Conflicts of interest, and the ones you do not notice

A conflict of interest arises where a duty to one client is compromised by a duty to another, or by your own interest. RICS members are required to identify them, and either decline or manage them with informed consent.

The obvious ones are easy. Acting for both sides on the same transaction is declined without much thought.

The ones that develop

The certifier who is also the employer’s cost consultant. Certifying under a JCT form requires independence between the parties. Advising the employer on how to reduce the account requires the opposite. On most projects these are the same person, and the tension only becomes visible when a valuation is disputed.

The repeat client. A contractor providing forty per cent of your practice’s income appears on the other side of a project where you certify. Nobody has done anything wrong and everybody knows the arithmetic.

The successor appointment. You are asked to review work carried out by a firm whose principal you worked with for a decade.

The party that changes. A subcontractor is acquired by a group you act for elsewhere. The conflict arrives without anyone doing anything.

Managing rather than declining

Some conflicts can be managed with informed consent from all parties, recorded in writing, sometimes with information barriers between teams. That works where the conflict is structural and the parties genuinely understand it.

It does not work where the conflict goes to the substance of the judgement being made. A certifier cannot manage away the requirement to certify independently.

The practical routine

• Check at instruction: parties, group companies, and anyone else you act for on the project.
• Record the check, including when it found nothing. The record is what shows the process exists.
• Recheck when a party changes, which happens more often than the initial check assumes.
• Where consent is the answer, get it in writing before proceeding, not afterwards.

The test worth applying

If this became known to the other party tomorrow, would they be entitled to feel misled? If the answer is anything other than a clear no, it needs disclosing, and disclosing it early is always cheaper than explaining later why it was not.