Building Consultants Ltd
Serving the greater Auckland Area since 1988
Conflicts of Interests
Rather than a definition, let’s look at some simple examples:
I am 15 years old. My best friend tells me a secret. Another friend finds
out there is a secret and wants me to tell = I have a conflict of interests.
I am a real estate agent, engaged to help a client sell their house. Then
I find out a friend wants to buy that house = I have a conflict of interests.
I am a Judge. I have to decide a case which could go either way. There are
two sides, each represented by lawyers. I have business interests with one
of the lawyers = I have a conflict of interests.
So these are all about finding myself in a situation where I clearly have
a responsibility; and I cannot fulfil that responsibility properly / fully
/ purely because I also have another, competing responsibility to someone
else.
So the test for this sort of conflict is very simple: do I have a responsibility
to more than one person?
A bit more complicated is the question for anyone who is entrusted to perform
a professional duty: is your own self interest interfering with your duty?
For example:
I am a pre-purchase inspector. I have a contract with a prospective buyer
to produce a report on the condition of the property. While undertaking
the inspection I see how I could make more money by offering to fix some
of the problems I identify.
My self interest in making more money is in conflict with my duty to report
impartially.
We expect Professionals to be able to put aside self interest and perform
their duties impartially. The more respected the profession is, the more
strict our expectations and the more harshly society will judge those who
are perceived to be sacrificing their duty for selfish ends.
At this moment, I detect the development of a movement towards judging Remediation
Specialists as a group who are “sailing very close to the wind”
. This is about the distinction between, on the one hand identifying what
is wrong with a building and what needs to be done to fix it, and on the
other hand, being involved in the actual remediation. The reasons why the
same firm would do both are well understood within the profession –
but some members of the public clearly see it as consultants generating
work / feathering their own nests. The fees generated by running a remediation
project can be a great deal larger than what is earned in the investigation
and reporting stages.
To explain a little bit why firms do both: you cannot be an expert without
experience. The more experience you have testing your scope by being involved
in the supervision of remediation, the better equipped you will be to develop
a more realistic scope of works after the next investigation. Conversely,
if all you have done is investigate and report and you have no first hand
experience to draw upon when developing the scope of works, the chances
of that scope striking the right balance diminish and you may lack credibility
in the eyes of a Judge. It is easy to imagine a Judge asking an expert to:
“Tell me what you do, rather than what you think.” To be an
expert you need practical experience, not just theory.
Most of the larger firms do however create a separation, or pause between
on the one hand the investigation and reporting stage (which includes the
scope of remedial works) and on the other hand the involvement in the remedial
process. That pause provides space for the client to think, and the opportunity
to go and get a second opinion, or “change horses” For this
reason I suggest any client should be wary of an offer of service from a
consultant which encourages signing up for the whole package right at the
start. There should be no problem with a staged approach which does not
over commit the client.