Who Else Is Listening? The Board's Standing Test for Adviser Conflicts

Boards are accustomed to interrogating a consultancy proposal. They ask about methodology, fees, the named team and the evidence behind the recommended approach. They are less accustomed to asking a simpler question: who else in our market is this firm advising? The omission is rarely deliberate. It reflects the way engagement letters are drafted, with conflicts handled in a standard clause and then filed away until something goes wrong.

That is a thin basis for governance. Specialist advisers often work across a sector, moving between competitors, adjacencies and former clients. Knowledge is not neatly compartmentalised by contract. The board does not need to assume bad faith to recognise that information barriers, team separation and disclosure timing deserve more than a passing assurance. The question is not whether an adviser has other clients. It is whether the firm can explain, in plain terms, how it manages what those relationships mean for you.

The question that arrives after the decision

Conflict clauses tend to be written for signature, not for renewal. They confirm that the adviser will disclose conflicts and will not act where a conflict cannot be managed. In practice, the disclosure is often generic, the management method is described in a phrase, and the board's attention has already moved to delivery. By the time the retainer comes up for review, the clause is buried in a document nobody rereads.

A standing question at renewal corrects that. It treats conflict disclosure as part of the ongoing relationship rather than a one-off warranty. The board is not asking for a dramatic confession. It is asking for a current picture: which clients in or near our sector are being advised, what kind of work is being done, and what has changed since the engagement began.

Three disclosures, not one

A useful board test separates three categories. First, existing conflicts: clients the adviser is already serving in the same sector or in a directly competing position. Second, potential conflicts: pipeline work, pitches or mandates that could create a conflict if won. Third, structural conflicts: situations where the adviser's wider group, affiliate or subcontractor has a relationship that bears on the engagement.

The adviser may not be able to name every client. Confidentiality cuts both ways. But it can describe categories, the nature of the work and the proximity to the board's own market. A response that offers only a blanket assurance is not a disclosure; it is a mood. The board should be able to point to a written summary and a reasoned conclusion.

Information barriers are a control, not a metaphor

The phrase 'Chinese walls' has survived well beyond its usefulness. It sounds reassuring and explains almost nothing. A board should ask for the operating detail. Who is walled off from what? Which systems hold client information, and who can access them? Are delivery teams separated by reporting line as well as by intention? What happens when a member of staff moves between engagements? Is there a breach log, and who reviews it?

These are not unreasonable questions for a specialist retainer. They are the difference between a policy and a practice. An adviser that cannot describe its barriers in concrete terms is either unfamiliar with its own controls or relying on the board not to ask. Neither is a comfortable position at renewal.

Team separation is testable

Conflict management often fails at the human level rather than the contractual one. The same partner may sit across two competing accounts. A junior analyst may move from one engagement to another with the same shared drive and the same weekly catch-up. Support staff may see documents without knowing which client they belong to. None of this requires malice. It requires a system that has not been designed for the risk.

Boards can ask a short set of practical questions. Will the same partner lead both relationships? Will any delivery staff be shared? Are there separate collaboration spaces, access permissions and document repositories? Are staff briefed on the barrier, and is that briefing recorded? If a conflict emerges mid-engagement, who decides what happens next? The answers should be specific enough to minute.

Disclosure timing matters as much as disclosure content

Most conflict disclosure happens once, at the start. That is the wrong cadence for a retainer that may run for a year or more. New clients arrive. Pitches are won. Teams change. A conflict that did not exist at signature can exist at month nine.

The engagement terms should therefore require notification within a defined period if a relevant new relationship arises. The board should also ask for an annual confirmation and a refresh at each renewal. This is not an administrative nicety. It creates a record that the adviser has considered the question and that the board has had the chance to respond. If the answer is 'nothing to report', that nil return is still useful evidence of a live process.

Put it on the retainer review agenda

Conflict disclosure belongs alongside fees, performance and scope at the retainer review. A short standing item can cover four things: an extract from the adviser's conflict register relating to the board's sector; any new engagements or pitches that could be relevant; an attestation that information barriers remain in place; and any breaches, near misses or team changes that affect the engagement.

The board does not need to see the whole register. It needs enough to satisfy itself that the question has been asked and answered. Minutes should record the disclosure, the board's conclusion and any conditions attached to renewal. That is a more reliable form of oversight than a clause that no one has read since procurement signed it.

Questions to put before renewal

A board can keep the conversation short without making it superficial. Ask who else the adviser is working with in the same sector or a directly adjacent one. Ask what kind of work that is and whether it touches the board's commercial priorities. Ask how information is separated in practice, not in principle. Ask whether the same partner or delivery team is involved. Ask when the adviser would notify a new conflict and who decides whether work should be declined. Ask what happened the last time a barrier was tested. Ask for the answer in writing.

These questions are not adversarial. They are the same questions a well-run firm would ask of itself before accepting a sensitive mandate. The adviser that answers them clearly is easier to trust, not harder to work with.

The rival may be legitimate; the silence is the risk

A consultancy can advise a competitor and still serve the board well. Sector experience is often the reason it was appointed. The governance issue is not the existence of another client. It is whether the board knows enough to judge the risk and whether the adviser has controls that can bear the weight of the relationship.

Vague assurances are not a governance answer. A standing item at renewal is. It turns a buried clause into a live question, gives the board a record and gives the adviser a reason to keep its barriers in working order. The rival in the room may be entirely legitimate. The board should still know who is listening.