Archive for the ‘professionalism’ Category

Sandusky’s Lawyer & Business Ethics

Just like a defence lawyer in a criminal trial, a CEO has a specific goal to achieve. The CEO’s goal is to turn a profit, and it’s a goal rooted as much a duty to society as it is a duty to shareholders. And, importantly, when it comes to both defence lawyers and CEOs, you don’t have to agree with their goals in order to value the role they play in the larger system.

The trial of former football coach Jerry Sandusky illustrates what I’m talking about.

Jerry Sandusky’s lawyer has an unenviable job. His job is to defend—vigorously and wholeheartedly—a man that pretty much everyone else has already assumed is guilty.

Joseph Amendola, lead defence lawyer for Sandusky, has taken on the task of defending the former Pennsylvania State University assistant football coach against 52 charges of child sexual abuse. In the minds of many, this makes Amendola only slightly less worthy of scorn than his client. After all, how can anyone seriously defend a man against whom there is so much compelling evidence?

The catch here is that we cannot evaluate the ethics of a defence lawyer without looking at the bigger picture, and the bigger picture is the adversarial system within which the defence lawyer operates. Amendola isn’t just some guy defending a child molester; he’s a defence attorney playing his part in a system that places very specific ethical obligations on defence attorneys.

The point here isn’t really about the legal system. The point is that the people who play a role in a system don’t necessarily have to pursue the goals of the system directly. In fact, in some cases that would be downright counter-productive. Let’s assume, for example, that the goal of the criminal justice system is precisely what the name implies: justice. The fact that justice is the goal of the system absolutely doesn’t imply that every participant in the system has to pursue justice. Compare: a football team’s objective is to get the football into the opponent’s end-zone. But that doesn’t mean that every member of the team is trying to get the ball across that line. An Offensive Guard who focused on moving the ball would be failing at his job: his job is, pure and simple, to protect the quarterback.

What’s important in any complex institution—football team, system of justice, or a market — is that every ‘player’ do his part. Then if the institution is designed reasonably well, the sum total of the actions of various ‘players’ will result in the system that performs well as a whole. If all the players on a football team do their jobs well, the ball moves forward toward the end zone. If all the lawyers in a system of criminal justice do their jobs well, then more often than not the guilty will be punished and the innocent will go free.

So, Amendola is duty-bound to make Sandusky’s interests his first priority. But the reason is not that Sandusky deserves it. The reason is that the system as a whole requires it. The adversarial legal system can only have any hope of rendering justice if the parts of the system diligently play their roles.

The exact same principle applies to the profit-seeking behaviour of CEOs. As Joseph Heath points out in his scholarly work on this topic, the profit-seeking behaviour of companies is an essential element of the pricing function of the Market. When companies pursue profits in a competitive environment, it helps drive prices toward market-clearing levels. This helps ensure that supply of and demand for a given product settle at the socially-optimal level. So it is important, not just to shareholders but to society as a whole, that companies pursue profits. That is how companies and their CEOs play their role in producing the social benefits that flow from the market.

Of course, in the case of both defence lawyers and corporate executives, the obligation to pursue partisan goals is not unlimited. There are certain things you cannot do as a defence lawyer—suborning perjury, for example, or tampering with evidence. Such behaviour would reliably subvert the goals of the system. Similarly, there are things that an executive must not do in pursuit of profits. Figuring out which things those are—what the limits are on competitive behaviour in an adversarial market—is the very heart of business ethics.

Financial Advice, Competency, and Consent

I blogged recently on a California case about an insurance agent who was sentenced to jail for selling an Indexed Annuity — a complex investment instrument — to an elderly woman who may have been showing signs of dementia. I argued that giving investment advice is just the sort of situation in which we should expect professionals to live up the standard of ‘fiduciary’, or trust-based duty. An investment advisor is not — cannot be — just a salesperson.

But asserting that investment advisors have fiduciary duties doesn’t settle all relevant ethical questions. It settles how strong or how extensive the advisor’s obligation is; but it doesn’t settle just how the financial advisor should go about living up to it.

The story alluded to above again serves as a good example of that complexity. How should a financial advisor, in his or her role as fiduciary, handle a situation in which the client shows signs of a lack of decision-making competency? Sure, the advisor needs to give good advice, but in the end the decision is still the client’s. How can an advisor know whether a client is competent to make such a decision?

In the field of healthcare ethics, there is an enormous literature on the question of ‘informed consent,’ including the conditions under which consent may not be fully valid, and the steps health professionals should take to safeguard the interests of patients in such cases.

The way the concept is explained in the world of healthcare ethics, informed consent has three components, namely disclosure, capacity and voluntariness. Before a health professional can treat you, he or she needs to disclose the relevant facts to you, make sure you have the mental and emotional capacity to make a decision, and then make sure your decision is voluntary and uncoerced. And the onus is on the professional to ensure that those three conditions are met. But there’s really nothing very special about healthcare in this regard. Selling someone an Indexed Annuity isn’t as invasive, perhaps, as sticking a needle in them, but it often has much more serious implications.

Of the three conditions cited above — disclosure, capacity and voluntariness — disclosure is of course the easiest for those in the investment professions to agree to. Of course you need to tell your client the risks and benefits of the product you’re suggesting to them. But of course, many financial products have an enormous range of obscure and relatively small risks — must the client be told about those, too? There’s only so much time in a day, and most clients won’t care about — or be able to evaluate — those tiny details.

Voluntariness might also be thought of as pretty straightforward. A client who shows up alone and who doesn’t seem distressed is probably acting voluntarily, and it’s unlikely that we want investment professionals poking around our personal lives to find out if there’s a greedy nephew lurking in the background and badgering Aunt Florence to invest in penny stocks.

What about capacity? That’s the tough one, the one implicated in the court decision alluded to above. Notice that in most areas of the market, no one tries to assess your capacity before selling to you. I bought a car recently, and all the salesperson cared about was a driver’s licence and my ability to pay. No one tried very hard to figure out if I was of sound mind — beyond immediate appearances — and hence able to make a rational purchase.

Investment professionals do typically recognize a duty to ensure the “suitability” of an investment, and presumably whether an investment is suitable depends on more than just the client’s financial status. It also depends in part upon whether the client is capable of understanding the relevant risks. Being a true professional and earning the social respect that goes with that designation is going to require that financial advisors of all sorts adopt a fiduciary view of their role. That means learning at least a bit about the signs of dementia and other forms of diminished capacity. It also means knowing how and when to refer a client to a relevant health professional. Finally and most crucially, it means putting the client first — solidly and entirely first — and hence being willing to forego a sale when that is clearly the right thing to do.

Investment Advice and Fiduciary Duties

Most of us rely on accredited professionals for a range of services. Doctors, lawyers, accountants and so on play a huge role in our lives, giving us advice and rendering services that we would be foolish to provide for ourselves. Some topics, in other words, are beyond the ken of even the dedicated do-it-yourselfer. Financial planning is in that category. If you plan to do anything much beyond storing your money in a mattress, you probably want help from a professional. And you hope — really, really hope — that that professional is on the ball and has your best interests at heart.

A recent story highlights some of the difficulties in this regard. The story is about an independent insurance agent facing jail time for selling a particular kind of investment — an indexed annuity — to an 83-year-old woman. The catch: prosecutors say the woman showed signs of dementia, and the implication is that the agent took advantage of the fact that the buyer may not have understood the limits and disadvantages of the investment instrument she was buying.

Even minus the question of the buyer’s competency, there are worries here. For perspective on this story, I talked to Prof. John Boatright, who literally wrote the book on ethics in finance. He pointed out to me that Equity-Indexed Annuities are so complex that they’re a dubious product quite generally. He also pointed out that such annuities are investment instruments sold by people in the insurance industry who are not truly investment specialists. Most investment instruments are regulated such that they can only be sold by investment professionals with suitable training and credentials.

But regardless of the kind of professional you go to for investment advice, the underlying ethical question is whether that professional is going to have your best interests at heart. When the thing you’re buying is too complex to understand, you have to put your trust in the seller. Such trust is best underpinned by what are called fiduciary duties. A fiduciary, roughly speaking, is someone to whom something of value is entrusted. And a professional who bears a fiduciary duty has a stronger obligation than a mere salesman. Someone out to sell you something — a car, a stereo, whatever — has a plain obligation not to deceive you, but generally isn’t obligated to make sure that the product is right for you. Whether the product is right for you is up to you to decide. But a fiduciary is held to a higher standard. As Alexei Marcoux points out, we are vulnerable in various ways to professionals of various kinds, and that vulnerability generates duties on the part of those professionals, not just to be honest to us but to put our interests first. The transaction between a professional and a client is not a regular market transaction; rather, it is (or ought to be) governed by the higher standard implied by a fiduciary relationship.

Whether financial advisors and financial planners proclaim and live up to such a high standard is another matter. It certainly seems they should. In some places, financial professionals are explicitly expected to live up to the standard applied by a fiduciary duty, and other jurisdictions are moving in that direction. If ever there were a circumstance in which we were vulnerable, a situation in which we are trusting a stranger to tell us what to do with our life’s savings seems to fit the bill.

Must the Captain Go Down With His Ship?

Italian cruise-ship Captain Francesco Schettino is in jail, following an incident that left 6 dead and (at present) 29 missing. Among the accusations levied against is that he fled the foundering vessel before it was empty. (According to maritime law, a captain doesn’t literally have to “go down with the ship,” but he or she is supposed to be the last one off after ensuring the safety of others.)

Legal requirements aside, is there an ethical obligation for a captain to risk life and limb to stay on board until the last passenger and crewmembers are off? The answer is pretty clearly “yes.” Like many jobs, the job of captaining a ship comes with a range of risks and benefits. As long as the risks were understood when the job was taken on, you’re obligated to follow through.

There’s a more general point to be made here about the nature of ethics, and about ethics education and training.

Ethics often requires of us actions that we’d rather not carry out. You should tell the truth, even when it would be more convenient not to. You should keep your promises, even when breaking them would be more profitable. This is necessarily the case: if ethics only ever required you to do things you already wanted to do, there’d be no need for ethical rules (or at least no need to think of them as rules in the prescriptive sense).

But there’s at least a superficial tension, here, with the idea that ethics should be useful. After all, if having and following an ethical code doesn’t benefit us in some way, why bother? Sure, it’s easy enough to say “The right thing to do is the right thing to do,” but a system of ethics needs some justification in terms of human well-being or it’s just not going to be very credible, not to mention stable. Indeed, some ethical systems are subject to serious criticism precisely because their implications for human well-being are negative. Yes yes, I understand that your code of honour requires you to kill the man who killed your brother, but don’t you see how crazy this all is?

So there’s got to be some connection between ethics and benefit. And it’s not enough to point to social benefit. After all, pointing out that the community benefits from me taking ethics seriously merely pushes the question of justification to a second level: why should I care about the good of the community, especially if doing so requires significant self-sacrifice?

None of this should engender skepticism or cynicism. It just means we need to think carefully about who benefits, and how, from a system of ethics.

It also means that we need to think about how we can help individuals keep the promises that it was in their interest, initially to make. Captain Schettino found it in his interest to make certain promises (albeit perhaps implicit ones) when he signed on to be captain of the Costa Concordia, but then all of a sudden found himself in a situation where it was not in his interest to keep that promise. Threats of punishment were understandably insufficient, here. Staying out of jail is no great incentive if you’re free-but-dead.

Organizations of all kinds — including especially corporations and professional associations — need to work hard to help members think of the relevant ethical rules as something more than the terms of a contract, to help members become the sorts of people who simply would never abandon ship when they are needed most.

The Social Responsibilities of Lawyers

If there’s serious academic topic and social issue that might generate more stupid jokes than Business Ethics, it’s Legal Ethics. Which is too bad, since it’s an important topic. And that’s the topic raised by a recent story in the Boston Globe about lawyers who specialize in defending drivers accused of drunk driving.

Anyone with a broad interest in business ethics is almost inevitably going to run into questions of legal ethics, for a couple of reasons. One reason is that many corporations employ lawyers, and so businesses have to know about the ethical constraints on these very special employees. The other reason is that lawyers who don’t work for big companies are, themselves, either partners in law firms or owners of their own small businesses. And whether you work for a business or run one, questions arise regarding the intersection of, and perhaps conflict between, legal ethics on one hand and business ethics on the other.

One of the crucial ethical question that must inevitably arise for lawyers is this: what are a lawyer’s social responsibilities? In other words, what are a lawyer’s obligations to the society she lives in, while she goes about trying to ply her trade and make a living?

There’s a very strong argument to be made to the effect that the key way in which lawyers serve society — their key social responsibility — is by serving their clients well. Ours is an adversarial legal system, under which all parties to a dispute are entitled to legal representation. A key presumption of the system is that we are most likely to arrive at a just outcome if all parties to the dispute are represented by lawyers who vigourously pursue their clients’ interest. So the morality of whole system effectively stands or falls with the practice of zealous advocacy. We can never be 100% confident in the outcome of a trial, perhaps, but at least we know each side had its bulldog.

Now, it’s widely recognized among legal scholars that there are limits to zealous advocacy. Lawyers are forbidden from directly breaking the law in attempting to help their clients, and from derailing the court’s processes by, for example, suborning perjury or destroying evidence. But beyond that, lawyers are entitled — indeed, required — to do their damnedest.

Yale legal scholar Robert W Gordon wrote a nice piece a few years back called “Why Lawyers Can’t Just Be Hired Guns.” Gordon’s basic argument is essentially that lawyers play too important a role in modern society for them to think of themselves as solely beholden to their clients. In particular, Gordon argues that a lawyer’s right to engage in zealous advocacy only makes sense to the extent that lawyers also help support the system within which such advocacy ends up being constructive:

…lawyers’ work on behalf of clients positively requires—both for its justification and its successful functioning for the benefit of those same clients in the long run—that lawyers also help maintain and refresh the public sphere, the infrastructure of law and cultural convention that constitutes the cement of society.

(You’ll find Goron’s piece in a very good book called Ethics in Practice: Lawyers’ Roles, Responsibilities, and Regulation, edited by Deborah L. Rhode.)

It’s worth noting that Gordon’s argument about social responsibility is essentially an argument about the limits that apply to the fundamental moral obligation that lawyers have to faithfully play their role in the larger legal system. And it’s equally worth noting that that obligation cannot be described without reference to that system, and to the role we want lawyers to play within it.

There’s a general lesson, here. We shouldn’t think of ethics strictly in terms of the human micro-implications of a particular situation. We need also to look carefully at the roles individuals play in important social structures, and the roles those structures play in society as a whole.

Workplace Accommodation of Masturbation

Here’s an odd story, to say the least. A woman in Brazil has apparently won the legal right to masturbate at work — frequently — and to watch porn on her work computer as part of that activity.

Here’s the story, from David Moye blogging for the Huffington Post, via the Employer Handbook blog:

In a decision that can only be described as touchy, a Brazilian judge has reportedly ruled that a 36-year-old female accountant can legally masturbate at work and watch porn on her work computer.

Ana Catarian Bezerra successfully argued that she suffers from a chemical imbalance that triggers severe anxiety and hypersexuality, according to a viral news story….

It’s a story sure to engender plenty of giggles, but it’s also another example of a bizarre little story that serves as a pretty decent starting point for consideration of more serious issues.

A couple of quick points:

1) It’s worth considering the gender issue, here. People’s reactions to this story clearly have a lot to do with the fact that the individual involved is a woman. I wonder, if the employee with the habit of excessive on-the-job masturbation had been male, would people’s reaction change from giggles to disgust? I suspect so. I suspect a male with this proclivity would garner far, far less sympathy. Now in making this observation (or, I should say, this educated guess), I am emphatically not claiming reverse discrimination. I’m not saying there’s anything wrong with the fact that many of us would judge a man more harshly in this situation. In fact, that makes a good deal of sense to me. Men account for the vast majority of sexual predators and are the more frequent perpetrators of sexual harassment in the workplace. So it’s not surprising if our primary reaction to a male with a masturbation-at-work habit would be critical, rather than supportive. That’s not to say that a man wouldn’t deserve the same workplace consideration that the judge in this case mandated; it’s just to say that a man might have a harder time getting sympathy. I’m not sure what to do with that distinction, but it’s worth noting.

2) The woman in this case is basically arguing that she has a kind of disability, one that the workplace ought to accommodate. All obvious jokes aside, it’s an issue that ought to be considered seriously — as the court in this case clearly did. Now, the woman in question claims a chemical imbalance that triggers her odd behaviour. And of all the odd behaviours that take place in the workplace, something of a private and sexual nature certainly isn’t the oddest or most disruptive. But refusal to accommodate this particular disability wouldn’t need to be based in a repressive Victorian view of human sexuality. The very fact that humans — and I’m thinking in particular of co-workers here — have the reactions they do to the thought of other humans pleasuring themselves means that such behaviour, especially when publicized is bound to be disruptive, even if it happens out of sight. But then again, our society is still crawling slowly towards truly embracing the notion, enunciated most forcefully by John Stuart Mill, that we shouldn’t have rules against behaviour that doesn’t harm anyone, and that, hence, what goes on between consenting adults behind closed doors is nobody else’s business. But it’s not clear just how that rule of thumb applies when the ‘business’ in question is actually someone’s business, and when the closed door involved is an office door.

Charlie Sheen as Toxic Asset

While actor Charlie Sheen may not be a ‘toxic asset’ in the technical sense, he’s clearly become too much of a liability for the companies who have thus far been profiting richly from his services.

In case you don’t already know all the gory details, here’s one version of the story, by Bill Carter, writing in the Business section the NY Times: Sheen Tantrum Likely to Cost in the Millions

Charlie Sheen’s latest antics may leave CBS and Warner Brothers with a quarter-billion-dollar headache.

The two companies decided on Thursday to halt production of the hit CBS comedy “Two and a Half Men” after Mr. Sheen, the star of the show, unleashed a barrage of vituperative comments about the sitcom’s creator, Chuck Lorre.

The loss of next season’s episodes would mean forgoing about $250 million in revenue between Warner Brothers, which produces the show, and CBS….

Sheen, of course, was already a famously problematic ‘talent’ long before his decision to publicly and viciously bite the hand that feeds him. Sheen has a long history of handing the tabloids easy headlines through his penchant for drugs and booze and prostitutes and property damage and domestic violence.

Several writers have already suggested that all of that should have been enough to make Sheen persona non grata, but it wasn’t. As the LA Times’ Mary McNamara put it,

If you are the star of a hit comedy on CBS, you can keep your job in spite of accusations of: threatening your pregnant second wife; holding a knife to your third wife’s throat on Christmas Day; and indulging in cocaine-fueled weekends during which your bizarre behavior causes your female companion to fear for her life.

I think from a Business Ethics point of view, we can look at this in two ways.

1) Employment. From an employment point of view, this is a question of CBS and Warner Brothers having an employee with serious behavioural problems, most of which have been after-hours problems rather than on-the-job problems. As McNamara reports, Sheen’s bosses referred to his domestic abuse troubles as “very personal and very private.” Of course, any employer needs to recognize that it will always be the case that at least some of their employees will have personal troubles, and it’s not entirely clear that such problems are grounds for dismissal. But what employers cannot ignore is insubordination, and that’s basically what Sheen’s recent outburst amounts to.

2) Production methods. In an age of conscious consumerism, people are paying a lot more attention to the way in which the products they enjoy are produced. The average consumer is more likely than ever to want to know whether their clothes were made in third-world sweatshops or whether coffee was made with beans that were traded fairly. For the bizarrely popular product that is “Two and a Half Men”, Charlie Sheen is a major part of the means of production. And all available evidence suggests that consumers of that product just don’t care that, in order to produce it, CBS and Warner Brothers had to turn a blind eye to behaviour that was by turns childish, unethical, and criminal.

Management Ethics & Oaths Without Professionalization

Here’s a piece I wrote as part of a debate on the MBA Oath, in a recent Canadian Business magazine: The MBA oath helps remind graduates of their ethical obligations.

In the article, I express the view that the MBA Oath, in its current incarnation, is “not a revolutionary thing, not a perfect thing, [but] definitely a good thing.” The real thrust of my defence of the Oath is that most of the criticisms of it are simply off-base. Critics either expect too much of a simple oath, or conversely underestimate the value of having people stand up and say “I promise.”

My conclusion:

But overall, the main problem with the MBA oath isn’t really a problem with the oath at all — it’s a problem with people’s expectations. Dismissive critics say that no oath will solve the deep and abiding moral problems that beset the world of business. That’s surely true, but no one could seriously have thought otherwise. It’s trite, but also true, to say that the world of business is increasingly complex. The ethical demands on business are higher than ever. In particular, business executives are called upon with increasing regularity to account for their actions and their policies, and to justify them to an increasing range of stakeholders. Add to that the enormous, lingering cultural rift regarding the proper role of corporations and markets. The MBA oath is of course not going to solve all of the ethical challenges that arise in such a context. Nor is it going to ensure that none of its signatories ever crosses the line into regrettable or disreputable or even disgraceful behaviour. But if given half a chance, the MBA oath might just turn out to play a small but not insignificant role in keeping the discussion alive.

Now, I do think there are some valid criticisms of the MBA Oath. One kind of criticism has to do with its content. I think, for example, that the Oath needs to be more clear regarding the balancing of the interests of various stakeholders. Note also that the current version of the Oath has MBA’s swearing not to engage in “business practices harmful to society”, a category so broa and contentious as to provide practically zero moral guidance.

But another set of criticisms has to do not with the Oath’s content, but with the its goals. At least some supporters of the Oath liken it to the Hippocratic Oath, and look to the day when Management can take its place alongside professions like Medicine, law, Accounting, and others. That, I think, is a mistake.

To see why, you can begin with this very recent piece by Ben W. Heineman, Jr., on his Harvard Business Review Blog: Management as a Profession: A Business Lawyer’s Critique.

Heineman’s focus isn’t on the question of oaths, but (as the title implies) on the question of professionalism more generally. He suggests that people who promote ethics in management by analogy to the professions misunderstand the nature of professionalism — and in particular, misunderstand his own profession, law. Heineman agrees that business schools face serious ethical questions. But, he says:

…these significant questions for business schools can be addressed without putting them in a context of the imperfect and potentially misleading analogy to legal professionalism

Another view on the question of professionalism is provided by Roger Martin (Dean of the Rotman School of Management), on his Harvard Business Review Blog: Management Is Not a Profession — But It Can Be Taught.

Martin points out two key characteristics of “the professions,” as those are traditionally understood. One is information asymmetry — basically, professionals like physicians and lawyers know stuff that their patients or clients generally do not. For example, I can of course look up basic facts of anatomy on Wikipedia, but it takes a trained dermatologist to tell me if that little bump is a harmless cyst or a potentially-deadly carcinoma.

The other element of professionalism that Martin points to is regulation. Information asymmetry is a problem in lots of industries, but only in some cases does it result in professionalization:

[When such a service]…is delivered by an identifiable individual practitioner, it tends to become a regulated profession. Doctors are regulated professionals because if they screw up, people die….

So, failure by identifiable individuals, says Martin, is the key:

The higher the cost of failure, the more likely the individual practice in question is to become a regulated profession.

That, he says, is why managers are unlikely every to be professionals in the narrow sense. For managers…

…[f]ailure is seen as the product of a team of managers doing a poor job in concert, rather than the product of one manager. Of course, CEOs get singled out for disproportionate blame. But the question is not whether being a CEO should be a profession but rather whether management should be a profession.

Of course, none of this is to say that managers can’t be expected to behave “like professionals” or to “conduct themselves in a professional manner,” in the looser sense of the word “professional.” The information asymmetry that exists between corporate managers and (for example) the company’s shareholders is very considerable, and it ought to be seen as bringing real responsibilities. The same goes for most front-line workers; lacking high-level business education and lacking direct access to the company’s books, they are left to trust senior managers to keep the company solvent in order to maintain job security. Being a manager may not make you a professional, but it is an awful lot like being a professional, in ethically-important ways. It is in that looser sense that the MBA Oath ought to be understood as seeking to instill in MBAs a sense of professionalism.

—–
(p.s. I blogged about this back in May of 2009: Harvard Students Take Ethics Pledge.)

Is a Board Position a Conflict of Interest?

Here’s an story (in which I was quoted) by Paul Turenne, in the Winnipeg Sun: Gerrard slams WRHA manager’s ‘moonlighting’.

The story is basically about a senior executive (Brock Wright) at the Winnipeg Regional Health Authority (the public body responsible for administering hospitals in and around that city) who took a position on the Board of Directors of a small American medical technology company. Critics (like Opposition leader Gerard, named in the headline) called that a Conflict of Interest.

Now, a conflict of interest is basically any situation in which a person has a private or personal interest sufficient to appear to influence the objective exercise of judgment in his or her official duties.

So, to figure out whether there’s a problem here, a few elements need to be considered.

1) Does taking a Board position constitute an “personal interest” in the relevant sense? The one that’s usually (but not always) at stake is an interest in money. Well, And corporate board membership isn’t typically volunteer work. It involves a significant stipend, along with a good deal of personal prestige.

2) What bits of judgment might Wright need to exercise on behalf of WRHA that might be jeopardized by his board membership? The most obvious one is his involvement in purchasing decisions for the WRHA. In that regard, a spokesperson for the WRHA says:

This is a company the WRHA has no business relationship with. We have not purchased anything from them. If at any time they were to try to sell us something, Dr. Wright would of course remind us of his relationship with them and recuse himself from any discussions. Having said that, he’s not in a position to make decisions like that. We have a very strict policy about the tendering process

The bigger issue (though perhaps not insurmountable) is the judgment that Wright (or any employee) needs to exercise with regard to his own time management. Being a member of a corporate board isn’t an honourary thing: it comes with real responsibilities, and can take considerable time. So the question I would want to ask, if I where the WRHA, is how Wright plans to satisfy his duties as a member of the TearLab board (including possibly several trips a year to attend meetings in California) without diminishing the quality of his work in Winnipeg. If there’s reasonable plan to make that happen,

3) Finally, it’s worth noting (again and again) that being in a Conflict of Interest isn’t automatically unethical. (So it’s not, contrary to the headline used in another newspaper’s story about this issue, an accusation.) It is possible to end up in a Conflict of Interest through no fault of your own. And, finding yourself in a COI, what matters is what you do about it. Disclosing the COI to the person or organization relying on your judgment is usually considered step 1, and removing yourself from key decisions, if possible, is another standard move. But COI is at least sometimes worth tolerating, if managed appropriately. That does mean, though, that we should all be expected to think carefully, before putting ourselves into a Conflict of Interest, whether the risks are manageable, and whether in the end those risks are sufficient to constitute a disservice to those who rely upon our judgment.

Chiropractic Referral Fees & Conflict of Interest

Sometimes, when consumers need two different, but related, goods or services, they rely on the advice of the provider of one product to select a provider of the second. That often makes sense, because providers in related businesses often have specialized knowledge that lets them give good advice (e.g., the guy who sells you your carpet likely knows who would be good at cleaning that carpet.) In such a case, people in related businesses can be a good source of expert, independent advice.

That is, if the advice is truly independent. And the most obvious way to eliminate independence is to inject a financial interest into the scenario. If the person you’re relying on for advice is financially beholden to the person he or she is recommending, you have every reason to doubt that advice.

And if that advice you’re after isn’t about something mundane, like carpets (something about which a great many non-experts know quite a lot) but is instead about your health, you have every reason to worry — especially when one of the service providers involved is taking active steps to put the person you’re relying on for advice into a Conflict of Interest.

Here’s an article (in which I’m quoted) about just such a situation. It’s by Yoni Freedhoff, MD, writing for the Canadian Medical Association Journal, Chiropractic clinic offered referral kickbacks

A chiropractic clinic with locations in Ontario, Nova Scotia and Manitoba offered lucrative kickbacks to physicians for referring clients to its five outlets until the College of Physicians and Surgeons of Ontario (CPSO) apparently stepped in to scuttle the payments as a result of CMAJ inquiries.

The offer of kickbacks, which were in the form of financial compensation, arising out of referrals from doctors, came to light as a result of a CMAJ request for a “doctor’s information kit” in accordance with instructions from an advertisement placed in the journal by the Low Back Clinic.

The kit included a document detailing appropriate patient referral criteria, which was followed by the proclamation: “In compliance with the C.P.S.O. standards, a $300 documentations fee will be provided once the patient completes care….”

Summary of problems:

  • The payments put referring physicians into a conflict of interest;
  • The payments, which are based on completion of a course of care, induce physicians to encourage patients to complete a course of care independent of whether that’s in the patient’s best interests;
  • The payments risk jeopardizing patients’ trust in their physicians;
  • The payments risk the professional reputation of the medical profession quite generally;
  • Referring to the payments as being “In compliance with the C.P.S.O. standards” falsely implies that the payments are required by the C.P.S.O.

All in all, this scheme was a pretty bad idea. Perhaps the clinic offering the fee could be excused for not knowing that doing so was contrary to regulation. But health professionals certainly ought to know enough about conflict of interest to recognize that such a scheme is seriously ethically problematic.

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