Yared bizuwork

Group dynamics and conflict management

January 22 2010

Conflicts of interest related to the practice of law

In the legal profession, the duty of loyalty owed to a client prohibits an attorney (or a law firm)
from representing any other party with interests adverse to those of a current client. The few
exceptions to this rule require informed written consent from all affected clients. In some
circumstances, a conflict of interest can never be waived by a client. In perhaps the most
common example encountered by the general public, the same firm should not represent both
parties in a divorce or child custody case.

A prohibited or undisclosed representation involving a conflict of interest can subject an attorney

to disciplinary hearings, the denial or disgorgement of legal fees, or in some cases (such as the
failure to make mandatory disclosure), criminal proceedings. In the United States, a law firm
usually cannot represent a client if its interests conflict with those of another client, even if they
have separate lawyers within the firm, unless (in some jurisdicitions) the lawyer is segregated
from the rest of the firm for the duration of the conflict. Law firms often employ software in
conjunction with their case management and accounting systems in order to meet their duties to
monitor their conflict of interest exposure and to assist in obtaining waivers.

Conflicts of interest generally (unrelated to the practice of law)

More generally, conflicts 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.

Depending upon the law or rules related to a particular organization, the existence of a conflict of
interest may not, in and of itself, be 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 for example when an individual tries (and/or succeeds in)
influencing the outcome of a decision, for personal benefit. A director or executive of a
corporation will be subject to legal liability if a conflict of interest breaches his Duty of Loyalty.

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 can
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.)

OCI, or Organizational Conflict of Interest (commonly mentioned in US Government

RFPs)

An organizational conflict of interest, or OCI, may exist in the same way as described above, in
the realm of the private sector providing services to the Government, where a corporation
provides two types of services to the Government that have conflicting interest or appear
objectionable (ie: manufacturing parts and then participating on a selection committee comparing
parts manufacturers). Corporations may develop simple or complex systems to mitigate the risk
or perceived risk of a Conflict of Interest. These risks are typically evaluated by a Governmental
Office to determine whether the risks pose a substantial advantage to the private organization
over the competition or will decrease the overall competitiveness in the bidding process.

Relationship to medical research

The influence of the pharmaceutical industry on medical research has been a major cause for
concern. In 2009 a study found that "a number of academic institutions" do not have clear
guidelines for relationships between Institutional Review Boards and industry.[1]

Types of conflicts of interests

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

 Self-dealing, in which an official who controls an organization causes it to enter into a

transaction with the official, or with another organization that benefits the official. The
official is on both sides of the "deal."
 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. See Nepotism.
 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.)
 Pump and dump, in which a stock broker which owns a security artificially inflates the
price by "upgrading" it or spreading rumors, sells the security and adds short position,
then "downgrade" the security or spread negative rumors to push the price down.

Other improper acts that are sometimes classified as conflicts of interests are probably better
classified elsewhere. 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 a 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.

Examples

 Self-policing of any group is also a conflict of interest. If any organization, such as a

corporation or government bureaucracy, is asked to eliminate unethical behavior within
their own group, it may be in their interest in the short run to eliminate the appearance of
unethical behavior, rather than the behavior itself, by keeping any ethical breaches
hidden, instead of exposing and correcting them. An exception occurs when the ethical
breach is already known by the public. In that case, it could be in the group's interest to
end the ethical problem to which the public has knowledge, but keep remaining breaches
hidden.
 Insurance companies retain claims adjusters to represent their interest in adjusting claims.
It is in the best interest of the insurance companies that the very smallest settlement is
reached with its claimants. Based on the adjuster's experience and knowledge of the
 insurance policy it is very easy for the adjuster to convince an unknowing claimant to
settle for less than what they may otherwise be entitled which could be a larger
settlement. There is always a very good chance of a conflict of interest to exist when one
adjuster tries to represent both sides of a financial transaction such as an insurance claim.
This problem is exacerbated when the claimant is told, or believes, the insurance
company's claims adjuster is fair and impartial enough to satisfy both theirs and the
insurance company's interests. These types of conflicts could be easily be avoided by the
use of disclosures.
 A person working as the equipment purchaser for a company may get a bonus
proportionate to the amount he's under budget by year end. However, this becomes an
incentive for him to purchase inexpensive, substandard equipment. Therefore, this is
counter the interests of those in his company who must actually use the equipment.
 Representatives, in general, have different interests than their constituents. Thus,
accepting bribes to vote a certain way is in their interest (assuming they don't get caught),
while not in their constituents' interest. These actions are sometimes illegal, but often not,
as in the case of a politician accepting large amounts of money for a political campaign,
and in return, granting the contributor access to political leaders. This is often cited as an
argument for direct democracy (the replacement of representatives' votes with referenda).
 Revolving door (politics), government workers or elected officials quitting public service
to work for the companies they used to regulate. Regulators are accused of using inside
information for their new employers, or compromising laws and regulations in hopes of
securing employment in the private sector.


Ways to mitigate conflicts of interests

Removal

The best way to handle conflicts of interests is 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 politician 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 interests, the best way to deal with them are one or more of the
following (mitigation) measures:

Disclosure

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".

Certain professionals are required either by rules related to their professional organization, or by
statute, to disclose an actual or potential conflicts of interest. In some instances, the failure to
provide full disclosure is a crime.

Recusal

Those with a conflict of interest are expected to recuse themselves from (i.e., abstain from)
decisions where such a conflict exists. The imperative for recusal varies depending upon the
circumstance and profession, either as common sense ethics, codified ethics, or by statute. 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, a close relative of one of the
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.

Judges are supposed to recuse themselves from cases when personal conflicts of interest may
arise. For example, if a judge has participated in a case previously as some other judicial role
he/she is not allowed to try that case. Recusal is also expected when one of the lawyers in a case
might be a close personal friend, or when the outcome of the case might affect the judge directly,
such as whether a car maker is obliged to recall a model that a judge drives. This is required by
law under Continental civil law systems and by the Rome Statute, organic law of the
International Criminal Court.

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 may also be used as proof that transactions were, in fact, fair ("arm's-
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 interests. Often, however, the specifics can be
controversial. Should therapists, such as psychiatrists, be allowed to have extra-professional
relations with patients? Ex-patients? Should a faculty member be allowed to have an extra-
professional 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 interests because they can spell out
the extent to which such conflicts should be avoided, and what the parties 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.

As codes of ethics cannot cover all situations, some governments have established an office of
the ethics commissioner. Ethics commissioner should be appointed by the legislature and should
report to the legislature.

1. What do organisations use conflict management for?

For any organisation to be effective and efficient in achieving its goals, the people in the
organisation need to have a shared vision of what they are striving to achieve, as well as clear
objectives for each team / department and individual. You also need ways of recognising and
resolving conflict amongst people, so that conflict does not become so serious that co-operation
is impossible. All members of any organisation need to have ways of keeping conflict to a
minimum - and of solving problems caused by conflict, before conflict becomes a major obstacle
to your work. This could happen to any organisation, whether it is an NGO, a CBO, a political
party, a business or a government.

Conflict management is the process of planning to avoid conflict where possible and organising
to resolve conflict where it does happen, as rapidly and smoothly as possible.

2. Important things to know about "conflict" and "conflict management":

The differences between "competition" and "conflict"

"Competition" usually brings out the best in people, as they strive to be top in their field, whether
in sport, community affairs, politics or work. In fact, fair and friendly competition often leads to
new sporting achievements, scientific inventions or outstanding effort in solving a community
problem. When competition becomes unfriendly or bitter, though, conflict can begin - and this
can bring out the worst in people.
Common causes of conflict

Causes or sources of organisational conflict can be many and varied. The most common causes
are the following:

 scarcity of resources (finance, equipment, facilities, etc)

 different attitudes, values or perceptions
 disagreements about needs, goals, priorities and interests
 poor communication
 poor or inadequate organisational structure
 lack of teamwork
 lack of clarity in roles and responsibilities

Conflict between individual

People have differing styles of communication, ambitions, political or religious views and
different cultural backgrounds. In our diverse society, the possibility of these differences leading
to conflict between individuals is always there, and we must be alert to preventing and resolving
situations where conflict arises.

Conflict between groups of people

Whenever people form groups, they tend to emphasise the things that make their group "better
than" or "different from" other groups. This happens in the fields of sport, culture, religion and
the workplace and can sometimes change from healthy competition to destructive conflict.

Conflict within a group of people

Even within one organisation or team, conflict can arise from the individual differences or
ambitions mentioned earlier; or from rivalry between sub-groups or factions. All leaders and
members of the organisation need to be alert to group dynamics that can spill over into conflict.

3. How to identify signs and stages of conflict

"Disputes of right" and "disputes of interest"

Especially in the workplace, two main types of disputes have been noted (although these two
types may also happen in other situations). These are:

 "disputes of right", where people or groups are entitled by law, by contract, by previous
agreement or by established practice to certain rights. Disputes of right will focus on
conflict issues such as employment contracts, legally enforceable matters or unilateral
changes in accepted or customary practices. A dispute of rights is, therefore, usually
settled by legal decision or arbitration and not by negotiation.
 "disputes of interest", where the conflict may be a matter of opinion, such as where a
person or group is entitled to some resources or privileges (such as access to property,
better working conditions, etc). Because there is no established law or right, a dispute of
interest will usually be solved through collective bargaining or negotiation.

Stages of conflict

The handling of conflict requires awareness of its various developmental stages. If leaders in the
situation can identify the conflict issue and how far it has developed, they can sometimes solve it
before it becomes much more serious. Typical stages include:

 where potential for conflict exists - in other words where people recognise that lack of
resources, diversity of language or culture may possible result in conflict if people are not
sensitive to the diversity.
 latent conflict where a competitive situation could easily spill over into conflict - e.g. at a
political rally or in the workplace where there are obvious differences between groups of
people.
 open conflict - which can be triggered by an incident and suddenly become real conflict.
 aftermath conflict - the situation where a particular problem may have been resolved but
the potential for conflict still exists. In fact the potential may be even greater than before,
if one person or group perceives itself as being involved in a win-loose situation.
Signs of conflict between individuals

In the organisation leaders and members should be alert to signs of conflict between colleagues,
so that they can be proactive in reducing or resolving the conflict by getting to the root of the
issue. Typical signs may include:

 colleagues not speaking to each other or ignoring each other

 contradicting and bad-mouthing one another
 deliberately undermining or not co-operating with each other, to the downfall of the team

Signs of conflict between groups of people

Similarly, leaders and members can identify latent conflict between groups of people in the
organisation or the community and plan action before the conflict becomes open and destructive:

 cliques or factions meeting to discuss issues separately, when they affect the whole
organisation
 one group being left out of organising an event which should include everybody
 groups using threatening slogans or symbols to show that their group is right and the
others are wrong

4. How to build teamwork and co-operation (…and so minimise the possibility of

conflict)

Teamwork and co-operation are essential in an organisation which aims to be effective and
efficient, and not likely to be divided by conflicting factions. The best teamwork usually comes
from having a shared vision or goal, so that leaders and members are all committed to the same
objectives and understand their roles in achieving those objectives. Important behaviours in
achieving teamwork and minimising potential conflict include a commitment by team members
to:

 share information by keeping people in the group up-to-date with current issues
 express positive expectations about each other
  empower each other - publicly crediting colleagues who have performed well and
encouraging each other to achieve results
 team-build - by promoting good morale and protecting the group's reputation with
outsiders
 resolve potential conflict - by bringing differences of opinion into the open and
facilitating resolution of conflicts

5. How to manage and resolve conflict situations

Collective bargaining

Especially in workplace situations, it is necessary to have agreed mechanisms in place for groups
of people who may be antagonistic (e.g. management and workers) to collectively discuss and
resolve issues. This process is often called "collective bargaining", because representatives of
each group come together with a mandate to work out a solution collectively. Experience has
shown that this is far better than avoidance or withdrawal, and puts democratic processes in place
to achieve "integrative problem solving", where people or groups who must find ways of co-
operating in the same organisation, do so within their own agreed rules and procedures.

Conciliation

The dictionary defines conciliation as "the act of procuring good will or inducing a friendly
feeling". South African labour relations legislation provides for the process of conciliation in the
workplace, whereby groups who are in conflict and who have failed to reach agreement, can
come together once again to attempt to settle their differences. This is usually attempted before
the more serious step of a strike by workers or a lock-out by management is taken; and it has
been found useful to involve a facilitator in the conciliation process. Similarly, any other
organisation (e.g. sports club, youth group or community organisation) could try conciliation as a
first step.