How to Deal When Personal Lives Impact Professional Goals Conflicts of interest can create far bigger conflicts.

I'm a partner in a local business, and a morning news report set off chaos in our office. A county agency is suing a local businessman. That agency is considering us for a lucrative project -- and the man they're suing is married to one of my business partners, Susan. She claims she didn't know about the lawsuit or the conflict with her husband. Other partners find that hard to believe, and are concerned about our reputation. Do owners have a responsibility to step away when their personal relationships smash into the firm's reputation?

Not necessarily. It all depends on the person's role in the company, and how involved they are in the conflict. Let's consider Susan. If she had been on the team involved with this agency's account, she should have immediately withdrawn from the project when she learned about the conflict. If she was implicated in the lawsuit, she should take a leave of absence from your firm. And if she lied about what she knew and when, then she violated her partnership responsibilities and should be shown the door. When you break trust, you lose credibility -- and therefore value.

But first, everyone needs to cool down. If there's no proof that Susan lied, then go buy her lunch and say you're sorry her family is going through a tough time. Then use this as an opportunity for your firm to fill in a gap in its policies. Draw up criteria that spells out when a partner needs to withdraw from a project, take a leave or step away permanently. Without that, you cannot expect partners to exit -- with no evidence of wrongdoing, and no policy to follow -- whenever their relatives are in a client's crosshairs. That's unfair, disrespectful and smacks of no loyalty.