Legal Consequences of Unethical Behavior

Authored by: Frederick J. Petersen

“In civilized life, law floats in a sea of ethics.”
Former US Supreme Court Chief Justice Earl Warren.

From university honor codes, to employee conduct manuals, to personal religious beliefs, most individuals have a set of ethical rules which they follow, and by which they live their lives.  Although enforcement of ethical rules by private institutions is customary and usually expected, ethics regulation has gradually crept into the public court system, and created a controversy whether a court is a proper forum to regulate ethical conduct.

Ethical rules have become an important part of the business and professional world.  Ethical codes are usually created to help a profession define minimum and expected standards of ethical conduct by its members.  Ethical codes are usually created by a state or national organization, and typically enforced according to guidelines within the organization.  A wide range of groups have adopted ethical codes, including lawyers, doctors, accountants, real estate professionals, teachers, journalists, social workers and engineers.  The ethical standards allow clients and peers to rely on the fitness and honor of that professional’s conduct in the workplace, and confident that remedies will be available when those standards are not upheld.

Civil courts allow people to sue for the tort of negligence, when they suffer damages because the conduct of another falls below a reasonable standard of care.  Typically, a reasonable standard of care is defined by the conduct of an average individual in a similar circumstance.  Failing to get your car’s brakes fixed, despite knowledge that they won’t stop the car, is an obvious negligent act. It is more difficult to define a reasonable standard of care for a person acting in a professional capacity.  Usually, there is a dispute between members of the profession as to whether the act was negligent or not.  Whether an act is negligent becomes even more difficult when a professional is sued for malpractice, based on a violation of an ethics code.

Until recently, courts viewed ethical codes as aspirational for professionals in a particular field.  Recently, however, some state courts have determined that ethical rules have legal significance, and that failing to adhere to ethical standards can result in court-imposed civil liability, in addition to discipline from the professional organization.  Unfortunately, there has been no uniform determination by courts whether ethics codes should be followed or must be followed.  Some courts have accepted ethical rules as a standard of practice and use the rules to determine professional responsibility, while others dismiss them as merely suggestions.

It is unlikely that courts will ever unify regarding the import of ethical rules in civil matters.  Part of the problem with a uniform rule is that ethical codes from industry to industry, and even from rule to rule, carry different weight as to what must be followed and what should be followed.  Further complicating the matter is that most organizations do not require membership or participation by all members of that particular profession.   The courts have yet to answer whether ethical guidelines should apply to members of the profession, who do not belong to the organization that created the guidelines.

In all of the uncertainty, professionals should remain aware that ethical guidelines may have legal consequences.  Behaving ethically may not only avoid professional discipline, but civil litigation as well.