The February Ethical Dilemma: Changes in Compensation

This is the February 2026 edition of our monthly series of Ethics case studies titled What Do You Think? This series is comprised of case studies from NSPE archives, involving both real and hypothetical matters submitted by engineers, public officials and members of the public.

Your peers and the NSPE Board of Ethical Review have reviewed the facts of the case as shown below. And, here are the results.

Applicable NSPE Code References:
Code II.4.b: Engineers shall not accept compensation, financial or otherwise, from more than one party for services on the same project, or for services pertaining to the same project, unless the circumstances are fully disclosed and agreed to by all interested parties.
Code II.5.b: Engineers shall not offer, give, solicit, or receive, either directly or indirectly, any contribution to influence the award of a contract by public authority, or which may be reasonably construed by the public as having the effect or intent of influencing the awarding of a contract. They shall not offer any gift or other valuable consideration in order to secure work. They shall not pay a commission, percentage, or brokerage fee in order to secure work, except to a bona fide employee or bona fide established commercial or marketing agencies retained by them.
Code III.6.a: Engineers shall not request, propose, or accept a commission on a contingent basis under circumstances in which their judgment may be compromised.
Code III.7.a: Engineers in private practice shall not review the work of another engineer for the same client, except with the knowledge of such engineer, or unless the connection of such engineer with the work has been terminated.

The facts in this case do not directly reveal the relationship between Engineer Walter and Attorney Larry, but it is reasonable to assume that Engineer Walter and Attorney Larry may have had an informal relationship, under which Attorney Larry might refer preliminary investigation and expert witness business to Engineer Walter. It is not entirely clear what the extent of this arrangement was under the facts, but there is nothing in the facts to suggest that Attorney Larry did not enjoy similar relationships with other engineers in addition to Engineer Walter.

NSPE Code of Ethics provision II.5.b. states in part that engineer “shall not pay a commission, percentage or brokerage fee in order to secure work, except to a bonafide employee or bonafide established commercial or marketing agencies retained by them”. However, in this context, the Board is not convinced that this Code provision is specifically applicable to the situation described under the facts. Without more information, it does not appear that the relationship was any different than the relationships that might exist between law firms and engineers who sometimes serve as expert witnesses prior to or during litigation. Lawyers and law firms often have lists of engineering experts that they use and on the basis of their experience may suggest to their clients for possible professional engagements. Clearly recommendations by “word of mouth” is a basic method through which engineering experts gain recognition, reputation, and notoriety within the professional community, and securing work through this method, without any indication of a formal marketing effort, does not require any careful analysis or review. Clearly there is nothing in the facts to indicate that Engineer Walter paid Attorney Larry for referring work to Engineer Walter.

Instead, the issue in this case appears to turn on the services being provided by Engineer Walter and whether Engineer Walter’s obligation was to the Client or to Attorney Larry. Assuming Engineer Walter’s obligation was to Attorney Larry, it appears that Engineer Walter would have no direct ethical duty to the Client that would obligate Engineer Walter to perform his services under the terms of the arrangement originally discussed with Attorney Larry. On the other hand, if the obligation of Engineer Walter was to the Client with Attorney Larry merely serving as the “go-between”, it would appear that Engineer Walter would have an obligation to perform his services under the terms of the arrangement originally discussed with Attorney Larry. To find that the arrangement was between Engineer Walter and the Client would also require the Board to treat this case similar to one involving a contingency relationship (See Code III.6.a.), since it appears that at least in the mind of one of the parties (Engineer Walter), Client’s payment or the forgiveness of the fee to Engineer Walter for the preliminary investigation was contingent upon at least one factor (e.g., continued use of Attorney Larry).

The NSPE Code of Ethics Code III.6.a. states that engineers “shall not request, propose, or accept a commission on a contingent basis under circumstances in which their judgment may be compromised.” This provision is intended to cause engineers to avoid cases where, for example, the payment of their fee is conditioned upon the results of their investigation. A good example of this is BER Case 91-2, involving an engineer reviewing the work of another engineer with his fee increased based upon the higher number of errors identified. There, the Board ruled the actions of the engineer were unethical. In the present case, the Board cannot identify any factors that would suggest that Engineer Walter’s judgment could have been compromised since the payment of Engineer Walter’s fee was not tied to the substantive results of his investigation as was the case in BER Case 91-2, but instead appeared to hinge on Attorney Larry’s continued involvement in this matter.

Without exploring such matters as attorney client privilege, attorney work product, and the right of any client to select the legal counsel of their choice without interference, the Board is of the view that regardless of the formal nature of the relationship between the parties, Engineer Walter, either independently or through Attorney Larry, has some type of ethical obligation to the Client, either at the outset of the relationship or soon thereafter, to make clear what the terms and conditions of their relationship would be and what impact, if any, the termination of Attorney Larry would have on the rights and responsibilities of the parties, particularly Client and Engineer Walter.

By failing to do so, Engineer Walter caused a misunderstanding with Client that could have been easily avoided through early disclosure, which should have been made in writing. In addition, it appears from the facts that Engineer Walter, by not agreeing later to provide expert testimony without additional compensation for the preliminary investigation, exacerbated this misunderstanding. Code II.4.b. states that “Engineers shall not accept compensation, financial or otherwise, from more than one party for services on the same project, or for services pertaining to the same project, unless the circumstances are fully disclosed and agreed to by all interested parties.” While engineers are clearly entitled to fair, just and reasonable compensation for their professional services, such compensation should be a reflection of the terms and conditions that the Engineer agreed to provide in full and open disclosure and negotiation as appropriate with the Client.

BOARD OF ETHICAL REVIEW
Lorry T. Bannes, P.E., James G. Fuller, P.E., Donald L. Hiatte, P.E., Joe Paul Jones, P.E., Paul E. Pritzker, P.E., Richard Simberg, P.E., C. Allen Wortley, P.E., Chairman

Note – In regard to the question of application of the Code to corporations vis-a-vis real persons, business form or type should not negate nor influence conformance of individuals to the Code. The Code deals with professional services, which services must be performed by real persons. Real persons in turn establish and implement policies within business structures. The Code is clearly written to apply to the Engineer and it is incumbent on a member of NSPE to endeavor to live up to its provisions. This applies to all pertinent sections of the Code. This opinion is based on data submitted to the Board of Ethical Review and does not necessarily represent all of the pertinent facts when applied to a specific case. This opinion is for educational purposes only and should not be construed as expressing any opinion on the ethics of specific individuals. This opinion may be reprinted without further permission, provided that this statement is included before or after the text of the case.