Conflict of Interest in Medical Research, Education, and Practice (2009) / Chapter Skim
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Appendix C: Conflict of Interest in Four Professions: A Comparative Analysis
Appendix C: Conflict of Interest in Four Professions: A Comparative Analysis
Pages 302-357
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From page 302... ...
The professions evaluated here -- law (lawyers) , accountancy (certified public accountants [CPAs]
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From page 303... ...
Looking at how these nonmedical professions respond to the conflicts of interest that are more likely to arise in large organizations should help physicians both look critically at present arrangements and anticipate the future. Finally, these professions all recognize conflicts of interest as posing a threat to the integrity of the profession and have developed ethics rules to address the threat.
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From page 304... ...
For example, the definitions section of the American Bar Association's (ABA's) Model Rules of Professional Conduct includes definitions of "informed consent" and "fraud" but not "conflict of interest." Instead, situations labeled conflicts of interest are described in the Model Rules. Similarly, the American Institute of Certified Public Accountants' (AICPA's)
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From page 305... ...
Broadly speaking, two kinds of conflict are understood to arise in that relationship: first, conflicts between the interests of two or more clients (whether they be current clients or a current client and a former client) and, second, conflicts between the interests of one or more clients and the personal interests of the attorney.
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From page 306... ...
So, for example, a lawyer who marries will immediately report that change of status to his firm along with the spouse's investments, family connections, employer, and the like. In some cases, law firms have staff dedicated to monitoring conflicts of interest, including, according to one New York City law firm partner whom we spoke with, general counsel whose risk management responsibilities include conflict of interest issues.
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www.abanet.org/legaled/ baradmissions/basicoverview.html. 10 American Bar Association, 2007–2008 Standards for Approval of Law Schools, Interpre tation 302-9.
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addressing lawyers' conflicts of interest, there is much for American law students and lawyers to learn. Canons, Model Codes, and Model Rules Although local bar associations began to appear in the United States in the late 19th century, most U.S.
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16 American Bar Association, Model Code of Professional Responsibility, 1983.
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20 American Bar Association website, ABA Model Rules of Professional Conduct: State Adoption of Model Rules. www.abanet.org/cpr/mrpc/model_rules.html.
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will be able to provide competent and diligent representation." The next two rules provide more specific guidance. 22 AmericanBar Association, Model Rules for Professional Conduct: Rule 1.7 Comment.
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, that is, that the client was fully able to look after its own interests without relying on the lawyer. 23 AmericanBar Association, Model Rules for Professional Conduct: Rule 1.8.
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Under the rule, the conflicts of interest of one lawyer in a firm are imputed to all lawyers in the firm: "a firm of lawyers is essentially one lawyer for purposes of the rules governing loyalty to the client."26 The rule prohibits a member of a law firm from knowingly representing a client that any one of them practicing alone would be prohibited from representing under Rules 1.7 and 1.9, unless the prohibition is based on a personal interest of the lawyer and "does 24 American Bar Association, Model Rules for Professional Conduct: Rule 1.9. www.abanet.
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From page 314... ...
. In the United States, this case law is helpfully summarized in the American Law Institute's Restatement of the Law Governing Lawyers.27 Chapter 8 of that document analyzes conflicts of interest in general, including conflicts between a lawyer and a client, among current clients, between a lawyer and a former client, and because of the lawyer's obligation to a third person.
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If the legal profession could more clearly separate harm rules -- for example, rules against lawyers providing bad legal advice or against lawyers entering into unfair business deals with their clients -- from risk rules -- for example, rules prohibiting a lawyer from preparing an instrument by which 28 American Bar Association, Survey on Lawyer Discipline Systems: 2006. www.abanet.
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From page 316... ...
Another consequence of sharply distinguishing between risk and actual harm would be to make unnecessary the distinction between "actual" and "potential" conflicts of interest, which McMunigal considers to be a distinction of little practical use. In his analysis of the legal profession's management of conflicts of interest, law professor Robert Lawry focuses on a different kind of problem.32 He sees a gradual lessening of professional standards to allow for the greater mobility of lawyers, which is at least partially justified by an appeal to the increased sophistication of some clients.
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From page 317... ...
Without such screens, it was argued, "good lawyers would avoid government work, to the detriment of the common good." This principle, which was developed for government lawyers and which is discussed only in the Model Rules (and comments) in reference to government lawyers, is now routinely extended to private lawyers.
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(b) of the Securities Exchange Act of 1934 and American Institute of Certified Public Accountants, Statement on Auditing Standards: No.
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Questions about professional ethics are included in the Uniform Certified Public Accountant examination and are based on AICPA's Code of Professional Conduct. Many state licensing boards require continuing professional education (CPE)
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; any applicable state laws; and any applicable federal laws, notably, the Public Company Accounting Reform and Investor Protection Act of 2002.39 This act, commonly known as the Sarbanes-Oxley Act, was passed in response to a number of corporate and accounting scandals in the late 1990s and early 2000s. Before passage of the act, the largest accounting firms had diversified their practices to the extent that audits were a small part of the services that they provided to their clients.
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From page 321... ...
PCAOB's conflict of interest rules are designed to preserve the independence of the accounting firm.42 Rule 3520 states: "a registered public accounting firm and its associated persons must be independent of the firm's audit client throughout the audit and professional engagement period." Rules 3521, 3522, and 3523 describe situations in which an accounting firm cannot be considered independent, for example, if the firm provides a service or product to the audit client for a contingent fee or a commission, if the firm provides assistance in planning or tax advice on certain types of potentially abusive tax transactions to an audit client, or if the firm provides any tax services to certain persons in a financial reporting oversight role at an audit client or to immediate family members of such persons. Violation of the PCAOB rules can lead to an investigation by PCAOB.
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It states: "A member should maintain objectivity and be free of conflicts of interest in discharging professional re 46 The American Institute of Certified Public Accountants, AICPA Code of Professional Responsibility. www.aicpa.org/About/code/index.html.
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From page 323... ...
and 102 (Integrity and Objectivity) .50 49 The American Institute of Certified Public Accountants, AICPA Code of Professional Responsibility: Section 55, Article IV, Objectivity and Independence.
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(The last prohibition applies not simply during the period of the professional engagement but during the whole period covered by the financial statements being prepared by the accountant.) When in doubt about whether a particular circumstance might cause independence to be questioned, the section asks that members "evaluate whether that circumstance would lead a reasonable person aware of all the relevant facts to conclude that there is an unacceptable threat to the member's and the firm's independence" (emphasis added)
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. It begins with the rule that "in the performance of any professional service a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others." Although the rule is concerned with the misrepresentation of fact as well as conflict of interest, the interpretations for the rule offer a definition of conflict of interest: "a conflict of interest may occur if a member performs a professional service for a client or employer and the member or his or her firm has a relationship with another person, entity, product, or service that could, in the member's professional judgment, be viewed by the client, employer, or other appropriate parties as impairing the member's objectivity." Note that the relationship need not be financial or familial, and it need not actually impair the CPA's objectivity -- it is enough that it could, in the member's judgment, appear to impair his or her objectivity.
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From page 326... ...
in particular is that a CPA performing an external audit has a primary obligation to the public. Indeed, the second principle in the Code of Professional Conduct, titled The Public Interest, states that the public relies "on the objectivity and integrity of certified public accountants to maintain the orderly functioning of commerce." The rules and practices of CPAs, therefore, are fairly strict when it comes to preserving independence and avoiding even the appearance of conflict of interest.
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From page 327... ...
One important lesson from the recent history of public accountancy is that a failure to address conflicts of interest led to federal regulation of conflict of interest in one important aspect of CPA practice: the auditing of publicly listed companies. Investor confidence in the objectivity and independence of auditors and therefore in the truthfulness of public companies' 53 The American Institute of Certified Public Accountants, Professional Ethics Executive Committee, Fact Sheet 2004–2005.
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, and commentary (when necessary to avoid a common misinterpretation of a rule) .55 The 1909 AIA code reached all architects, not just AIA members, through its adoption by state licensing boards as local standards of practice.
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, selfadministered continuing education courses, and so on. NCARB's code of ethics (Rules of Conduct)
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Their judgment that their professional judgment will not be affected is not relevant. That, too, is now under suspicion.
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The architect must assess whether the interest (direct or indirect) is "substantial enough to influence his or her judgment in the performance of professional services" (whether or not it does or would in fact influence it)
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In contrast, an agreement to specify or endorse a product does not threaten professional judgment. It does something much more dramatic.
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For public statements, the standard
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. The NCARB commentary might therefore have appealed to this obligation in support of a rule governing public statements (protecting the public)
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, but the first rule, Rule 3.201, adds something new. Rule 3.201 prohibits AIA members from rendering professional services if their "professional judgment could be affected by responsibilities to another project or person, or by [their own]
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(Such gifts would seldom be given with the intent of influencing the architect's professional judgment.) In contrast, the AIA would, presumably, want to prohibit a gift from a potential developer hoping to reduce the hostility of an architect toward a project that he or she has in mind when that architect is a member of the local planning commission.
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Instead, there are five major societies. One each for the major disciplines: the American Society of Civil Engineers (ASCE)
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The NSPE code62 is designed (like architecture's NCARB code) primarily for adoption by state licensing boards.
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The underlying idea seems to be that an engineer's professional judgment (or, rather, an IEEE member's professional judgment) should be above suspicion.
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has six main rules, each of which corresponds to one of the Fundamental Canons. The specific rules under a rule (designated with lowercase letters)
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. There is, however, something wrong with an engineer giving the impression that he or she is doing something else, that is, expressing independent professional judgment (one independent of an employer, client, or other interested party)
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They make avoidance the standard response to a conflict of interest. Rule II.4b forbids engineers from accepting "compensation, financial or otherwise, from more than one party for services on the same project, or for services pertaining to the same project, unless the circumstances are fully disclosed and agreed to by all interested parties." Rule II.4c forbids engineers from soliciting or accepting "financial or other valuable consideration, directly or indirectly, from outside agents in connection with the work for which they are responsible." The only significant difference between these two rules and the corresponding NCARB rules is (again)
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Even the agency's informed consent does nothing to ensure protection of the public interest. The disclosure would have to be made to the public directly in a way that allows the public to take appropriate action.
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Professional Obligations, rules that seem to offer interpretations of the remaining Fundamental Canon, which requires engineers to "Conduct themselves honorably, responsibly, ethically, and lawfully so as to enhance the honor, reputation, and usefulness of the profession." This section has nine main rules, numbered like the Rules of Practice, but not obviously derived from the wording of either the preamble or the Fundamental Canons. Except for not overlapping much with the Rules of Practice, there is no obvious unity in the subject matter of Part III.
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From page 345... ...
That rule forbids engineers "without the consent of all interested parties, [to] promote or arrange for new employment or practice in connection with a specific project for which the engineer has gained particular and specialized knowledge." The engineer must have the consent of "all interested parties," generally, the old employer and the new one (as well as clients, if any)
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From page 346... ...
(The number of engineers makes it unlikely that the adverse party will fail to find a qualified witness even if one party rejects the first engineer for conflict of interest.) Rule III.5 forbids engineers to "be influenced in their professional duties by conflicting interests." The rule should not be interpreted as forbidding engineers to be influenced by conflicts of interest because, so interpreted, it would be inconsistent with all of the rules discussed so far, which permit conflicts of interest when there are full disclosure and consent (however, the interests, in fact, influence the decision)
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From page 347... ...
Although most of the rules under it have nothing to do with conflict of interest, one does. Rule III.6a forbids engineers to "request, propose, or accept a commission on a contingent basis under circumstances in which their judgment may be compromised." At one time, most engineering codes simply forbade engineers from working on a "contingent basis" (that is, where payment, all or just part, depends on success)
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From page 348... ...
is that ABET's Fundamental Canon 4 has been amended to append to the language of the NSPE code a comma and the words "and shall avoid conflicts of interest." Most engineering codes of ethics now include that amendment, the result of a scandal in the middle 1970s that ended in a $7.5 million judgment against ASME.65 Some volunteers in one of ASME's standard-setting bodies, although faithful agents and trustees of their employer (as Fundamental Canon 4 then required) , had a conflict of interest when acting as members of the committee.
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From page 349... ...
in requiring engineers to "avoid all known conflicts of interest" (rather than simply to disclose them) and to disclose promptly to their clients or employers the rest, what the NSPE code identified as "potential" conflicts of interest: "any business association, interests, or circumstances which could influence their judgment or the quality of their services" (emphasis added)
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COMPARATIVE OVERVIEW This survey has discussed both similarities and differences in the treatment of conflicts of interest by four important professions. What can be learned from this survey of lawyers, certified public accountants, architects, and engineers?
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So far, it seems, engineering's strict rules concerning conflict of interest seem to have protected it from the sorts of scandals medical research has suffered. 68 Nevertheless, some guidance on conflict of interest in scholarship is available from the Association of American Law Schools, which requires that professors disclose any economic interest that they have in the subject matter of their scholarship.
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From page 352... ...
2. Compliance with each profession's codes of ethics depends -- as the AICPA code of ethics says -- "primarily on members' understanding and voluntary actions, secondarily on reinforcement by peers and public opinion, and ultimately on disciplinary proceedings, when necessary, against members who fail to comply with the Rules." In other words, the codes of ethics of all four professions are enforced in much the same way that the AMA enforces its code of ethics.
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From page 353... ...
The crucial question is always the known or suspected tendency of the fact in question to affect professional judgment adversely.
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disclosure of the interest to the parties concerned (who can include current and former clients, current and former employers, and third parties)
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Table C-1 summarizes the responses of the four professions discussed here to conflicts of interest.
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Public speaking, speaking Not addressed. Public speaking is not Architects must disclose Engineers are forbidden about professional issues addressed, except to the any personal financial from making statements extent that audits and interests in public on technical matters "that attestations are public statements.
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Financial or other No representation of Few restrictions. Disclosure and consent of Such relationships are relationships with relevant opposing parties in all interested parties are generally prohibited.
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