An Ethical Perspective By: Jim McGowen

Who is the most ethical person you know?
Did you have to pause before you answered that question? If so, there could be a problem. Did you answer “me”? If not, there could be a problem.

The fact that there is the ability to rank the ethics of those we deal with is the root of the problem. If everyone was entirely ethical and uncompromising in their integrity, the most ethical person would be impossible to determine because we would all be equally and unquestionably ethical. But, unfortunately, that isn`t the arena we work in.

Ethics has been said to separate people into three categories. There are those whose word is as good as any contract. Others insist on signing a contract because they have full intentions of honoring it. With others there is no need to sign a contract because they won`t honor it anyway.

It seems that every time there is a boom in the oil and gas business, new people come into our ranks and ethics seems to become less defined and moves down on the priority list. I`m not saying the newbies are unethical and the old-timers trustworthy. But in the excitement of financial success, ethics sometimes gets lost in the shuffle.

For example, leasing in the Barnett Shale is very competitive. Some stories I`m hearing about the tactics of a few landmen are disgraceful. Such actions are not limited to the Barnett Shale; nor are they limited to landmen. I just happen to live in Dallas so I hear more about the Barnett Shale than other plays. I hear stories of landmen stating the bonus they are offering is the highest bonus in the area; it is actually only 10% of what a competitor is offering two blocks away. Landmen telling potential lessors that they must sign the lease today because the landman is leaving town tomorrow and the company will no longer take the lease after he/she leaves.

The one that really kills me is the company landman who tells a field landman or lessor that his company will pay a certain bonus for the lease as long as the company landman gets a portion of the bonus. The only two companies I ever worked for would have fired me and pressed criminal charges had I ever done that. And I would have deserved it. But there are a few companies where this behavior is becoming more and more accepted.

These are examples of a few of the unethical things happening in the industry these days. Still more; landmen who pad their invoices; double-dippers who charge two companies for the same day of work, and the landmen who use their expense reports as an occasion to practice creative writing, etc. And there are companies who ignore such behavior as long as the company gets what it wants.

Many years ago a new term was introduced. It was called “situation ethics”. Under that theory it is permissable to do something unethical in certain situations. The usual example is, when a lady asks if you think the jeans make her look fat, you should answer “no” rather than hurt their feelings, even though you think the jeans look like they were made by a tent manufacturer. The problem with situation ethics is that you can always find justification for lying – being unethical, if you will. Going back to the example, I`m not saying you should answer the lady “yes, they make you look fat.” But you could diplomatically respond with something truthful such as “I really like the designer ones better.” Of, if you want to live dangerously, you can say, “No, I don`t think the jeans are causing it.” The point is we justify some ethical violations in our personal dealings. And the habit of those personal ethical violations can make ethics cloudy in our business dealings.

As a practicing lawyer I have seen some extremely unethical behavior. Sometimes it is done by lawyers – sometimes by clients. One lawyer I know set up a corporation for his client. In doing so, he accidentally misspelled the name of the company. Rather than confess his mistake and do the work again, he called the client and said, “I think it was brilliant of you to spell that word wrong on the form I asked you to fill out. It will draw more attention to your business.” The client assumed they had made the mistake and accepted the work with the error. Of course I`d rather talk about the client who takes a will or contract prepared by the attorney and sends copies to all his friends so they can prepare their own will or contract. Or the client who calls and asks questions for 30 minutes and they says, “Well, thanks for the information; if I decide to hire an attorney, I`ll call you back.” Why hire an attorney when you were able to get the legal advice for free?

Just last week I attended a funeral for a 75 year old relative by marriage. He was a good person and I enjoyed knowing him. At his funeral there were thought provoking comments made about him. When I think, which doesn’t happen as often as it used to, I feel compelled to write. I`d like to share some thoughts provoked by that occasion with you.

Among the things said about the deceased was the statement that he had a great business ethic. He would out-trade you. He would negotiate to the last penny. And he would not spend as much as most of us would spend if we had it, but he adhered to the principles of honesty, integrity, and ethical behavior.

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