Question

Kim is a partner of Angst Associates, a management consulting firm that provides advice to corporations ranging in size from $8,000,000 to $40,000,000 in assets. Crient Company asks Kim whether she will provide management consulting services to Crient. Kim says she will do it personally and that Crient should pay her directly. Crient has $10,000,000 in assets. At night and on weekends, Kim consults with Crient. Crient pays Kim $25,000. Has Kim done anything wrong?

Answer 1

Answer: Kim has done wrong by denying her firm the benefit of of Crient's business.

Explanation:

Even though Kim did the Crient's work outside of office hours, this represents a breach of loyalty to Angst Associates. Kim is not being loyal to the firm because she is taking work that would otherwise have benefitted the firm from the firm if it had gone through the firm.

She is therefore not only denying the firm the benefit of her skills in this manner but also denying them the chance to make a profit on the consulting which is ethically wrong.

Had Kim engaged with Crient in providing services to them that was not the same service that her firm provided, there would be no breach of loyalty here but as the services she offered and that of her firm are the same, she has breached loyalty and if found out, will be punished.