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Business & Professional Ethics Journal 38:1
Spring 2019, pp. 111–131
doi: 10.5840/bpej201812574
Defining Conflicts of Interest
in Terms of Judgment
Abraham P. Schwab
Purdue University-Fort Wayne
Abstract: Conflicts of interest represent one of the defining problems of our time,
and yet a clear definition of what constitutes a conflict of interest remains elusive.
To move us closer to resolving this problem, this article first reviews and critiques
attempts to define conflicts of interest, and, second, uses these critiques to ground
a more conceptually consistent and practically useful definition. This definition
builds on, but also breaks away from Michael Davis’s (1982) definition of conflicts
of interest. Specifically, it articulates and defends defining conflicts of interest in
terms of their threat to good judgment but does so in the broadest terms. Defining it
in this way expands the domain of conflicts of interest, but also avoids unnecessary
conceptual distractions and practical difficulties.
Key Words: conflict of interest, judgment, trust, role-based responsibilities
Introduction
Over the past forty years, attempts have been made to articulate and defend a
clear definition of a conflict of interest. These attempts have two features in
common. First, they all deal with an individual or organization pulled in separate directions by their responsibilities and interests. Typically, a personal, often
financial, interest has come into conflict with their role-based or otherwise acquired responsibilities. Second, they have all fallen short in one way or another.
Of particular note, the authors of these definitions often invoke arbitrary limits
on the application of their definition: situations which appear to meet the offered
definition’s criteria are then defined as not a conflict of interest. The reasons for
these exclusions remain unarticulated.
© Business & Professional Ethics Journal. ISSN 0277-2027.
Correspondence may be sent to Abraham P. Schwab, [email protected]
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Business and Professional Ethics Journal
Despite their common features, these definitions also have substantial differences. For my purposes, the most notable difference is how they diverge on
the characteristics that define conflicts of interest. Specifically, these definitions
can be roughly separated into four groups. First, one approach focuses on the
conscious states of mind (i.e., intentions) of the conflicted individual.1 Second,
Luebke’s (1987) approach hinges the definition on the trusting relationship.
Conflicts of interest are those where an outside interest threatens the trust one
individual has for another. Third, Boatright’s (1992) approach defines conflicts
of interest in terms of fulfilling responsibilities. Fourth and finally, Davis (1982)
defines conflicts of interest in terms of the threat to the judgment of a conflicted
individual. This approach (in rough outline) was also adopted by the Committee
on Conflict of Interest in Medical Research, Education, and Practice (Lo and
Fields, 2009).
In what follows, I critique these approaches and make the case for rejecting
the first three and expanding Davis’s approach. Specifically, I argue that despite
the virtues of these definitions, there are clear advantages to defining conflicts
of interest in terms of judgment, but based upon a broader set of judgments than
Davis allows.2
There is a terminological question confronting an analysis like the one in
this paper: how to describe what might be a conflict of interest? As we’ll see,
there are situations where Davis’s (and my) approach would define a situation
as including a conflict of interest but Luebke’s approach would not. To call such
situations a “conflict of interest” would beg the question about the definition
of a conflict of interest. Accordingly, throughout, I will describe individuals in
these situations as having “conflicting interests” or as an individual who has a
“conflicting interest.” This has the virtue of being superficially true (individuals
pulled in separate directions do have a conflicting interest) and also avoids appearing to beg the question.
Conscious States of Mind
A fifty-year-old law review article provides the clearest definition of conflicts of
interest in terms of the conflicted individual’s conscious states of mind:
If courts are judging, and legislatures setting up, ‘ethical’ conduct,
intention and motives rather than the external act should be the basic
consideration. The exterior appearances and actions are, perhaps, the best
indication of interior motivation, but where the acts themselves fall into
a grey area, more attention than is now being given should be focused on
the elements of intention and motivation. (BJM and EMP 1961: 1056)
Defining Conflicts of Interest in Terms of Judgment
113
Focusing the definition of conflicts of interest on intention and motives appears
to provide a straightforward definition. If the conflicting interest affects an individual’s intentions, it should be defined as a conflict of interest. If it does not, the
conflict doesn’t warrant our concern or rise to the level of a conflict of interest.
The excerpt above also hints at the appeal of looking to conscious states of
mind in general. When we look to “exterior appearances,” we cannot always tell
what, if any, effect a conflicting interest has had on an individual’s judgment or
actions. Their actions and judgments may fall “into a grey area.” There are two
ways that actions and judgments may fall into this grey area.
First, a conflicting interest might affect the direction of the judgment. For
example, a judge who has the responsibility to render impartial judgment in a
case might also have a personal interest in that same case. Without the conflicting interest, the judge might find in favor of the plaintiff, but the conflicting
interest leads them to find in favor of the defendant. These are the most egregious effects of a conflicting interest, and so one might think that such situations
will be the easiest cases to identify and define as conflicts of interests. From the
outside, however, we cannot confidently establish that the conflicting interest
affected the intentions of the judge and led him to decide in favor of the defendant. Because we have no counterfactual experience, we cannot know what the
judge would have decided without the conflicting interest; we cannot know if the
judge’s intentions were in fact affected.
Second, and more insidiously, a conflicting interest might affect the amplitude of a judgment. Using the same hypothetical judge, they might have found
in favor of the defendant anyway, but the conflicting interest may alter his finding from a minimalist finding (the plaintiff failed to prove the case) to a more
extreme finding (the plaintiff brought a spurious case). And again, the fact that
the personal interest produced this effect on the judge’s judgment is not visible
from the outside.
Appeals to conscious states of mind have continued in contemporary analyses of conflicts of interest. Take for example Brody’s (2011) use of Erde’s
definition of conflicts of interest:
Erde’s further analysis then suggests that a conflict of interest exists in
medicine when the following conditions have all been met:
1. The physician has a duty to advocate for the interests of the patient (or
public).
2. The physician is also subject to other interests—her or his own, or
those of a third party.
3. The physician becomes a party to certain social arrangements.
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4. Those arrangements, as viewed by a reasonable onlooker, would tempt
a person of normal human psychology to neglect the patient’s/public’s
interests in favor of the physician’s (or third party’s). (Brody 2011: 24;
emphasis added)
It is the fourth condition that invokes the conscious state of mind of the conflicted
individual. The conflicted individual who is or may be tempted is an individual
who is consciously aware of this effect. That is, one cannot be tempted without
knowing it.
Despite the (ongoing) appeal of defining conflicts of interest in terms of
conscious states of mind, an adequate definition of conflicts of interest will be
agnostic about an individual’s conscious states of mind for two reasons. First,
the individual themselves may be aware of their conscious states of mind, but
outsiders have no such access. This renders the definition moot for anyone other
than individual him or herself.3 Erde’s definition attempts to sidestep this difficulty by relying not on the actual state of mind of the individual, but the state
of mind as it might be and as inferred by a “reasonable onlooker.” This strategy
will produce uneven results at best because it requires an individual to be able
to imagine themselves in the other person’s position, something we are not particularly good at.
Second, defining conflicts of interest in terms of conscious states of mind
fails to account for unconscious influences on judgment. Despite the virtues of
Erde’s definition, because it relies on inferences of temptation, it cannot account
for unconscious effects on judgment and action. Individuals cannot be unconsciously tempted. For example, I do not worry that the temptation of a brownie
will lead me to unconsciously eat it, but instead worry that the temptation will
lead me to decide to eat it. Further, individuals do not have to be tempted to have
their judgment affected by the conflict between responsibilities and interests.
Moore and Loewenstein (2004) theorize that personal interests have insidious
influence because of the automatic nature in which such interests are inserted
into our judgment. In contrast, our judgments about our responsibilities require
conscious activity. Accordingly, even when we are well-intentioned, conflicting interests may unconsciously bias our judgment. Such unconscious effects
were demonstrated most clearly in an experiment by Moore, Tanlu, and Bazerman (2010). In their study, participants were first given an incentive to prefer
one outcome over another, similar to how an individual with a personal interest
might prefer those interests over their responsibilities. Then these same participants were asked to make an impartial judgment which did not take into account
their earlier preference. As Moore, Tanlu, and Bazerman summarize it: “When
Defining Conflicts of Interest in Terms of Judgment
115
asked then to make neutral judgments, they failed to extricate themselves from
the influence of their partisan roles” (Moore, Tanlu, and Bazerman 2010: 46).
These findings indicate that the judgments of professional and non-professionals, whether they are tempted by their outside interests or not, whether they are
consciously corrupt or not, are likely to be affected by these outside interests.4
In short, using intentions to define conflicts of interests fails because the
intentions of individuals remain opaque from the outside and because intentions
do not preclude unconscious biases from affecting the quality of an individual’s
judgment.
The Trusting Relationship
Luebke, who abbreviates “conflict of interest” as “CI,” claims that “what is morally at stake in CI cases is a potential violation of trust on the part of the party
having the CI” (Luebke 1987: 66). He situates this definition within the context
of fiduciary relationships. For Luebke, conflicts of interest only arise within
relationships where “trust or reliance is reposed for the purpose of advising,
aiding, acting on behalf of, or protecting the interest of another party” (68). For
Luebke, what defines a conflict of interest is the effect conflicting interests can
have on the fiduciary relationship, specifically, as they affect the subject’s trust
in the conflicted fiduciary: “To my mind, the moral issue is trust, not correctness.
The appropriate question a client might raise is ‘Can I trust X to give me good
advice?’ not ‘Can I trust X to give me good advice?’” (74).
Focusing on the subject’s trust in the fiduciary relationship creates a tension
that Luebke’s account does not resolve, and that may not be resolvable. Defining
conflicts of interest in terms of trust hinges the definition on the beliefs and attitudes of the subject in the fiduciary relationship. But these beliefs and attitudes
may be uncalibrated. The individual’s trust in the fiduciary may be so steadfast
that no conflicting interests could shake it. They might always believe that they
can trust the fiduciary. In those cases, the conflicting interest, no matter what it
is, would not qualify as a conflict of interest on Leubke’s view. Alternatively, a
cynical individual may be so likely to distrust a fiduciary that distrust exists even
if there is no conflicting interest or responsibility. They never trust the fiduciary
and so any interest should be categorized as a conflict of interest. Significantly,
the horns of this dilemma are not specific to Luebke’s account. Any account that
defines conflicts of interest in terms of trust will face the same problem.
Luebke complicates his particular account when he clarifies what he means
by an “interest” in conflicts of interests. Describing whether or not an interest
can compromise the work of a fiduciary on behalf of another, he writes:
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Business and Professional Ethics Journal
The degree to which the interest may subjectively affect the fiduciary is
often not clear. If it can be firmly established that, contrary to standard
assumptions, the interest has no subjective effects adverse to the fiduciary
relation, then one might conclude there is no actual CI in the given case.
(Luebke 1987: 74)
By emphasizing the “actual,” as opposed to perceived or possible, Luebke implies that CIs are defined independently of subjective trust. Even though Luebke
defines conflicts of interest in terms of the subject’s trust in their fiduciary, he
also explicitly claims that the effects that define an interest as a conflict of interest are objectively identifiable. He makes this even clearer when he states: “By
contrast, ‘interest’ as I have defined it is situational and thus objective rather than
subjective—in the sense that it is open to investigation by a Senate Committee
rather than by a board of psychologists” (Luebke 1987: 74). This produces the
following possibility: a fiduciary could have conflicting interests that are “demonstrated” to have no effect on the fiduciary, but that also produces distrust in the
individual for whom the fiduciary works. In such a case, on Luebke’s definition,
the fiduciary would not (on objective criteria) have a CI, while also (as the result
of the loss of trust) have a CI.5
A trust-based definition of conflict of interest, whether Luebke’s or any
other account, could sidestep this set of problems by avoiding the fickle trust of
individuals. Specifically, these accounts could pivot from “trust” to “trustworthiness.” Evaluating “trust” grounds the evaluation in the beliefs and dispositions
of the subject. Do they “trust” the person who acts as fiduciary? Evaluating
“trustworthiness,” however, grounds the evaluation in the individual who acts
as fiduciary. Is this individual “trustworthy” in their actions as fiduciary? This
shift has the advantage of avoiding the pitfalls of relying on the (potentially
uncalibrated) beliefs and dispositions of the subject, but requires abandoning
questions of trust.6 Evaluations of “trustworthiness,” however, would hinge either on the intentions of the fiduciary (as noted in the previous section, a doomed
effort) or on the “correctness” of the advice they offer. That is, the fiduciary who
gives generally correct advice demonstrates that they are in fact “trustworthy.”
Shifting concerns about conflicts of interest from “trust” to “trustworthiness”
would shift focus onto whether we can rely on the fiduciary to fulfill their responsibilities, independent of whether they happen to be trusted.
Fulfilling Responsibilities
Boatright defines conflicts of interest in terms of responsibilities: “a conflict
of interest may be described as a conflict that occurs when personal interest
Defining Conflicts of Interest in Terms of Judgment
117
interferes with a person’s acting so as to promote the interests of another when
the person has an obligation to act in that other person’s interest” (Boatright
1992: 191). I think Boatright’s definition is right as far as it goes. The threat of
a conflict of interest is that it will undermine the ability of an individual to fulfill their obligations. In this sense, Boatright’s and my own position (as well as
perhaps Luebke’s) are in agreement. The threat of harm arising from a conflict
of interest is the harm of failing to fulfill one’s obligations. While I agree with
this general approach, the specifics of Boatright’s perspective are problematic.
First, Boatright attempts to unnecessarily and arbitrarily limit the scope of
what counts as a conflict of interest. His general definition—that an obligation
possibly subject to a conflict of interest “is an obligation to act in the interest of
another” (Boatright 1992: 191)—is clear enough. But then he goes on to distinguish “interests” from “interests”:
It is not sufficient, however, to speak of role obligations as being in conflict with personal interest without some qualification. A husband who
commits adultery has a role obligation of faithfulness that comes into
conflict with a personal interest in an extramarital affair, but we would
not say that he has a conflict of interest. Similarly, a salesman who pads
his expense account puts his own interest above his obligation to the firm
without being in a conflict-of-interest situation. (Boatright 1992: 191)
Boatright does not offer his own justification for these exclusions, but instead
simply points to Margolis (1979) who distinguishes conflicting obligations from
conflicts of interest. As Margolis defines it, “conflicting obligations” occur when
an individual occupies multiple roles that it is considered legitimate for them
to occupy. “Conflicts of interests” occur when occupying both roles should be
considered illegitimate.
Defining conflict of interest in terms of the legitimacy of holding two positions simultaneously has both a conceptual difficulty and a practical limitation.
First, conceptually, this definition of conflicts of interest requires agreement
about what counts as two legitimate positions to hold simultaneously. While
there will be agreement on many cases (e.g., one should not be President of
the United States while also the chief executive of a company that pursues contracts with the government), there will be many cases where we will not agree
about whether it is legitimate to inhabit two or more roles simultaneously. For
example, my roles as both an advisor for students and the director of a minor
seem legitimate for me to hold simultaneously. But, of course, insofar as my annual reviews hinge on the number of declared minors, I will have an interest in
advising every student to declare their pursuit of the minor. So, is it legitimate
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Business and Professional Ethics Journal
for me to hold both of these roles? This question does not have such a clear and
straightforward answer. This illuminates the conceptual difficulty of defining
conflicts of interest in terms of the legitimacy of roles. How do we know which
roles are legitimate and which ones are not? The difficulty will be particularly
dogged because it is not a question of the legitimacy of a single role, but of a
combination of two or more roles. Two roles which are legitimate in isolation
may not be legitimate in tandem, requiring the careful analysis for legitimacy of
the complex constellation of role rela …
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