Its a truism that disclosure of conflicts of interest makes information more reliable and lets people make better judgments of its neutrality.  As this article in the NYT discusses, that may not be as true as we would like.

A solution often advocated for this lack of objectivity is to increase transparency through disclosure of conflicts of interest. But a 2005 study by Daylian M. Cain, George Loewenstein and Don A. Moore found that disclosure can exacerbate such conflicts by causing people to feel absolved of their duty to be objective. Moreover, such disclosure causes its “victims” to be even more trusting, to their detriment. [Note as to this second conclusion, see discussion below.]

Our legal system often focuses on whether unethical behavior represents “willful misconduct” or “gross negligence.” Typically people are only held accountable if their unethical decisions appear to have been intentional — and of course, if they consciously make such decisions, they should be. But unintentional influences on unethical behavior can have equally damaging outcomes.

Here is the full study.  The research was based on an experiment in which “estimators” estimated the value of a jar full on coins, based in part on advice from “advisors,” and in which pay-offs to the advisors varied between being based on accuracy and the size of the estimate itself.  In some cases the incentive to “advise” high was disclosed to the ultimate estimators, and in others it was not.  This is obviously more like a stock analyst situation than a legal one, but still analogous.  The full study reviews the literature as to psychological incentives in conflict of interest.

I read the abstract, below, as not being quite so firm as the NYT article about the extent to which people feel they can rely more on those who have disclosed their conflicts, although it is clear that the study does conclude that people underestimate the extent to which they must discount the advice of those who have disclosed conflicts.

Conflicts of interest can lead experts to give biased and corrupt advice. Although disclosure is often proposed as a potential solution to these problems, we show that it can have perverse effects. First, people generally do not discount advice from biased advisors as much as they should, even when advisors’ conflicts of interest are disclosed. Second, disclosure can increase the bias in advice because it leads advisors to feel morally licensed and strategically encouraged to exaggerate their advice even further. As a result, disclosure may fail to solve the problems created by conflicts of interest and may sometimes even make matters worse.

This is probably the key take-away (pasted from the study itself):

Disclosure, at least in the context of the admittedly stylized experiment discussed in this paper, benefited the providers of information but not its recipients. To the extent that a similar effect occurs outside the experimental laboratory, disclosure would supplement existing benefits already skewed toward information providers. In particular, disclosure can reduce legal liability and can often forestall more substantial institutional change. We do not believe that this is a general result—that is, that disclosure always benefits providers and hurts recipients of advice—but it should challenge the belief that disclosure is a reliable and effective remedy for the problems caused by conflicts of interest.

This all suggests (notwithstanding the caution as to generality in the above para)  that disclosure alone is far from enough.  If I were a lawyer with an expert on the other side (or indeed anyone with an interest) I would not want the disclosure to be voluntary, I would want to bring it out by cross examination, and I would want to be allowed to explore it in its detail, not merely as a general statement, and this study would hopefully help me explain to the judge my need (and right) to do so.

Much more broadly, this raises interesting questions about the impact of having a lawyer advocate for a client before a judge.  Do judges underestimate the impact of the interest of the client upon what the lawyer says to the court (an obviously inherently disclosed and assumed conflict)?  If so, this should not matter when both sides are represented, but might have a major impact when one side is represented. 

Indeed, this may provide some additional insight into why such cases are reported by many judges as being the hardest of all, and why judges feel so torn about how to respond.  We need more research into both what is going on, and what best practices will be most effective in maintaining neutrality.  It also supports the position taken in the civil Gideon debate that the presence of counsel on the other side is a major factor militating in favor of the need for counsel in order for a litigant to have full access to justice.  (No kidding disclosure:  I have tried, without success, to get additional funding to go into this area of attorney-on-one-side more deeply, as one of a number of “harder problems” in self-represented litigation in the courtroom, and may well do so again.  Of course the topic was included in the (funded) National Judicial Curriculum that was launched at a Conference at Harvard in 2007, and which I coordinated.)

Thoughts much appreciated.