The Greek Conference - Kos, September 2007 Papers

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ETHICAL DILEMMAS: AUSTRALIA
Lawyers, Company Executives, Researchers and Doctors

Andrew Alston*

Every profession has ethical duties that are usually documented in codes of conduct or government regulation. This paper discusses two duties that are shared by all professions. The first is the duty of confidence and exceptions to it. The second is the duty to avoid conflict of interest. The discussion is conducted by way of examining a fact situation that involves lawyers, company

executives, researchers and doctors.1 It is substantially derived from widely publicised events that have occurred in recent times and from common situations that occur in practice. Discussions on entitlement to breach confidence and conflict of interest usually focus on the medical profession.2 It is well established that doctors have duties to the community that sometimes override duties to their patients. However, here the focus is on other professions, particularly the legal profession and company executives.

The problem

Steve is a junior solicitor working for a large city firm. The firm’s biggest client is Yummy-Drugs Ltd., a drug company that has recently withdrawn one of its drugs, "Nopaine", from the market because it has discovered that people who have taken the drug will probably suffer from a crippling arthritic condition in five to ten years time.

The only people who know why "Nopaine" has been withdrawn are solicitors at Steve’s firm, senior executives at Yummy-Drugs and a research scientist who discovered the problem. Yummy-drugs has awarded the research scientist a grant of two million dollars to leave the country and research the medical effects of quality wines consumed in large qualities.

The firm has asked Steve to advise it on the following actions:

Steve’s aunt Clarissa has been a client of the firm for many years and she has asked him to draft her will and to include in it a bequest of $50,000 to Yummy-Drugs Ltd so that it may further its research into painkilling drugs. Clarissa had been taking "Nopaine" regularly and believes that she has benefited from it.

(1) Assume that you are a trusted colleague of Steve’s and that he has asked for your advice on problems that he may have. Advise Steve.

(2) Assume that you are a conscientious senior executive of Yummy-Drugs Ltd. and that you want to best serve the interests of

(a) yourself;

(b) the shareholders;

(c) the employees;

(d) the directors;

(e) the general public.

What are your options?

(3) Assume that you are the research scientist. You were the principal investigator in the ethically approved trial, the findings of which led to the marketing of "Nopaine" by Yummy-Drugs Ltd. You are a loyal employee of Yummy-Drugs Ltd and a conscientious research scientist and you want to serve the interests of the general public.

What are your options?

(4) Assume that you are Steve’s psychiatrist. In confidence, he tells you all his problems including his ethical dilemma over "Nopaine". You form the view that he will not tell anyone else about it.

Guidance for Steve: The Rules of Professional Conduct and Practice These Rules were adopted by the Law Council of Australia in 2002. They are the basis for the Professional Conduct Rules in every State and Territory in Australia each of which has modified them to varying degrees. Unlike statutory provisions and decisions of judges, the rules do not have the force of law.3 However, they provide guidance for practitioners as to appropriate professional conduct. Failure to comply with them may result in disciplinary proceedings.

The rules that apply to Steve and his predicaments are as follows:

Should the firm say nothing?

Should litigation be vigorously defended?

No! Refer in particular to:

The predominant, if not the only purpose of doing so was to delay and defer White Industries (Qld) Pty Ltd in bringing to a conclusion its undoubted claim for moneys due under a building contract. Goldberg J ordered Flower & Hart to pay the costs of White Industries (Qld) Pty Ltd. His Honour said:

I do not consider that it is a legitimate or appropriate purpose for the institution of a proceeding in this Court that the purpose of the proceeding is to postpone, delay or put a barrier in front of a claim of another party and the payment of an amount due in respect of that claim. The purpose of proceedings in a court of law is to vindicate a claimed right whether, for example, that right be a right to positive relief such as a claim for money due or specific performance of an agreement or whether the right be one to be free from unauthorised governmental interference. It is not part of the legal process in this Court that its process and procedure be used as an instrument of oppression so as to frustrate the bringing, and expeditious disposition of a legitimate claim.

Should lawyers advise that assets be transferred to another jurisdiction so that the client cannot pay the compensation?

Steve’s Duty to Aunt Clarissa

Does Yummy-Drugs Ltd. have a duty to disclose the information about Nopaine?

The idea for this part of the problem comes from the events in September 2005 when Phil Burgess, the regulatory chief of Telstra, stated publicly that he “wouldn’t recommend” Telstra shares to his mother. This statement contributed to a sudden and substantial downgrade in the value of Telstra’s shares. The Prime Minister described the behaviour of Telstra executives as disgraceful. Why was it disgraceful? It seems that the Prime Minister and others thought that it was wrong to have disclosed that the shares were overvalued. However, it is submitted that what was wrong was not the disclosure of this information but the way in which it was disclosed.

Comments on the exceptions

What should the Research Scientist do?

If the research scientist discloses the information, will she/he be protected as a whistleblower or does she/he risk being sued in tort and/or contract?

What should Steve’s Psychiatrist do?

None of these exceptions apply here.8

Three Golden Rule

* Legal Practitioner, South Australia; Adjunct Associate Professor, Flinders University, School of Law.

1 The fact situation developed from a discussion topic for first year students studying procedures and ethics at Flinders University Law School. The discussion topic for students involved only the ethical dilemmas of Steve, the lawyer.

2 See Andrew Alston Lawyers and Doctors: Entitlement to Breach Confidentiality The Greek Conference, Mykonos, Towards a Just Society – Issues in Law and Medicine September 2005, published in (2006) Flinders Journal of Law Reform 63-78.

3 Law Society of South Australia v Le Poidevin [1998] SASC 7014 (Full Court) per Wicks J.

4 [1998] 806 FCA (14 July, 1998)

5 See for example Whistleblowers Protection Act 1993 (SA)

6 Australian Government 2007. See chapter 4.8.

7 Like the Rules of Professional Conduct and Practice that apply to legal practitioners, the AMA’s Code of Ethics does not have the force of law but it provides guidance for doctors as to appropriate professional conduct.. Failure to comply with the Code may result in disciplinary proceedings. See above heading: Guidance for Steve: The Rules of Professional Conduct and Practice.

8 For further discussion of entitlement of medical practitioners to breach confidentiality, see Andrew Alston Lawyers and Doctors: Entitlement to Breach Confidentiality The Greek Conference Towards a Just Society – Issues in Law and Medicine Mykonos, September 2005, published in (2006) Flinders Journal of Law Reform 63-78.

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Copyright 2007. Greek Legal and Medical Conference