Conflict of interest

For the Babylon 5 episode, see Conflicts of Interest

A conflict of interest is a situation in which someone in a position of trust, such as a lawyer, a politician, or an executive or director of a corporation, has competing professional and/or personal interests. Such competing interests can make it difficult to fulfill his or her duties fairly. Even if there is no evidence of improper actions, a conflict of interest can create an appearance of impropriety that can undermine confidence in the ability of that person to act properly.

In the legal profession, the duty of loyalty owed to a client is generally supposed to preclude an attorney (or a law firm) from representing persons with interests adverse to those of the client. As perhaps the most common example encountered by the general public, the same firm will not represent both parties in a divorce case.

More generally, conflict of interest can be defined as any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit.

Having a conflict of interest is not, in and of itself, evidence of wrongdoing. In fact, for many professionals, it is virtually impossible to avoid having conflicts of interest from time to time. A conflict of interest can, however, become a legal matter if an individual tries to (and/or succeeds in) influencing the outcome of a decision, for personal benefit.

There often is confusion over these two situations. Someone accused of a conflict of interest may deny that a conflict exists because he/she did not act improperly. In fact, a conflict of interest does exist even if there are no improper acts as a result of it. (One way to understand this is to use the term "conflict of roles". A person with two roles - an individual who owns stock and is also a government official, for example - may experience situations where those two roles conflict. The conflict can be mitigated - see below - but it still exists. In and of itself, having two roles is not illegal, but the differing roles will certainly provide an incentive for improper acts in some circumstances.)


Types of conflicts of interests

The following are the most common forms of conflicts of interests:

  • Self-dealing, in which public and private interests collide, for example issues involving privately held business interests,
  • Outside employment, in which the interests of one job contradict another,
  • Family interests, in which a spouse, child, or other close relative is employed (or applies for employment) or where goods or services are purchased from such a relative or a firm controlled by a relative. For this reason, many employment applications ask if one is related to a current employee. If this is the case, the relative could then recuse from any hiring decisions.
  • Gifts from friends who also do business with the person receiving the gifts. (Such gifts may include non-tangible things of value such as transportation and lodging.)

Other improper acts that are sometimes classified as conflicts of interest are probably better classified elsewise. Accepting bribes can be classified as corruption; almost everyone in a position of authority, particularly public authority, has the potential for such wrongdoing. Similarly, use of government or corporate property or assets for personal use is fraud, and classifying this as a conflict of interest does not improve the analysis of this problem. Nor should unauthorized distribution of confidential information, in itself, be considered conflict of interest. For these improper acts, there is no inherent conflict of roles (see above), unless being a (fallible) human being rather than (say) a robot in a position of power or authority is considered to be a conflict.

Ways to mitigate conflicts of interests

The best way to handle conflicts of interest are to avoid them entirely. For example, someone elected to political office might sell all corporate stocks that he/she owns before taking office, and resign from all corporate boards. Or that person could move his/her corporate stocks to a special trust, which would be authorized to buy and sell without disclosure to the owner. (This is referred to as a "blind trust".) With such a trust, since the politican does not know in which companies he/she has investments, there should be no temptation to act to their advantage.

Short of avoiding conflicts of interest, the best way to deal with them is one of more of the following (mitigation) measures:


Commonly, politicians and high-ranking government officials are required to disclose financial information - assets such as stock, debts such as loans, and/or corporate positions held, typically annually. To protect privacy (to some extent), financial figures are often disclosed in ranges such as "$100,000 to $500,000" and "over $2,000,000".


Those with a conflict of interest are (ethically) expected not to participate in decisions where such a conflict exists. For example, if the governing board of a government agency is considering hiring a consulting firm for some task, and one firm being considered has, as a partner, the spouse of one of board's members, then that board member should not vote on which firm is to be selected. In fact, to minimize any conflict, the board member should not participate in any way in the decision, including discussions. Such non-participation is called recusing oneself.

Judges recuse themselves from cases from time to time due to personal conflicts of interest. For example, they might have participated in a case in the years before becoming a judge. Or one of the lawyers in a case might be a close personal friend. Or the outcome of the case might affect the judge directly, such as a case about whether an increase in judicial salaries within a state is legal.

Third-party evaluations

Consider a situation where the owner of a majority of a publicly-held corporation decides to buy out the minority shareholders and take the corporation private. What is a fair price? Obviously it is improper (and, typically, illegal) for the majority owner to simply state a price and then have the (majority-controlled) board of directors approve that price. What is typically done is to hire an independent firm (a third-party), well-qualified to evaluate such matters, to calculate a "fair price", which is then voted on by the minority shareholders.

Third-party evaluations can also be used as proof that transactions were in fact fair ("arms-length"). For example, a corporation that leases an office building that is owned by the CEO might get an independent evaluation showing what the market rate is for such leases in the locale, to address the conflict of interest that exists between the fiduciary duty of the CEO (to the stockholders) and the personal interest of that CEO (to maximize the income that the CEO gets from owning that office building).

Codes of ethics

Generally, codes of ethics forbid conflicts of interest. Often, however, the specifics can be controversial. Should therapists, such as psychiatrists, be allowed to have sexual relations with patients? Ex-patients? Should a faculty member be allowed to have a sexual relationship with a student, and should that depend on whether the student is in a class of, or being advised by, the faculty member?

Codes of ethics help to minimize problems with conflicts of interest because they can spell out the extent to which such conflicts should be avoided, and what the individual should do where such conflicts are permitted by a code of ethics (disclosure, recusal, etc.). Thus, professionals cannot claim that they were unaware that their improper behavior was unethical. As importantly, the threat of disciplinary action (for example, a lawyer being disbarred) helps to minimize unacceptable conflicts or improper acts when a conflict is unavoidable.


United States Office of Government Ethics (

Conflict of Interest in the Professions (, by Michael Davis and Andrew Stark, 2001

Biomedical Research: Collaboration and Conflict of Interest (, by Roger J. Porter and Thomas E. Malone.

Ethics and Conflict of Interest (

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