September 25, 2017

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The Conflict Review Process

Media reports regarding the review perspectives of the Office of Government Ethics provide an unique, yet particularly relevant reminder of the need for governance committees to pursue a specific, consistent process with respect to evaluating conflicts of interest issues that come to its attention. This is a process in which the general counsel can be a particularly valuable advisor.

The focus of these reports is the transition of leadership at the Office of Government Ethics, and the different approach taken by the old and new ethics leadership in interpreting government ethics rules. Much of the current controversy has related to the approach taken with respect to evaluating conflict and potential divestiture issues relating to new Administration officials. According to The New York Times, the prior Director of the Office applied a strict approach to the review of financial disclosures, the interpretation of conflicts, and to the need for asset divestiture as a precondition to government service. The Times described the new director as applying a less rigid approach to conflicts and other ethical issues; i.e., more likely to be flexible with respect to waivers and divestiture.

There is no doubt that the Office of Government Ethics has lately been at the center of political controversy, and there is no reliable means for evaluating the reasonableness of the evaluation approaches taken by the former and current directors. The value of these reports is that they highlight the importance of process and identifiable, consistent standards to be applied by any board committee with responsibility for evaluating conflicts of interest and code of ethics-related issues. What is the evaluation approach to be adopted by the committee? What standards and criteria will it apply to particular instances of conduct? What are the circumstances in which it will waive conflicts, subject to ongoing conditions? Is the committee’s perspective one of strict/rigid adherence to duty of loyalty standards or a willingness to be more permissive in its interpretation? The general counsel can be an important contributor to the development of written conflicts and ethical review guidelines.

© 2017 McDermott Will & Emery

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About this Author

Michael W. Peregrine, Corporate Governance Attorney, Corporate Structure Lawyer, McDermott Will Emery, Chicago Law firm
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Michael W. Peregrine is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  He represents corporations (and their officers and directors) in connection with governance, corporate structure, fiduciary duties, officer-director liability issues and charitable trust law.  Michael is recognized as one of the leading national practitioners in corporate governance law.

Michael is outside governance counsel to many prominent corporations, including hospitals and health systems, voluntary health...

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