Authored by Trisha Pitt

Conflicts between Clients Interests

These day people spend significant part of their lives at work so different conflicts may appear in professional and business aspects of life. Consequently, conflict resolution and conflict avoidance become extremely important issue since professional conflict can not only negatively influence business process and productivity but also it can ruin one’s career or even business

Among many types of conflicts psychologists define conflict of interest. This term is applied to the situation when people’s primary and secondary interests contradict each other’s. The primary interest should be dominative one, however when secondary interests prevail over the primary, conflict of interest appears. High professional results, keeping professional ethics and building a reliable reputation belong to the primary interests. The secondary interests include personal financial benefit or favorable career perspective. A conflict of interest may take place when a professional represents client’s interests but he is influenced by the other rival client or company which may bring better personal benefits to him. The only way to avoid such situation is to obey the professional ethics code.

Michael Cervantes is a CPA working as a sole proprietor. During certain period of time he had been providing the accounting service for La Mancha Hardware Company, which planned to purchase a small company Impossible Dreams Hardware Co. For some reasons La Mancha chose to change their CPA service provider and terminated the contract with Michael Cervantes. Simultaneously Michael was working for Aldonza Dulcinea whose client Quixote Electronics also planned to make an offer for Impossible Dreams Hardware Co. In this situation the conflict of interests appears since Michael wants to provide high-quality service to Quixote Electronics but he possesses valuable information about La Mancha’s intension to acquire Impossible Dreams Hardware Co.

The primary interest in this situation is to follow the non-disclosure agreement and safeguard the reputation while the secondary interest is to help Aldonza’s client to gain the business goals. Surely, it would be unethically and unprofessionally of Michael to serve his own interests and Aldonza’s or Quixote’s interests but neglecting his former client’s La Mancha interests. He should always act according to the AICPA’s Code of Professional Conduct which claims to avoid exploiting any confidential information of the client regardless whether this client is current or former. It also asks the professional to be confident that “the professional service can be performed with objectivity”. The precious advice how to gain the objectivity is “to invoke the Golden Rule: Do unto others as you would have them do unto you”. To prevent the conflict of interests Michael should inform Quixote about his strong intention to keep the non-disclosure agreement with his former client. He should warn his client about importance of following the professional ethics and not revealing the information and using knowledge about the former client’s goal and plans. If Michael is confident to be impartial and objective, he should authenticate his intention in the contract with Quixote. In case he is uncertain about being fair with both former and current clients, the best way out is to withdraw from the engagement with Quixote. If he accepts Quixote’s offer but acts unfair by using former client’s information for the benefit of new client it will result in ruining his reputation, harming La Mancha’s business and decreasing Quixote’s expected productivity.

To sum up, the conflict of interest may take place when the professional service provider protects conflicting interests of different clients. To avoid negative results of this conflict the situation should be discussed with the current client with promise to be objective. In other case the work with this client should be stopped in order to keep a good reputation and protect former client’s interests.

These day people spend significant part of their lives at work so different conflicts may appear in professional and business aspects of life. 142 Bytes
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