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Kaplan’s Courtby Jeffrey M. KaplanConflicts of interest:Where law and ethics meetKaplanIhave long been fascinated by the field ofconflicts of interest (COI) and last yeareven launched a blog devoted entirely tothe topic. What lies behind this interest in asubject that most “normal” individuals wouldfind depressing at best?To begin, COI is an area where,more than any other, law and ethicsmeet. Indeed, many legal fields withwhich compliance and ethics (C&E)professionals routinely deal are basedentirely on COI ethical principles(as in the case of anti-corruptionlaw) or largely on these principles(as is true for fraud and insider trading law).Additionally, the realm of fiduciary duty canbe seen as the legal embodiment of ethicalstandards, as reflected in Justice BenjaminCardozo’s justly celebrated words that “[a]trustee is held to something stricter than themorals of the marketplace. Not honesty alone,but the punctilio of an honor the most sensitive,is then the standard of behavior.” 1Studying COIs helps underscore theimportance of other areas of knowledge, too,for C&E professionals. One of these is psychology,and particularly, the large numberof recent studies showing how seeminglyirrational many ethics-related decisions are.Specifically, “behavioral ethics” research hasdemonstrated the counterintuitive fact thatdisclosing COIs actually increases the likelihoodof wrongful behavior. Yet anotherimportant area of knowledge for C&Eprofessionals is economics, and the conceptof “moral hazard” (which can be seen as a“cousin” of COIs) helps illuminate the manylinks between incentives and C&E risks.“COI is an area where,more than any other,law and ethics meet.”Finally, proper handling of COIs is essentialto a healthy ethical culture which, in turn,can be viewed as “business anthropology”(although this term has other meanings, too).This is because a failure to sufficiently addressCOIs—the most common C&E problem in manycompanies—can undermine employees’ senseof “organizational justice,” thereby contributingto an overall erosion of its culture. And, to bringus full circle, increasingly the law recognizes theimportance of culture to compliance.In short, COIs embrace a broad rangeof knowledge concerning law, psychology,economics, and anthropology that C&E professionalsneed for their work. In this sense,studying COIs provides an ongoing—andprofessionally relevant—liberal arts education,which is why I am so fascinated by the field.(More information about all of the abovetopics can be found on the Conflict of InterestBlog—www.conflictofinterestblog.com). ✵1. Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928)Jeffrey Kaplan is a Partner with Kaplan and Walker, LLP in Princeton, NJ.He can be contacted at jkaplan@kaplanwalker.com.Compliance & Ethics Professional March/April 2012+1 952 933 4977 or 888 277 4977 | www.corporatecompliance.org 43