Where Conflicts of Interest Are Concerned, What You Don’t Know Can Most Definitely Hurt You
Written by Mark J Ohringer
Ask the proverbial person on the street, or for that matter most college graduates, what an undisclosed conflict of interest is and you’ll likely get a blank stare. Or, at best, a very imperfect definition. And if they’re not quite sure what conflicts of interest are or how to avoid them, then they will probably commit plenty of them in their personal lives and at work. This is unfortunate, since the conflict of interest is at the root of much evil.
Actually, most of the Ten Commandments could have been replaced by “Thou Shalt Not Commit an Undisclosed Conflict of Interest,” although admittedly that would probably have made them a much harder sell. But if that had occurred 5,000 years ago and the rabbis, priests and mullahs had subsequently used the concept as the basis for their moral teachings, we all could have been a lot better off.
But none of that happened, so we have some work to do. We need to do a much better job of making everyone—our children, our work colleagues, our friends and our enemies—understand and deeply internalize what an undisclosed conflict of interest is, why it is so bad, that it can occur in almost every facet of life, and that identifying it early and preventing it will almost always be the smart thing to do.
While it is, of course, naïve to think that this will really happen on a grand scale, it doesn’t mean we shouldn’t try, since even some modest improvement would make the world a significantly less corrupt and unhappy place.
What are we really talking about here? Well, if you think about it, the existence of a conflict of interest is at the core of most problematic situations, whatever their type. If it goes on for a while, and before those affected by it also know about it, then when they eventually do find out (given that it is almost impossible to keep conflicts hidden forever), they inevitably will feel cheated, deflated and taken advantage of. They will also lose faith and confidence in the perpetrator in a way that can probably never be fully rectified or forgiven, no matter the depth of the apology or the attempt to make it right.
Obvious examples abound:
- A doctor prescribing a drug made by a company that is paying him to consult on the drug’s effectiveness;
- A wife cheating on her spouse;
- A journalist writing an investigative article about a family friend;
- An executive who leases space for his employer in an office building he owns; and
- A mayor who pushes through a zoning variance for a developer who has offered her a job after she is out of office;
Some more subtle ones would be:
- Accepting tickets to a (definitely hypothetical) Cubs World Series game for you and your son from a vendor you manage at work (and who will not be going with you to the game);
- Recommending your best friend’s daughter for a job posted by one of your subordinates; and
- Publishing a review of a restaurant that advertises in your magazine.
These all have one thing in common, which gets to the core of how to define a conflict of interest in the first place: it is where Jane has created some kind of secret and divided loyalty such that she may not be able to remain fully faithful to the interests of Frank, who is relying on her. This literally defrauds and devalues Jane’s relationship with Frank. If and when Frank finds out about it, we all know Frank will feel cheated since Frank will not be sure that he really needed the medicine, that his company got the best deal on its lease, or that his company hired the best person for the job. Frank will not trust Jane anymore and may never want to associate with her again. This hurts Jane too, since her reputation may suffer, she may lose her job, she may lose her family or, in an extreme case, she may land in prison. Jane probably won’t really know how much damage she inflicted on herself until one or more of these things happens, at which point it will be too late to unscramble the eggs.
Like most interpersonal ills, much of this avoidable. Easily. The primary challenge is for someone to identify in the first place that he may be creating, or stumbling into, a situation that may result in a conflict of interest. And if he doesn’t see it himself, then likely he won’t be disclosing it, which significantly compounds the problem. This is where we come back to the Ten Commandments point. As a society, we clearly do not do enough to educate ourselves about what a conflict of interest is and why divided loyalties can result in so much misery. I’ll bet the vast majority of humanity goes all the way through school, and that includes most graduate schools, without ever even hearing the words “conflict of interest.” They hear lots about situations that constitute conflicts of interest (the core of most great literature, for example), but did you ever have a class where the teacher really talked about it as a sophisticated topic in its own right? I didn’t until law school, and then it was only in the context of the sometimes oxymoronic legal ethics rules about not representing two clients who might have adverse interests. And religious education doesn’t do a good job of this either, which I suppose helps explain the devilish hypocrisy for which some religious organizations have become infamous (we will go no further on that point here).
If there was any kind of explicit and meaningful education on conflicts of interest—anywhere—then it would also explain how potential conflicts can often be diffused in a simple way that keeps them from being ruinous. The first step is, of course, just to be taught how to identify when your loyalties may go in more than one direction, as the result of which you may not be able to satisfy someone who is relying on your relationship to be pure and whole. Once you identify the possibility, then the right step is affirmatively to decide to take one of two distinct paths: (1) you can get rid of one of the conflicting relationships; or (2) if you think you can keep both relationships and successfully navigate between them, then you can disclose the issue to the other participants and determine how to protect their interests in a way that is satisfactory to both of them.
If you take the second, ultimately more complicated, path, there are in turn two possible outcomes, either of which can be okay. First, one of the other participants may decide to back out of the relationship; he may not be happy about it, but at least he won’t feel cheated by you and will probably at least respect you for treating him openly and he won’t feel taken advantage of. Or, if they both would prefer to stick with you, you may be able to put protections in place to keep the potential conflict from causing a divided loyalty. Maybe you can get an independent review of that lease so that your boss knows it is at market rates and terms. Or you can get your patient a second opinion on those meds. Or you can sell your husband on the idea of an open marriage(!). Or whatever. You get the point. When everything is in the open, everyone can take care of him or herself and make the best decisions without any hard feelings. Eyes wide open, no secrets, a chance to balance all interests appropriately. No deflation, no devaluation, no big deal.
If we had “Thou Shalt Not Commit an Undisclosed Conflict of Interest” (or maybe it should have been “Thou Shall Disclose All Potential Conflicts”), as well as a little education about what that means, then we wouldn’t have specifically needed the ones about no other gods or idols, murder, adultery, theft and coveting your neighbor’s stuff, and that list is on the conservative side. Not to mention, maybe we could have avoided a few wars, genocides and financial crises along the way.
