexistingattorney-clientrelationship.[53]Whenviewedinthislight,awithdrawalaccomplishedwithgoodcauseshouldbeaneffectivewithdrawalthatdoespermitalawyertotakeonarepresentationthatwouldotherwisebeconflicting,aslongasthereisnosubstantialrelationshipwiththepriormatter.[54]Thestandardusedtoassessconflictsinvolvingsuchformerclientswillbediscussedinthenextsection. Successiveconflictsofinterest[edit] Thesubstantialrelationshiptest[edit] Conflictsofinterestrulesinvolvingformerclientsareprimarilydesignedtoenforcetheattorney'sdutytopreserveaclient'sconfidentialinformation.[12]ModelRule1.9(a)setsforththisdoctrineinarulethathascometobeknownasthesubstantialrelationshiptest.Therulestates: Alawyerwhohasformerlyrepresentedaclientinamattershallnotthereafterrepresentanotherpersoninthesameorasubstantiallyrelatedmatterinwhichthatperson'sinterestsaremateriallyadversetotheinterestsoftheformerclientunlesstheformerclientgivesinformedconsent,confirmedinwriting.-MODELRULESOFPROF'LCONDUCTr.1.9(a). Withoutthesubstantialrelationshiptest,aclientattemptingtoprovethatitsformerlawyerpossessesitsconfidentialinformationmighthavetodisclosepubliclytheveryconfidentialinformationitistryingtoprotect.[55]Thesubstantialrelationshiptestwasdesignedtoprotectagainstsuchdisclosures.[55]Underthistest,theattorney'spossessionoftheformerclient'sconfidentialinformationispresumedif"confidentialinformationmaterialtothecurrentdisputewouldnormallyhavebeenimpartedtotheattorneybyvirtueofthenatureoftheformerrepresentation."[56]Thesubstantialrelationshiptestreconstructswhetherconfidentialinformationwaslikelytoimpartedbytheformerclienttothelawyerbyanalyzing"thesimilaritiesbetweenthetwofactualsituations,thelegalquestionsposed,andthenatureandextentoftheattorney'sinvolvementwiththecases."[57] Imputationofconflicts[edit] Theconflictsofanindividuallawyerareimputedtoallattorneyswho"areassociatedwiththatlawyerinrenderinglegalservicestoothersthroughalawpartnership,professionalcorporation,soleproprietorship,orsimilarassociation."[58]Thisimputationofconflictscanleadtodifficultieswhenattorneysfromonelawfirmleaveandjoinanotherfirm.Theissuethenariseswhethertheconflictsoftheitinerantlawyer'sformerfirmareimputedtohisorhernewfirm. InKirkv.FirstAmericanTitleCo.,[59]thecourtruledthatanitinerantlawyer'sconflictsarenotimputedtohisorhernewlawfirmifthatfirmtimelysetsupaneffectiveethicsscreenpreventingthelawyersfromimpartinganyconfidentialinformationtothelawyersinthenewfirm.[60]Aneffectiveethicsscreenrebutsthepresumptionthattheitinerantlawyerssharedconfidentialinformationwiththelawyersinthenewfirm.[61]Thecomponentsofaneffectiveethicsscreen,asdescribedbythecourtinKirk,are: physical,geographic,anddepartmentalseparationofattorneys; prohibitionsagainstandsanctionsfordiscussingconfidentialmatters; establishedrulesandprocedurespreventingaccesstoconfidentialinformationandfiles; procedurespreventingadisqualifiedattorneyfromsharingintheprofitsfromtherepresentation; continuingeducationinprofessionalresponsibility.[62] Judicialdisqualification,alsoreferredtoasrecusal,referstotheactofabstainingfromparticipationinanofficialactionsuchasacourtcase/legalproceedingduetoaconflictofinterestofthepresidingcourtofficialoradministrativeofficer.[63]Applicablestatutesorcanonsofethicsmayprovidestandardsforrecusalinagivenproceedingormatter.Providingthatthejudgeorpresidingofficermustbefreefromdisablingconflictsofinterestmakesthefairnessoftheproceedingslesslikelytobequestioned.[64] Inthepracticeoflaw,thedutyofloyaltyowedtoaclientprohibitsanattorney(oralawfirm)fromrepresentinganyotherpartywithinterestsadversetothoseofacurrentclient.Thefewexceptionstothisrulerequireinformedwrittenconsentfromallaffectedclients,i.e.,an"ethicalwall".Insomecircumstances,aconflictofinterestcanneverbewaivedbyaclient.Inperhapsthemostcommonexampleencounteredbythegeneralpublic,thesamefirmshouldnotrepresentbothpartiesinadivorceorchildcustodymatter.Foundconflictcanleadtodenialordisgorgementoflegalfees,orinsomecases(suchasthefailuretomakemandatorydisclosure),criminalproceedings.In1998,aMilbank,Tweed,Hadley&McCloypartnerwasfoundguiltyoffailingtodiscloseaconflictofinterest,disbarred,andsentencedto15monthsofimprisonment.[65][66][67]IntheUnitedStates,alawfirmusuallycannotrepresentaclientiftheclient'sinterestsconflictwiththoseofanotherclient,evenifthetwoclientsarerepresentedbyseparatelawyerswithinthefirm,unless(insomejurisdictions)thelawyerissegregatedfromtherestofthefirmforthedurationoftheconflict.Lawfirmsoftenemploysoftwareinconjunctionwiththeircasemanagementandaccountingsystemsinordertomeettheirdutiestomonitortheirconflictofinterestexposureandtoassistinobtainingwaivers.[68] Generally(unrelatedtothepracticeoflaw)[edit] Moregenerally,conflictsofinterestcanbedefinedasanysituationinwhichanindividualorcorporation(eitherprivateorgovernmental)isinapositiontoexploitaprofessionalorofficialcapacityinsomewayfortheirpersonalorcorporatebenefit.[69] Dependinguponthelaworrulesrelatedtoaparticularorganization,theexistenceofaconflictofinterestmaynot,inandofitself,beevidenceofwrongdoing.Infact,formanyprofessionals,itisvirtuallyimpossibletoavoidhavingconflictsofinterestfromtimetotime.Aconflictofinterestcan,however,becomealegalmatter,forexample,whenanindividualtries(and/orsucceedsin)influencingtheoutcomeofadecision,forpersonalbenefit.Adirectororexecutiveofacorporationwillbesubjecttolegalliabilityifaconflictofinterestbreacheshis/herdutyofloyalty.[69] Thereoftenisconfusionoverthesetwosituations.Someoneaccusedofaconflictofinterestmaydenythataconflictexistsbecausehe/shedidnotactimproperly.Infact,aconflictofinterestcanexisteveniftherearenoimproperactsasaresultofit.(Onewaytounderstandthisistousetheterm"conflictofroles".Apersonwithtworoles—anindividualwhoownsstockandisalsoagovernmentofficial,forexample—mayexperiencesituationswherethosetworolesconflict.Theconflictcanbemitigated—seebelow—butitstillexists.Inandofitself,havingtworolesisnotillegal,butthedifferingroleswillcertainlyprovideanincentiveforimproperactsinsomecircumstances.)[69] Asanexample,inthesphereofbusinessandcontrol,accordingtotheInstituteofInternalAuditors: conflictofinterestisasituationinwhichaninternalauditor,whoisinapositionoftrust,hasacompetingprofessionalorpersonalinterest.Suchcompetinginterestscanmakeitdifficulttofulfillhisorherdutiesimpartially.Aconflictofinterestexistsevenifnounethicalorimproperactresults.Aconflictofinterestcancreateanappearanceofimproprietythatcanundermineconfidenceintheinternalauditor,theinternalauditactivity,andtheprofession.Aconflictofinterestcouldimpairanindividual'sabilitytoperformhisorherdutiesandresponsibilitiesobjectively.[70][71] Afewexamplesofconflictofinterestare: Whenamemberofthecommissionersofastatehighwaycommissionownsapieceofpropertywherethestatewillhavetocondemnit.Theconflictofinterestcomesinbecausethecommissionwillwanttoacquirethepropertyatthelowestpossibleprice(subjecttoitbeingatleastfairmarketvalue)whileasthepropertyowner,theyaregoingtowantthehighestpossiblepricetheycanget. Whenanofficerordirectorofacorporationownsapatentorcopyrightwhicheitherwasdevelopedbeforetheywereinvolvedwiththecorporation(whichmeansitcannotbesubjecttoacontractualrightofassignmentorworkforhire)orthatitwasdevelopedforatypeofproductnotrelatedtothescopeoftheiremployment.Asanauthororinventor,theyaregoingtowantalargelicensefeeorroyalty,whileasanofficerofthecorporationtheyareexpectedtoofferaslittleaspossible. Ajudgedecidingabenchtrialorarbitratorinbindingarbitrationmustnotdecideacasewherearelative,acquaintance,orbusinesspartnerisaparty.Becausetheymaygiveoverlyfavorabletermstothatparty,orwheretheymightimposeexcessivelyharshterms(suchasajudgehavingtheirestrangedchild,parent,orex-spouseasacriminaldefendantbeingsentencedbeforethem.) ConflictofinterestinUNSecurityCouncil[edit] ConflictofInterestexistseveninUN(UnitedNationsSecurityCouncil)regardingUnitedNationsSecurityCouncilvetopower.[citationneeded][clarificationneeded] Organizational[edit] Seealso:Accountability§ Organizational Anorganizationalconflictofinterest(OCI)mayexistinthesamewayasdescribedabove,forinstancewhereacorporationprovidestwotypesofservicetothegovernmentandtheseservicesconflict(e.g.:manufacturingpartsandthenparticipatingonaselectioncommitteecomparingpartsmanufacturers).[72]Corporationsmaydevelopsimpleorcomplexsystemstomitigatetheriskorperceivedriskofaconflictofinterest.Theseriskscanbeevaluatedbyagovernmentagency(forexample,inaU.S.GovernmentRFP)todeterminewhethertheriskscreateasubstantialadvantagetotheorganizationinquestionoveritscompetition,orwilldecreasetheoverallcompetitivenessofthebiddingprocess.[73] Conflictofinterestinthehealthcareindustry[edit] Mainarticle:Conflictofinterestinthehealthcareindustry Theinfluenceofthepharmaceuticalindustryonmedicalresearchhasbeenamajorcauseforconcern.In2009astudyfoundthat"anumberofacademicinstitutions"donothaveclearguidelinesforrelationshipsbetweenInstitutionalReviewBoardsandindustry.[74] Incontrasttothisviewpoint,anarticleandassociatededitorialintheNewEnglandJournalofMedicineinMay2015[75]emphasizedtheimportanceofpharmaceuticalindustry-physicianinteractionsforthedevelopmentofnoveltreatments,andarguedthatmoraloutrageoverindustrymalfeasancehadunjustifiablyledmanytooveremphasizetheproblemscreatedbyfinancialconflictsofinterest.ThearticlenotedthatmajorhealthcareorganizationssuchasNationalCenterforAdvancingTranslationalSciencesoftheNationalInstitutesofHealth,thePresident'sCouncilofAdvisorsonScienceandTechnology,theWorldEconomicForum,theGatesFoundation,theWellcomeTrust,andtheFoodandDrugAdministrationhadencouragedgreaterinteractionsbetweenphysiciansandindustryinordertobringgreaterbenefitstopatients.[76] Types[edit] Thefollowingarethemostcommonformsofconflictsofinterests:[77] Self-dealing,inwhichanofficialwhocontrolsanorganizationcausesittoenterintoatransactionwiththeofficial,orwithanotherorganizationthatbenefitstheofficialonly.Theofficialisonbothsidesofthe"deal." Outsideemployment,inwhichtheinterestsofonejobconflictwithanother. Nepotism,inwhichaspouse,child,orothercloserelativeisemployed(orappliesforemployment)byanindividual,orwheregoodsorservicesarepurchasedfromarelativeorfromafirmcontrolledbyarelative.Toavoidnepotisminhiring,manyemploymentapplicationsaskiftheapplicantisrelatedtoacurrentemployeeofthecompany.Thisallowsrecusaliftheemployedrelativehasaroleinthehiringprocess.Ifthisisthecase,therelativecouldthenrecusefromanyhiringdecisions. Giftsfromfriendswhoalsodobusinesswiththepersonreceivingthegiftsorfromindividualsorcorporationswhodobusinesswiththeorganizationinwhichthegiftrecipientisemployed.Suchgiftsmayincludenon-tangiblethingsofvaluesuchastransportationandlodging. Pumpanddump,inwhichastockbrokerwhoownsasecurityartificiallyinflatesthepriceby"upgrading"itorspreadingrumors,sellsthesecurityandaddsshortposition,then"downgrades"thesecurityorspreadsnegativerumorstopushthepricedown. Otherimproperactsthataresometimesclassifiedasconflictsofinterestsmayhavebetterclassification.Forexample,acceptingbribescanbeclassifiedascorruption,useofgovernmentorcorporatepropertyorassetsforpersonaluseisfraud,andunauthorizeddistributionofconfidentialinformationisasecuritybreach.Fortheseimproperacts,thereisnoinherentconflict. COIissometimestermedcompetitionofinterestratherthan"conflict",emphasizingaconnotationofnaturalcompetitionbetweenvalidinterests—ratherthantheclassicaldefinitionofconflict,whichwouldincludebydefinitionincludingavictimandunfairaggression.Nevertheless,thisdenotationofconflictofinterestisnotgenerallyseen. Examples[edit] Thissectionhasmultipleissues.Pleasehelpimproveitordiscusstheseissuesonthetalkpage.(Learnhowandwhentoremovethesetemplatemessages) TheexamplesandperspectiveinthissectiondealprimarilywiththeUnitedStatesanddonotrepresentaworldwideviewofthesubject.Youmayimprovethissection,discusstheissueonthetalkpage,orcreateanewsection,asappropriate.(April2013)(Learnhowandwhentoremovethistemplatemessage) Thissectionpossiblycontainsoriginalresearch.Pleaseimproveitbyverifyingtheclaimsmadeandaddinginlinecitations.Statementsconsistingonlyoforiginalresearchshouldberemoved.(October2015)(Learnhowandwhentoremovethistemplatemessage) (Learnhowandwhentoremovethistemplatemessage) Environmentalhazardsandhumanhealth[edit] Baker[78]summarized176studiesofthepotentialimpactofBisphenolAonhumanhealthasfollows:[79] Funding Harm NoHarm Industry 0 13(100%) Independent(e.g.,government) 152(86%) 11(14%) Lessig[80]notedthatthisdoesnotmeanthatthefundingsourceinfluencedtheresults.However,itdoesraisequestionsaboutthevalidityoftheindustry-fundedstudiesspecifically,becausetheresearchersconductingthosestudieshaveaconflictofinterest;theyaresubjectatminimumtoanaturalhumaninclinationtopleasethepeoplewhopaidfortheirwork.Lessigprovidedasimilarsummaryof326studiesofthepotentialharmfromcellphoneusagewithresultsthatweresimilarbutnotasstark.[81] Self-regulation[edit] Self-regulationofanygroupmayalsobeaconflictofinterest.Ifanentity,suchasacorporationorgovernmentbureaucracy,isaskedtoeliminateunethicalbehaviorwithintheirowngroup,itmaybeintheirinterestintheshortruntoeliminatetheappearanceofunethicalbehavior,ratherthanthebehavioritself,bykeepinganyethicalbreacheshidden,insteadofexposingandcorrectingthem.Anexceptionoccurswhentheethicalbreachisalreadyknownbythepublic.Inthatcase,itcouldbeinthegroup'sinteresttoendtheethicalproblemtowhichthepublichasknowledge,butkeepremainingbreacheshidden.[citationneeded] Insuranceclaimsadjusters[edit] Insurancecompaniesretainclaimsadjusterstorepresenttheirinterestinadjustingclaims.Itisinthebestinterestoftheinsurancecompaniesthattheverysmallestsettlementisreachedwithitsclaimants.Basedontheadjuster'sexperienceandknowledgeoftheinsurancepolicyitisveryeasyfortheadjustertoconvinceanunknowingclaimanttosettleforlessthanwhattheymayotherwisebeentitledwhichcouldbealargersettlement.Thereisalwaysaverygoodchanceofaconflictofinteresttoexistwhenoneadjustertriestorepresentbothsidesofafinancialtransactionsuchasaninsuranceclaim.Thisproblemisexacerbatedwhentheclaimantistold,orbelieves,theinsurancecompany'sclaimsadjusterisfairandimpartialenoughtosatisfyboththeirsandtheinsurancecompany'sinterests.Thesetypesofconflictscouldeasilybeavoidedbytheuseofathirdpartyplatformthatisindependentoftheinsurersandisagreedto,andnamedinthepolicy.[82] Purchasingagentsandsalespersonnel[edit] Apersonworkingastheequipmentpurchaserforacompanymaygetabonusproportionatetotheamounthe'sunderbudgetbyyearend.However,thisbecomesanincentiveforhimtopurchaseinexpensive,substandardequipment.Therefore,thisiscountertotheinterestsofthoseinhiscompanywhomustactuallyusetheequipment.W.EdwardsDeminglisted"purchasingonpricealone"asnumber4ofhisfamous14points,andheoftensaidthingstotheeffectthat"Hewhopurchasesonpricealonedeservestogetrooked."[citationneeded] Realestateagents[edit] Realestatebrokershaveaninherentconflictofinterestwiththesellerstheyrepresent,becausetheusualcommissionstructuresofbrokersmotivatethemtosellquicklyratherthantosellatahigherprice.However,abrokerrepresentingabuyerhasadistinctdisincentivetonegotiatealowerpriceonbehalfoftheirclient,becausetheywillsimultaneouslybenegotiatingtheirowncommissionlower.[83][84] Governmentofficials[edit] Conflictofinterestinlegislation;theinterestsofthepoorandtheinterestsoftherich.Apersonificationofcorruptlegislationweighsabagofmoneyanddeniesanappealofpoverty. Regulatingconflictofinterestingovernmentisoneoftheaimsofpoliticalethics.Publicofficialsareexpectedtoputservicetothepublicandtheirconstituentsaheadoftheirpersonalinterests.Conflictofinterestrulesareintendedtopreventofficialsfrommakingdecisionsincircumstancesthatcouldreasonablybeperceivedasviolatingthisdutyofoffice.Rulesintheexecutivebranchtendtobestricterandeasiertoenforcethaninthelegislativebranch.[85]ThisisvisiblethroughonestudywhichhighlightshowMembersofCongresswhohavespecificstockinvestmentsmayvoteonregulatoryandinterventionistlegislation.[86]Twoproblemsmakelegislativeethicsofconflictsdifficultanddistinctive.[87]First,asJamesMadisonwrote,legislatorsshouldsharea"communionofinterests"withtheirconstituents.Legislatorscannotadequatelyrepresenttheinterestsofconstituentswithoutalsorepresentingsomeoftheirown.AsSenatorRobertS.Kerroncesaid,"IrepresentthefarmersofOklahoma,althoughIhavelargefarminterests.IrepresenttheoilbusinessinOklahoma...andIamintheoilbusiness...Theydon'twanttosendamanherewhohasnocommunityofinterestwiththem,becausehewouldn'tbeworthanickeltothem."[88]Theproblemistodistinguishspecialinterestsfromthegeneralinterestsofallconstituents.Second,the"politicalinterests"oflegislaturesincludecampaigncontributionswhichtheyneedtogetelected,andwhicharegenerallynotillegalandnotthesameasabribe.Butundermanycircumstancestheycanhavethesameeffect.Theproblemhereishowtokeepthesecondaryinterestinraisingcampaignfundsfromoverwhelmingwhatshouldbetheirprimaryinterest—fulfillingthedutiesofoffice.[citationneeded] PoliticsintheUnitedStatesisdominatedinmanywaysbypoliticalcampaigncontributions.[64]Candidatesareoftennotconsidered"credible"unlesstheyhaveacampaignbudgetfarbeyondwhatcouldreasonablyberaisedfromcitizensofordinarymeans.Theimpactofthismoneycanbefoundinmanyplaces,mostnotablyinstudiesofhowcampaigncontributionsaffectlegislativebehavior.Forexample,thepriceofsugarintheUnitedStateshasbeenroughlydoubletheinternationalpriceforoverhalfacentury.Inthe1980s,thisadded$3billiontotheannualbudgetofU.S.consumers,accordingtoStern,[89]whoprovidedthefollowingsummaryofonepartofhowthishappens: Contributionsfromthesugarlobby,1983–1986 Percentvotingin1985againstgraduallyreducingsugarsubsidies >$5,000 100% $2,500–5,000 97% $1,000–2,500 68% $1–1,000 45% $0 20% This$3billiontranslatesinto$41perhouseholdperyear.Thisisinessenceataxcollectedbyanongovernmentalagency:Itisacostimposedonconsumersbygovernmentaldecisions,butneverconsideredinanyofthestandarddataontaxcollections. Sternnotesthatsugarinterestscontributed$2.6milliontopoliticalcampaigns,representingwellover$1,000returnforeach$1contributedtopoliticalcampaigns.This,however,doesnotincludethecostoflobbying.LessigcitessixdifferentstudiesthatconsiderthecostoflobbyingwithcampaigncontributionsonavarietyofissuesconsideredinWashington,D.C.[90]Thesestudiesproducedestimatesoftheanticipatedreturnoneach$1investedinlobbyingandpoliticalcampaignsthatrangedfrom$6to$220.Lessignotesthatclientswhopaytensofmillionsofdollarstolobbyiststypicallyreceivebillions. Lessiginsiststhatthisdoesnotmeanthatanylegislatorhassoldhisorhervote.[80]OneofseveralpossibleexplanationsLessiggivesforthisphenomenonisthatthemoneyhelpedelectcandidatesmoresupportiveoftheissuespushedbythebigmoneyspentonlobbyingandpoliticalcampaigns.Henotesthatifanymoneypervertsdemocracy,itisthelargecontributionsbeyondthebudgetsofcitizensofordinarymeans;smallcontributionsfromcommoncitizenshavelongbeenconsideredsupportingofdemocracy.[91] Whensuchlargesumsbecomevirtuallyessentialtoapolitician'sfuture,itgeneratesasubstantiveconflictofinterestcontributingtoafairlywelldocumenteddistortiononthenation'sprioritiesandpolicies.[citationneeded] Beyondthis,governmentalofficials,whetherelectedornot,oftenleavepublicservicetoworkforcompaniesaffectedbylegislationtheyhelpedenactorcompaniestheyusedtoregulateorcompaniesaffectedbylegislationtheyhelpedenact.Thispracticeiscalledthe"revolvingdoor".Formerlegislatorsandregulatorsareaccusedof(a)usinginsideinformationfortheirnewemployersor(b)compromisinglawsandregulationsinhopesofsecuringlucrativeemploymentintheprivatesector.Thispossibilitycreatesaconflictofinterestforallpublicofficialswhosefuturemaydependontherevolvingdoor.[citationneeded] Financeindustryandelectedofficials[edit] ConflictsofinterestamongelectedofficialsispartofthestorybehindtheincreaseinthepercentofUScorporatedomesticprofitscapturedbythefinanceindustrydepictedinthataccompanyingfigure. FinanceasapercentofUSDomesticCorporateProfitsFinanceincludesbanks,securitiesandinsurance.In1932–1933,thetotalU.S.domesticcorporateprofitwasnegative.However,thefinancialsectormadeaprofitinthoseyears,whichmadeitspercentagenegative,below0andoffthescaleinthisplot.[92] From1934through1985,thefinanceindustryaveraged13.8%ofU.S.domesticcorporateprofit.Between1986and1999,itaveraged23.5%.From2000through2010,itaveraged32.6%.Someofthisincreaseisdoubtlessduetoincreasedefficiencyfrombankingconsolidationandinnovationsinnewfinancialproductsthatbenefitconsumers.However,ifmostconsumershadrefusedtoacceptfinancialproductstheydidnotunderstand,e.g.,negativeamortizationloans,thefinanceindustrywouldnothavebeenasprofitableasithasbeen,andtheLate-2000srecessionmighthavebeenavoidedorpostponed.Stiglitz[93]arguedthattheLate-2000srecessionwascreatedinpartbecause,"Bankersactedgreedilybecausetheyhadincentivesandopportunitiestodoso".Theydidthisinpartbyinnovatingtomakeconsumerfinancialproductslikeretailbankingservicesandhomemortgagesascomplicatedaspossibletomakeiteasyforthemtochargehigherfees.Consumerswhoshopcarefullyforfinancialservicestypicallyfindbetteroptionsthantheprimaryofferingsofthemajorbanks.However,fewconsumersthinktodothat.Thisexplainspartofthisincreaseinfinancialindustryprofits.(Note,however,thatStiglitzhasbeenaccusedofaconflictofinterestsandviolationofColumbiaUniversitytransparencypoliciesforfailingtodisclosehisstatusasapaidconsultanttogovernmentofArgentinaatthesametimehewaswritingarticlesindefenseofArgentina'splanneddefaultofover$1billioninbonddebtduringthe1998–2002Argentinegreatdepression,andforfailingtodisclosehispaidconsultancytothegovernmentofGreeceatthesametimehewasdownplayingtheriskofGreecedefaultingontheirdebtduringtheGreekgovernment-debtcrisisof2009.[94]) However,itisarguedthatamajorportionofthisincreaseandadrivingforcebehindLate-2000srecessionhasbeenthecorrosiveeffectofmoneyinpolitics,givinglegislatorsandthePresidentoftheU.S.aconflictofinterest,becauseiftheyprotectthepublic,theywilloffendthefinanceindustry,whichcontributed$1.7billiontopoliticalcampaignsandspent$3.4billion($5.1billiontotal)onlobbyingfrom1998to2008.[95][96][97] Tobeconservative,supposewe[tone]attributeonlytheincreasefrom23.5%of1986through1999totherecent32.6%averagetogovernmentalactionssubjecttoconflictsofinterestcreatedbythe$1.7billionincampaigncontributions.That's9%ofthe$3trillioninprofitsclaimedbythefinanceindustryduringthatperiodor$270billion.Thisrepresentsareturnofover$50foreach$1investedinpoliticalcampaignsandlobbyingforthatindustry.(This$270billionrepresentsalmost$1,000foreveryman,womanandchildintheUnitedStates.)Thereishardlyanyplaceoutsidepoliticswithsuchahighreturnoninvestmentinsuchashorttime.[citationneeded] Financeindustryandeconomists[edit] Economists(unlikeotherprofessionssuchassociologists)donotformallysubscribetoaprofessionalethicalcode.Closeto300economistshavesignedaletterurgingtheAmericanEconomicAssociation(thediscipline'sforemostprofessionalbody),toadoptsuchacode.ThesignatoriesincludeGeorgeAkerlof,aNobellaureate,andChristinaRomer,whoheadedBarackObama'sCouncilofEconomicAdvisers.[98] ThiscallforacodeofethicswassupportedbythepublicattentionthedocumentaryInsideJob(winnerofanAcademyAward)drewtotheconsultingrelationshipsofseveralinfluentialeconomists.[99]Thisdocumentaryfocusedonconflictsthatmayarisewheneconomistspublishresultsorprovidepublicrecommendationontopicsthataffectindustriesorcompanieswithwhichtheyhavefinanciallinks.Criticsoftheprofessionargue,forexample,thatitisnocoincidencethatfinancialeconomists,manyofwhomwereengagedasconsultantsbyWallStreetfirms,wereopposedtoregulatingthefinancialsector.[100] Inresponsetocriticismthattheprofessionnotonlyfailedtopredictthefinancialcrisisof2007–2008butmayactuallyhavehelpedcreateit,theAmericanEconomicAssociationhasadoptednewrulesin2012:economistswillhavetodisclosefinancialtiesandotherpotentialconflictsofinterestinpaperspublishedinacademicjournals.Backersarguesuchdisclosureswillhelprestorefaithintheprofessionbyincreasingtransparencywhichwillhelpinassessingeconomists'advice.[101] Stockbrokers[edit] Aconflictofinterestisamanifestationofmoralhazard,particularlywhenafinancialinstitutionprovidesmultipleservicesandthepotentiallycompetinginterestsofthoseservicesmayleadtoaconcealmentofinformationordisseminationofmisleadinginformation.Aconflictofinterestexistswhenapartytoatransactioncouldpotentiallymakeagainfromtakingactionsthataredetrimentaltotheotherpartyinthetransaction.[102] Therearemanytypesofconflictsofinterestsuchasapumpanddumpbystockbrokers.Thisiswhenastockbrokerwhoownsasecurityartificiallyinflatesthepricebyupgradingitorspreadingrumors,andthensellsthesecurityandaddsshortposition.Theywillthendowngradethesecurityorspreadnegativerumorstopushthepricebackdown.Thisisanexampleofstockfraud.Itisaconflictofinterestbecausethestockbrokersareconcealingandmanipulatinginformationtomakeitmisleadingforthebuyers.Thebrokermayclaimtohavethe"inside"informationaboutimpendingnewsandwillurgebuyerstobuythestockquickly.Investorswillbuythestock,whichcreatesahighdemandandraisestheprices.Thisriseinpricescanenticemorepeopletobelievethehypeandthenbuysharesaswell.Thestockbrokerswillthenselltheirsharesandstoppromoting,thepricewilldrop,andotherinvestorsareleftholdingstockthatisworthnothingcomparedtowhattheypaidforit.Inthisway,brokersusetheirknowledgeandpositiontogainpersonallyattheexpenseofothers.[citationneeded] TheEnronscandalisamajorexampleofpumpanddump.Executivesparticipatedinanelaboratescheme,falselyreportingprofits,thusinflatingitsstockprices,andcovereduptherealnumberswithquestionableaccounting;29executivessoldovervaluedstockformorethanabilliondollarsbeforethecompanywentbankrupt.[citationneeded] Afinancialinstitutionwithaconflictofinterestmayalsobechargedwithmarketmanipulation.Stockbrokersthatactasmarketmakershaveadutytoestablishbonafide.[103]Aconflictofinterestservesagainstthatregulation.Stockbrokershavetoprovethattheirtradinginterestsandtransactinginterestsdonotinterferewithservingtheinterestsofinvestorsatbrokerages[104] Media[edit] Anymediaorganizationhasaconflictofinterestindiscussinganythingthatmayimpactitsabilitytocommunicateasitwantswithitsaudience.Mostmedia,whenreportingastorywhichinvolvesaparentcompanyorasubsidiary,willexplicitlyreportthisfactaspartofthestory,inordertoalerttheaudiencethattheirreportinghasthepotentialforbiasduetothepossibilityofaconflictofinterest. Thebusinessmodelofcommercialmediaorganizations(i.e.,anythatacceptadvertising)issellingbehaviorchangeintheiraudiencetoadvertisers.[105][106][107]However,fewintheiraudienceareawareoftheconflictofinterestbetweentheprofitmotiveandthealtruisticdesiretoservethepublicand"givetheaudiencewhatitwants". Manymajoradvertiserstesttheiradsinvariouswaystomeasurethereturnoninvestmentinadvertising.AdvertisingratesaresetasafunctionofthesizeandspendinghabitsoftheaudienceasmeasuredbytheNielsenRatings.MediaactionexpressingthisconflictofinterestisevidentinthereactionofRupertMurdoch,ChairmanofNewsCorporation,ownerofFox,tochangesindatacollectionmethodologyadoptedin2004bytheNielsenCompanytomoreaccuratelymeasureviewinghabits.TheresultscorrectedapreviousoverestimateofthemarketshareofFox.MurdochreactedbygettingleadingpoliticianstodenouncetheNielsenRatingsasracists.[108][verificationneeded]SusanWhitingArchived2012-10-27attheWaybackMachine,presidentandCEOofNielsenMediaResearch,respondedbyquietlysharingNielsen'sdatawithherleadingcritics.Thecriticismdisappeared,andFoxpaidNielsen'sfees.[109]Murdochhadaconflictofinterestbetweentherealityofhismarketandhisfinances. Commercialmediaorganizationslosemoneyiftheyprovidecontentthatoffendseithertheiraudienceortheiradvertisers.Thesubstantialmediaconsolidationthatoccurredsincethe1980shasreducedthealternativesavailabletotheaudience,therebymakingiteasierfortheever-largercompaniesinthisincreasinglyoligopolisticindustrytohidenewsandentertainmentpotentiallyoffensivetoadvertiserswithoutlosingaudience.Ifthemediaprovidetoomuchinformationonhowcongressspendsitstime,amajoradvertisercouldbeoffendedandcouldreducetheiradvertisingexpenditureswiththeoffendingmediacompany;indeed,thisisoneofthewaysthemarketsystemhasdeterminedwhichcompanieswonandwhicheitherwentoutofbusinessorwerepurchasedbyothersinthismediaconsolidation.(Advertisersdon'tliketofeedthemouththatbitesthem,andoftendon't.Similarly,commercialmediaorganizationsarenoteagertobitethehandthatfeedsthem.)Advertisershavebeenknowntofundmediaorganizationswitheditorialpoliciestheyfindoffensiveifthatmediaoutletprovidesaccesstoasufficientlyattractiveaudiencesegmenttheycannotefficientlyreachotherwise.[citationneeded] Electionyearsareamajorboontocommercialbroadcasters,becausevirtuallyallpoliticaladvertisingispurchasedwithminimaladvanceplanning,payingthereforethehighestrates.Thecommercialmediahaveaconflictofinterestinanythingthatcouldmakeiteasierforcandidatestogetelectedwithlessmoney.[106] Accompanyingthistrendinmediaconsolidationhasbeenasubstantialreductionininvestigativejournalism,[106]reflectingthisconflictofinterestbetweenthebusinessobjectivesofthecommercialmediaandthepublic'sneedtoknowwhatgovernmentisdoingintheirname.ThischangehasbeentiedtosubstantialchangesinlawandcultureintheUnitedStates.Tociteonlyoneexample,researchershavetiedthisdeclineininvestigativejournalismtoanincreasedcoverageofthe"policeblotter".[110]ThishasfurtherbeentiedtothefactthattheUnitedStateshasthehighestincarcerationrateintheworld. Beyondthis,virtuallyallcommercialmediacompaniesownsubstantialquantitiesofcopyrightedmaterial.Thisgivesthemaninherentconflictofinterestinanypublicpolicyissueaffectingcopyrights.McChesneynotedthatthecommercialmediahavelobbiedsuccessfullyforchangesincopyrightlawthathaveled"tohigherpricesandashrinkingofthemarketplaceofideas",increasingthepowerandprofitsofthelargemediacorporationsatpublicexpense.Oneresultofthisisthat"thepeopleceasetohaveameansofclarifyingsocialprioritiesandorganizingsocialreform".[111]Afreemarkethasamechanismforcontrollingabusesofpowerbymediacorporations:Iftheircensorshipbecomestooegregious,theyloseaudience,whichinturnreducestheiradvertisingrates.However,theeffectivenessofthismechanismhasbeensubstantiallyreducedoverthepastquartercenturyby"thechangesintheconcentrationandintegrationofthemedia."[112]WouldtheAnti-CounterfeitingTradeAgreementhaveadvancedtothepointofgeneratingsubstantialprotestswithoutthesecrecybehindwhichthatagreementwasnegotiated—andwouldthegovernmentattemptstosustainthatsecrecyhavebeenassuccessfulifthecommercialmediahadnotbeenaprimarybeneficiaryandhadnothadaconflictofinterestinsuppressingdiscussionthereof? Mitigation[edit] Removal[edit] Thissectionneedsexpansion.Youcanhelpbyaddingtoit.(September2015) Sometimes,peoplewhomaybeperceivedtohaveaconflictofinterestresignfromapositionorsellashareholdinginaventure,toeliminatetheconflictofinterestgoingforward.[citationneeded]Forexample,LordEvansofWeardaleresignedasanon-executivedirectoroftheUKNationalCrimeAgencyafteratax-avoidance-relatedcontroversyaboutHSBC,whereLordEvanswasalsoanon-executivedirector.Thisresignationwasstatedtohavetakenplaceinordertoavoidtheappearanceofconflictofinterest.[113] "Blindtrust"[edit] Blindtrustscanperhapsmitigateconflictsofinterestscenariosbygivinganindependenttrusteecontrolofabeneficiary'sassets.Theindependenttrusteemusthavethepowertosellortransferinterestswithoutknowledgeofthebeneficiary.Thus,thebeneficiarybecomes"blind"totheimpactofofficialactionsonprivateinterestsheldintrust.[114] Asanexample,apoliticianwhoownssharesinacompanythatmaybeaffectedbygovernmentpolicymayputthosesharesinablindtrustwiththemselvesortheirfamilyasthebeneficiary.Itisdisputedwhetherthisreallyremovestheconflictofinterest,however. Blindtrustsmayinfactobscureconflictsofinterest,andforthisreasonitisillegaltofundpoliticalpartiesintheUKviaablindtrustiftheidentityoftherealdonorisconcealed. Disclosure[edit] Commonly,politiciansandhigh-rankinggovernmentofficialsarerequiredtodisclosefinancialinformation—assetssuchasstock,debtssuchasloans,and/orcorporatepositionsheld,typicallyannually.[115]Toprotectprivacy(tosomeextent),financialfiguresareoftendisclosedinrangessuchas"$100,000to$500,000"and"over$2,000,000".Certainprofessionalsarerequiredeitherbyrulesrelatedtotheirprofessionalorganization,orbystatute,todiscloseanyactualorpotentialconflictsofinterest.Insomeinstances,thefailuretoprovidefulldisclosureisacrime. However,thereislimitedevidenceregardingtheeffectofconflictofinterestdisclosuredespiteitswidespreadacceptance.[116]A2012studypublishedintheJournaloftheAmericanMedicalAssociationshowedthatroutinedisclosureofconflictsofinterestbyAmericanmedicalschooleducatorstopre-clinicalmedicalstudentswereassociatedwithanincreaseddesireamongstudentsforlimitationsinsomeindustryrelationships.[117]However,therewerenochangesintheperceptionsofstudentsaboutthevalueofdisclosure,theinfluenceofindustryrelationshipsoneducationalcontent,ortheinstructionbyfacultywithrelevantconflictsofinterest.[118] And,anincreasinglineofresearchsuggeststhatdisclosurecanhave"perverseeffects"or,atleast,isnotthepanacearegulatorsoftentakeittobe.[119] Recusal[edit] Thissectionismissinginformationaboutthefactthatrecusalisanexpectation,andnosolutionforsituationswhereCOIcan'tbeverified,asisthecaseonWP.Pleaseexpandthesectiontoincludethisinformation.Furtherdetailsmayexistonthetalkpage.(September2015) Thosewithaconflictofinterestareexpectedtorecusethemselvesfrom(i.e.,abstainfrom)decisionswheresuchaconflictexists.Theimperativeforrecusalvariesdependinguponthecircumstanceandprofession,eitherascommonsenseethics,codifiedethics,orbystatute.Forexample,ifthegoverningboardofagovernmentagencyisconsideringhiringaconsultingfirmforsometask,andonefirmbeingconsideredhas,asapartner,acloserelativeofoneoftheboard'smembers,thenthatboardmembershouldnotvoteonwhichfirmistobeselected.Infact,tominimizeanyconflict,theboardmembershouldnotparticipateinanywayinthedecision,includingdiscussions. Judgesaresupposedtorecusethemselvesfromcaseswhenpersonalconflictsofinterestmayarise.Forexample,ifajudgehasparticipatedinacasepreviouslyinsomeotherjudicialrolehe/sheisnotallowedtotrythatcase.Recusalisalsoexpectedwhenoneofthelawyersinacasemightbeaclosepersonalfriend,orwhentheoutcomeofthecasemightaffectthejudgedirectly,suchaswhetheracarmakerisobligedtorecallamodelthatajudgedrives.ThisisrequiredbylawunderContinentalcivillawsystemsandbytheRomeStatute,organiclawoftheInternationalCriminalCourt. Third-partyevaluations[edit] Thissectiondoesnotciteanysources.Pleasehelpimprovethissectionbyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.(September2015)(Learnhowandwhentoremovethistemplatemessage) Considerasituationwheretheownerofamajorityofapubliccompaniesdecidestobuyouttheminorityshareholdersandtakethecorporationprivate.Whatisafairprice?Obviouslyitisimproper(and,typically,illegal)forthemajorityownertosimplystateapriceandthenhavethe(majority-controlled)boardofdirectorsapprovethatprice.Whatistypicallydoneistohireanindependentfirm(athirdparty),well-qualifiedtoevaluatesuchmatters,tocalculatea"fairprice",whichisthenvotedonbytheminorityshareholders. Third-partyevaluationsmayalsobeusedasproofthattransactionswere,infact,fair("arm's-length").Forexample,acorporationthatleasesanofficebuildingthatisownedbytheCEOmightgetanindependentevaluationshowingwhatthemarketrateisforsuchleasesinthelocale,toaddresstheconflictofinterestthatexistsbetweenthefiduciarydutyoftheCEO(tothestockholders,bygettingthelowestrentpossible)andthepersonalinterestofthatCEO(tomaximizetheincomethattheCEOgetsfromowningthatofficebuildingbygettingthehighestrentpossible). AJanuary2018reportbythePublicCitizennon-profitdescribesdozensofforeigngovernments,specialinterestgroupsandGOPcongressionalcampaigncommitteesthatspenthundredsofthousandsofdollarsatPresidentDonaldTrump'spropertiesduringhisfirstyearinoffice.Thestudysaidthatthesegroupsclearlyintendedtowinoverthepresidentbyhelpinghiscommercialbusinessempireprofitwhileheheldtheoffice.[120] Seealso[edit] Conflict-of-interesteditingonWikipedia Conflictsofinterestinacademicpublishing Corruption Dutytodefend Ethics Incentive Insidertrading Jurynullification Moralhazard Perverseincentive Quidproquo Remuneration Reservationofrights Revolvingdoor(politics) Tragedyofthecommons Vestedinterest(communicationtheory) References[edit] ^Komesaroff,PaulA.;Kerridge,Ian;Lipworth,Wendy(2019)."KomesaroffPA,KerridgeI,LipworthW."Conflictsofinterest:newthinking,newprocesses".InternalMedicineJournal.49(5);2019:574-577".InternalMedicineJournal.49(5):574–577.doi:10.1111/imj.14233.PMID 30693633.S2CID 59340797. ^LoandField(2009).ThedefinitionoriginallyappearedinThompson(1993). ^DennisF.Thompson(19August1993)."Understandingfinancialconflictsofinterest".TheNewEnglandJournalofMedicine.doi:10.1056/NEJM199308193290812. ^Wolfram,Charles(1986).MODERNLEGALETHICS.WestPublishingCompany.pp. §7.1.1.ISBN 9780314926395. ^GregoryC.Sisketal,LegalEthics,ProfessionalResponsibility,andtheLegalProfession§4-7.1(2018). ^HazardandDondi,GeoffreyCandAngelo(2004).LEGALETHICS:ACOMPARATIVESTUDY.StanfordUniversityPress.ISBN 9780804748827. ^AConciseRestatementoftheLawGoverningLawyers§60(Am.LawInst.2007). ^AConciseRestatementoftheLawGoverningLawyers§121(Am.LawInst.2007). ^Wolfram,§7.3.2. ^ModelRulesofProf'lConductr.1.7(Am.BarAss'n1983). ^abModelRulesofProf'lConductr.1.9(Am.BarAss'n1983). ^abSisk,etal,§4-7.1at357-58. ^Sisk,etal,§4-7.1at357-58. ^Flattv.SuperiorCourt,9Cal.4th275,282(1994). ^Flattv.SuperiorCourt,9Cal.4th275,282(1994). ^Cinema5,Ltdv.Cinerama,Inc.,528F.2d1384,1387(2dCir.1976). ^Wolfram§7.3.2.at350. 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Furtherreading[edit] Acocella,N.andDiBartolomeo,G.andPiacquadio,P.G.[2009],Conflictofinterest,(implicit)coalitionsandNashpolicygames,in:EconomicsLetters,105:303–305. Black,WilliamK.(2005).TheBestWaytoRobaBankIstoOwnOne.Austin,TX:UniversityofTexasPress.ISBN 978-0-292-72139-5. Davis,Michael;AndrewStark(2001).Conflictofinterestintheprofessions.Oxford:OxfordUniversityPress.ISBN 978-0-19-512863-5. Lessig,Lawrence(2011).Republic,Lost:HowMoneyCorruptsCongress--andaPlantoStopIt.Twelve.ISBN 978-0-446-57643-7. Lo,Bernard;MarilynJ.Field(2009).ConflictofInterestinMedicalResearch,Education,andPractice.Washington,D.C.:NationalAcademiesPress.ISBN 978-0-309-13188-9. Porter,RogerJ.;ThomasE.Malone(1992).Biomedicalresearch:collaborationandconflictofinterest.Baltimore:JohnsHopkinsUniversityPress.ISBN 978-0-8018-4400-3. Thompson,Dennis(1995).EthicsinCongress:FromIndividualtoInstitutionalCorruption.Washington,D.C.:BrookingsInstitutionPress.ISBN 978-0-8157-8423-4. Thompson,Dennis(1993)."Understandingfinancialconflictsofinterest".NewEnglandJournalofMedicine.329(8):573–76.CiteSeerX 10.1.1.466.1945.doi:10.1056/NEJM199308193290812.PMID 8336759. Externallinks[edit] Wikiquotehasquotationsrelatedto:Conflictofinterest Thacker,PaulD.(November2006)."Environmentaljournalsfeelpressuretoadoptdisclosurerules".EnvironmentalScience&Technology.40(22):6873–6875.Bibcode:2006EnST...40.6873T.doi:10.1021/es062808a.PMID 17153989. McDonald,Michael."EthicsandConflictofInterest".W.MauriceYoungCentreforAppliedEthics.Archivedfromtheoriginalon2007-11-03. vteConflictofinterestIssues Chinesewall Conflictofinterestinthehealthcareindustry ConflictsofinterestonWikipedia Fundingbias Insidertrading Judicialdisqualification Nepotism Regulatorycapture Self-dealing Self-regulation Statecapture Shill Related AllTrials Arm'slengthprinciple Bias Businessethics Cochrane Corruption Cuibono Followthemoney Legalethics Lobbying Medicalethics cases Medicalghostwriter Moralhazard Pharmaceuticalmarketing Pharmaceuticalsalesrepresentative Pharmacovigilance Politicalethics Politicalbias Revolvingdoor Sponsorshipofcontinuingmedicaleducation Law Nemoiudexincausasua RvBowStreetMetropolitanStipendiaryMagistrate,expartePinochet(No2) RvNeil RvSussexJustices,exparteMcCarthy Media BadPharma BigPharma InsideJob SideEffects WhoKilledtheElectricCar? 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