---
title: "Conflict of interest"
chunk: 4/10
source: "https://en.wikipedia.org/wiki/Conflict_of_interest"
category: "reference"
tags: "science, encyclopedia"
date_saved: "2026-05-05T04:27:55.281412+00:00"
instance: "kb-cron"
---

physical, geographic, and departmental separation of attorneys;
prohibitions against and sanctions for discussing confidential matters;
established rules and procedures preventing access to confidential information and files;
procedures preventing a disqualified attorney from sharing in the profits from the representation;
continuing education in professional responsibility.
Judicial disqualification, also referred to as recusal, refers to the act of abstaining from participation in an official action such as a court case/legal proceeding due to a conflict of interest of the presiding court official or administrative officer. Applicable statutes or canons of ethics may provide standards for recusal in a given proceeding or matter. Providing that the judge or presiding officer must be free from disabling conflicts of interest makes the fairness of the proceedings less likely to be questioned.
In the practice of law, 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, i.e., an "ethical wall". In some circumstances, a client can never waive a conflict of interest. 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 matter. Found conflict can lead to denial or disgorgement of legal fees, or in some cases (such as the failure to make mandatory disclosure), criminal proceedings. In 1998, a Milbank, Tweed, Hadley & McCloy partner was found guilty of failing to disclose a conflict of interest, disbarred, and sentenced to 15 months of imprisonment. In the United States, a law firm usually cannot represent a client if the client's interests conflict with those of another client, even if separate lawyers within the firm represent the two clients, unless (in some jurisdictions) the lawyer is segregated from the rest of the firm for the duration of the conflict. Law firms often employ software with their case management and accounting systems to meet their duties, monitor their exposure to conflicts of interest, and assist in obtaining waivers.

== Outside of 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 their duty of loyalty.
There is often confusion over these two situations. Someone accused of a conflict of interest may deny it exists because they did not act improperly. A conflict of interest can exist even if no improper acts result from 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 incentivize improper acts in some circumstances.)
As an example, in the sphere of business and control, according to the Institute of Internal Auditors:

conflict of interest is a situation in which an internal auditor, who is in a position of trust, has a competing professional or personal interest. Such competing interests can make it difficult to fulfil their duties impartially. A conflict of interest exists even if no unethical or improper act results. A conflict of interest can create an appearance of impropriety that can undermine confidence in the internal auditor, the internal audit activity, and the profession. A conflict of interest could impair an individual's ability to perform their duties and responsibilities objectively.
A few examples of conflict of interest are:

When a member of the commissioners of a state highway commission owns a piece of property, the state will have to condemn it. The conflict of interest comes in because the commission will want to acquire the property at the lowest possible price (subject to it being at least fair market value) while, as the property owner, they will want the highest possible price they can get.
When an officer or director of a corporation owns a patent or copyright that either was developed before they were involved with the corporation (which means it cannot be subject to a contractual right of assignment or work for hire) or that it was developed for a type of product not related to the scope of their employment. Authors or inventors will want a large license fee or royalty, while as an officer of the corporation, they are expected to offer as little as possible.
A judge deciding a bench trial or an arbitrator in binding arbitration must not decide a case where a relative, acquaintance, or business partner is a party. Because they may give overly favorable terms to that party, or where they might impose excessively harsh terms (such as a judge having their estranged child, parent, or ex-spouse as a criminal defendant being sentenced before them).

== Organizational ==