Jewish Business Ethics

Lenders deserve to know if a shaky lender has misled them

Question: A person I know is going around borrowing money for his business. I happen to know that his business is not going so great, so there is a good chance lenders may not get their money back. I feel like I should inform them, but I’m afraid that if I tell people I will actually be precipitating a failure and do more harm than good to the lenders.

Answer: Your question is a twist on the usual dilemma involving damaging disclosures. Let’s examine the usual situation:

The Torah commands us, “Don’t go about as a talebearer among your people; don’t stand idly by the blood of your neighbor.” (Leviticus 19:16). The first half of the verse prohibits slander or any other kind of damaging revelation about others, but the second half tempers that prohibition: Our concern for the reputation of the wrongdoer shouldn’t induce us to stand idly by when someone is liable to suffer a loss from his actions.

The classic book Chafetz Chaim by Rabbi Israel Meir HaCohen explains how we harmonize these competing principles. Revelation is justified when there is no other way to prevent someone from suffering a loss, and when the revelation doesn’t cause undeserved harm to the subject.

Thus, the evaluation process is simple. First, we see if the potentially damaging revelation is really likely to save someone from a loss. If it is, we see if there is any other way to prevent the loss. If there is none, we check to see if the revelation will cause disproportionate harm to the subject of the disclosure. If there isn’t, then disclosure is appropriate.

In your case, there is a twist. You can’t evaluate the likelihood of loss in isolation from the reporting itself. The reason is that the very fact that you report the danger may actually augment the danger.

The key question here is the extent of the danger. At one extreme, borrowing money in a doomed effort to prop up a failing business is really a variation of a pyramid scheme. You’re borrowing Peter to pay Paul until the day comes that you just can’t borrow enough to pay off your debts. If the underlying business isn’t viable then no amount of clever financing can save it. In this case, telling people about the business’s problem won’t be causing the failure but only hastening it, before the amount of unpayable debt balloons.

At the other extreme, many businesses, probably most, go through liquidity crises. Good, viable businesses don’t always generate enough cash to meet ongoing obligations and they need loans to get them through a temporary crunch. If this is the situation, then sowing panic among creditors would harm the company and even the creditors themselves, inducing them to be first in line to obtain partial recompense when with a little patience they could get full repayment.

In general the lenders should be evaluating these risks, not you. So your main question should be: Do I have evidence that the borrower is engaging in fraudulent or misleading practices? If the borrower is giving a false impression of his firm’s prospects or of its debt picture, then you will be doing the borrowers a favor by cluing them in. This may possibly trigger a collapse, but that is a consideration each lender can weight for himself

But if they are just overly hopeful or insufficiently diligent in evaluating the risks of a fundamentally legitimate business, I don’t see any reason for you to intervene.

Can I invest charity money in a sure-fire investment?

Question: I’m the head of a non-profit organization. The organization has some spare cash that I am convinced I can invest at a profit. Should I go ahead and benefit my organization in this way?

Answer: The Talmud has an interesting discussion regarding the propriety of investing charity funds.

Rabba asked Rav Yosef: What do we do with orphans’ funds? He said, we deposit them in court, and distribute them little by little. He said, then you exhaust the capital! He said, what then should we do? He said, we investigate a person who has known assets [to collect from in case he should lose the deposit], and deposit their money with him near to profit and far from loss [the active partner splits profits but bears all losses]. . . That’s very well if we find someone who has certain assets, but if we can’t find someone who has certain assets shall we let the orphans’ funds dissipate? Rather, Rav Ashi stated: We find a person of stable property, reliable, who is obedient to the Torah and is not under a ban, and we deposit it by him in court (Bava Metzia 70a).

The sages of the Talmud are trying to find the right balance between risk and return for charity funds – in this case, money belonging to minor orphans and being administered by a court-supervised guardian. Rav Yosef is unwilling to take any risk, and advocates simply disbursing the money. Rabba is willing to invest only if the investor is willing to personally bear any losses and can actually provide security for potential losses in advance – certainly a very unusual situation. Rav Ashi is the most lenient; he is willing to settle for the case where the investor agrees to bear the losses and appears willing and able to do so.

Based on Rav Ashi’s opinion, you can go right ahead and invest the money if you can personally cover any losses. Of course you would need the approval of the board of your charity before making such a far-reaching step.

However, it is extremely unusual nowadays for a private individual to be willing or even able to personally make good losses of the charity. (If the backer was sure of the quality of the investment it would make much more sense to borrow the money and invest it himself, giving any profits to charity.) So it seems that making even prudent investments could be quite difficult.

Later authorities, in response to changing situations, acknowledged that sometimes the requirement for co-signing could be waived, if it made it prohibitively difficult to invest charity funds productively (Cf. R. Avraham ben Mordechai HaLevi, response Ginat Veradim Choshen Mishpat IV:1). However, there is still a requirement for careful oversight, expressed in the passage by the need for someone stable, reliable and obedient, and for proper documentation (”deposit it by him in court”).

Experience has shown that the only way to do this effectively is by having an investment committee made up of a number of experienced experts who have the best interest of the charity foremost. There is no way for a single individual to exercise the appropriate degree of judgment and knowledge. This is especially true for someone like you, whose judgment would be colored by his involvement in the day-to-day management of the organization.

If you believe that the future interests of the organization would be best served by investing its funds in something more risky than a bank account or CD, you should recommend to the board that they establish a properly constituted investment committee for this purpose.

Another route: if you are so certain that this investment is a sure thing, you might want to invest your own money and promise to give a certain fraction of the returns to the charity. But experience shows that there is no way to know in advance if any investment is a sure thing.

Helping the needy is praiseworthy, but it can’t justify deceit.

Question: Insurers insist that every procedure be reimbursed according to its code. But sometimes a procedure that usually takes five minutes takes an hour. Can’t I record a higher-level code in order to get fair recompense?

Answer: The practice you describe is often called “upcoding” – recording a code for a procedure more expensive than the one the patient needs. It is recognized as a form of insurance fraud, or if the insurer is the government as a form of defrauding the government.

The argument you advance sounds convincing at first. After all, you are not trying to defraud the insurer, but only to get a fair payment for your investment in time. However, the argument appears specious when viewed in total context. No one expects the payment schedule to accurately reflect the time and resource investment of every single visit. The recompense for a procedure that generally takes five minutes, but occasionally an hour or more, will reflect the average amount of time – let us say ten minutes. When the procedure goes smoothly, do you “downcode” to save the insurer money and obtain only what is fair?

Furthermore, even if one particular procedure is mispriced even on an average basis, we have to consider the entire payment schedule. Some procedures pay too little compared to the effort involved, others too much. Again, do you downcode procedures that are consistently the most profitable? I am guessing that you don’t.

Another consideration is that often insurers provide for extra billing when codes don’t adequately reflect the resources needed for a procedure. There is a defined bureaucratic process involved. It is true that the paperwork involved in these claims can itself be somewhat burdensome, but that is to be expected when discussing a mechanism meant to be used only in exceptional circumstances. So the incentive to upcode is sometimes not in order to obtain fair recompense, but only in order to avoid annoying paperwork – an understandable motivation, but certainly not one compelling enough to justify insurance fraud.

After extensive research, I became aware that what I have written so far is not the entire story. Sometimes the insurance is so deficient that the underpayments by the insurance company are never balanced out, and dealing with the issue through paperwork is either impossible or totally not cost effective. This is especially likely to happen for poor people who have minimal insurance. As a result, I have heard of reputable practitioners who don’t want to turn indigent patients away but simply cannot afford to treat them without changing the codes.

Even so, I do not believe this situation can justify upcoding. The health system as a whole will have to find a solution for these underinsured individuals, but the solution is not insurance fraud. Not only is the practice fraudulent in itself, but taking an accepting attitude is nearly certain to lead to an accepting attitude towards upcoding in other cases, when it can’t be easily excused as a desire to help the needy.

According to Jewish law, fraud is impermissible even when it is employed to help the needy. If you find you cannot help needy individuals without upcoding, take as many as you reasonably can on a pro bono basis (meaning accepting only the inadequate payment from the insurer) and you will just have to turn the rest away.

Last week we discussed whether traders are engaging in socially worthwhile work, as opposed to some kind of rip-off. Based on the evidence I am aware of, I wrote that traders seem to be engaged in a job like any other, earning a salary based on performance which results from a combination of skill and luck.

Some people may be willing to grant this point, but still feel that at some stage salaries become “obscene” or “excessive”. In the US, there is legislation limiting how much salary can be considered a legitimate business expense. (Ironically, this supposedly “salary limiting” legislation is partially responsible for the compensation system of traders, who get a low base salary partially for this reason.)

It is interesting that no one has tried to limit how much money can be made from a business, or by an athlete. For some reason, people don’t have a problem with the fact that people like Bill Gates of Microsoft or Sam Walton of Walmart can make billions of dollars from the firms they founded, or with the hundred million dollars earned in a good year by outstanding sports talents like Tiger Woods. Yet it disturbs them that a “regular” salaried worker like Andrew Hall can earn a hundred million dollars a year. Perhaps it is because a salaried worker is working with “other people’s money” and not risking his own.

I think we can find a precedent for this attitude in the Torah. The patriarch Yaakov begins working for Lavan as an impoverished hand. But his management of the flock is so successful that soon his salary (a percentage arrangement worked out with Lavan) makes him a wealthy man in his own right. Lavan’s sons became jealous: “And he heard the words of the sons of Lavan, saying: ‘Yaakov has taken everything belonging to our father, and from what belongs to our father he obtained all this honor.” (Genesis 31:1.) Yaakov after all was merely a hired hand; it didn’t seem right for him to become a wealthy householder in his own right from a mere salary. But Lavan’s daughters, who are Yaakov’s wives, recognize the truth: “All the wealth that God saved from our father, it is ours and our sons’.” (Genesis 31:16.)

Later on we find a similar story with Yaakov’s son, Yosef. Yosef is acquired as a slave in the household of Potiphar; there, he makes shrewd use of his master’s possessions. “And it happened, since he appointed him on his house and on all that was his, that the Lord blessed the house of the Egyptian because of Yosef.” Yosef, despite being a slave, was allowed to enjoy a standard of living commensurate with the profits he brought his master, as he says to Potiphar’s wife , “and he hasn’t denied me anything except for you, seeing that you are his wife.” It is likely that jealousy towards Yosef’s success also played a role in the enmity borne him, which resulted in his imprisonment, but certainly we do not find any condemnation of Yosef’s generous remuneration merely because he was managing “other people’s money”.

To sum up, I don’t find that there is any reason to condemn someone for making a lot of money merely because they are managing and risking someone else’s money and not their own. If any person, such as Yaakov or Yosef, lacks funds of their own but shows a unique talent for effectively managing the funds of others, there is no reason they shouldn’t enjoy a fair return, up to an including making them independently wealthy like Yaakov or enjoying the lifestyle of a lord like Yosef.

Do Wall Street traders really earn their pay?

Question: Is it fair for Wall Street traders to be making tens of millions of dollars a year?

Answer: In the wake of the financial market crisis that began last year, many people in the general public became aware of the customary compensation system for Wall Street traders. Many are scandalized. Attention has intensified in recent weeks as people read of the Citigroup trader Andrew Hall who is due about a hundred million dollars for his work over the last year.

The job of traders is to guess which way markets are going and invest accordingly. The techniques they use to predict markets are quite varied. Many rely on careful market research, poring over balance sheets and sales projections to find companies whose underlying earning potential is much greater or less than the one reflected in the market price. Some use purely statistical techniques to identify prices that are out of alignment; for example, the same asset in two markets should be the same. Many other approaches are also in use.

Typically, traders get a “modest” base salary – modest by Wall Street standards means in six figures – and get a fraction of trading profits that is commonly in the millions of dollars, not infrequently in the tens of millions, and sometimes reaches over a hundred million dollars in a year.

Many ethical questions are directed at these compensation schemes.

1. Do the traders really earn their pay doing something socially productive, or are they bandits who are skillful in ripping off the investing public?

2. Is it fair for an ordinary salaried employee, not someone who built a business, to be getting so much money?

3. Is it fair that some people are getting nine-figure paydays when others live in poverty?

4. Is it right for anyone to control so much wealth?

In this column we will relate to the first issue, and in subsequent columns some of the other issues.

Traditionally, economists assume that speculators, such as today’s Wall Street traders, create value by aligning asset prices with their true economic value, thus ensuring that investment capital is directed to its most productive uses. There is certainly nothing unfair about earning money by knowing how to buy cheap and sell dear. The Shulchan Aruch states that if a person knows of a bargain he is entitled to the profit from it; if he sends an agent to purchase on his behalf but the agent profits himself, that agent is considered unethical (Shulchan Aruch Choshen Mishpat 183:4 in Rema).

However, some observers think that today’s Wall Street traders today don’t have any particular ability and actually make money because of the quirks of the bankruptcy system. Trading firms get all the upside of risky trades, but if there is a crash their creditors bear the loss. So it is a “heads I win, tails you lose” proposition for the public. If this is true, it wouldn’t make trading unethical but it would make obligate regulators to close this loophole. In any case, I have trouble accepting this approach because it wouldn’t explain why the firms pay traders such high salaries. After all, no special skill is necessary to engage in risky trades.

Another claim that is occasionally made against traders is that they prey on uninformed investors. This practice runs afoul of many principles of Jewish law. Legally, it may violate the requirement to disclose any defects in merchandise. Ethically, there is an additional problem. The Talmud states when someone is ill-informed about the odds against him, there is a lack of informed consent gambling against him. Maimonides states that this is considered a form of stealing (Maimonides’ Code, Gezeila veaveida 6:10). This is not quite the same as selling a financial asset, which does have some inherent value, but ethically I think that it is in many ways comparable regarding a risky asset.

I believe that this is a widespread problem, but not among traders. The problem is very widespread among unauthorized people selling different kinds of get-rich-quick schemes, and to a lesser extent it is found among registered brokers. There was a high profile case a few years ago where brokers at a major firm pushed stocks to clients while privately they referred to them as “dogs”. But the particular expertise of the high-flying traders is in arcane instruments which are not usually traded by amateurs at all.

So regarding the first question, my answer is that I do not find any grounds to doubt that traders earn their pay based on a combination of skill and good luck just like any other business person. It’s just another way to make a living, with its own ethical challenges but without any unique ethical opprobrium.

Animal suffering is sanctioned when it serves a legitimate human need

Last week we examined the various Torah verses mandating humane treatment of animals; we saw that beyond the underlying prohibition of cruel treatment towards any animal, there is an additional obligation to act positively to relieve the suffering of animals that work with us and serve us – for example, to give our animals rest on Shabbat, to relieve the load of an overloaded pack animal, and so on.

There is still a bit of a paradox. We are not allowed to cause suffering gratuitously to any animal, but if there is a valid human need then even if the animal will suffer the treatment is not considered cruelty. For this reason, there is no question that it is permissible and proper to use animals in medical experiments that are expected to lead to treatments that will alleviate human suffering. But this very usefulness is also what cements our obligation to show concern for the animals.

So the prohibition on animal suffering would never forbid using animals for an important human need, even if the use involved animal suffering; but it would forbid causing suffering not necessary for that need. Nachmanides writes, “[God's] mercy on creatures with an animal soul does not extend to prevent us from using them for our needs.” (Ramban Torah commentary Devarim 22:6)

This standard seems to be stricter than the standard for bal taschchit, which forbids gratuitous harm to or destruction of anything valuable or useful to humans. Regarding bal tashchit only gratuitous harm is forbidden, but tzaar baalei chaim, the prohibition on animal suffering, would seem to forbid also disproportionate suffering. In one place in the Talmud the sage Rabbi Pinchas ben Yair states that hamstringing an animal would constitute forbidden suffering, but only killing it would constitute gratuitous harm. My interpretation is that hamstringing the animal does bring some benefit, but not enough to justify the suffering induced. (Babylonian Talmud Chullin 7b; see explanation in Piskei Trumat Hadeshen 105)

An additional reason mentioned by the rabbis for human treatment of animals is that it cultivates humane conduct towards people, while inhumane treatment of animals carries the danger of inculcating insensitivity towards other people. (Some recent research confirms a connection between people who torture animals as youngsters and those who are violent as adults, though there is no way to tell if there is a causal relationship.)

The Sefer Hachinuch (596) writes: “Among the motivations for this commandment is to accustom ourselves to delicate souls, choosing the straight path and adhering to it, and seeking mercy and kindness. And once we obtain this habit, then even towards animals, which were created to serve us, we will show concern.”

And Nachmanides writes: “The reason for refraining [from taking the eggs in the presence of the mother] is to teach us the quality of mercy, and not to act cruelty. For cruelty [towards animals afterwards] spreads in the soul of man [and expresses itself towards people as well]“. (Ramban Torah commentary Devarim 22:6)

Each consideration is an independent aspect of the law. For example, the noted Medieval authority Rabbi Yisrael Isserlin ruled that plucking geese while they are alive, when there is a need for the feathers, is permissible; the geese do suffer, but there is an evident benefit. However, he then writes that people customarily refrain, because plucking the birds in this way leads to bad traits. (Piskei Trumat Hadeshen 105) Rabbi Moshe Isserlish writes approvingly of this custom. (Rema Shulchan Arukh Even Haezer 5:14)

Ethical obligations to animals stem in large measure from the benefit they provide us

Last week we saw that the book of Genesis shows that from the dawn of man’s creation, he is in a close relationship with his animal companions, a relationship that partakes of both lordship and fellowship. Later we find that the Torah includes a number of commandments involving mercy towards animals. This week we will examine some of these commandments.

In the Ten Commandments we find (Exodus 20:8-9): “Six days shall you work, and do all your labor. And the seventh day is a Sabbath to the Lord your God; don’t do any labor – you, and your son, and your daughter, your manservant and your maidservant and your beast, and the sojourner in your gate.” A little later the Torah elaborates (Exodus 23:12): “Six days shall you do your tasks and on the seventh day rest, in order that your ox and your ass shall rest, and the son of the maidservant and the sojourner be refreshed.”

In the same chapter, we find (Exodus 23:5): “If you see [even] your enemy’s ass struggling under his load, don’t refrain from helping him; surely help him [to unload].” According to the Talmud, this is one source for learning the prohibition of animal suffering. (Bava Metzia 31a)

In the book of Deuteronomy (12:21), we find the commandment to slaughter animals before we may eat them: “Slaughter from your herd and your flock which the Lord your God gave you, as I commanded you; and [then] eat in your gates according to what your soul desires.” Many commentators, including Sefer Hachinukh, express the opinion that one purpose of this commandment is that kosher slaughter is a humane way of killing that causes only minimal suffering to the animal.

In chapter 22 (verses 6-7), we find the commandment to send away the mother bird before taking the eggs for our own use. The commentators explain that seeing the eggs taken away causes distress to the mother, which is partially alleviated by sending her away.

A few verses later (Deuteronomy 22:9) we find the prohibition on plowing with two different kinds of animals. The Sefer Hachinukh suggests that plowing with another kind of animal causes distress to draft animals.

Later in the same book we find (Deuteronomy 25:4) “Don’t muzzle the ox as it threshes.” Again the Chinukh explains that it is stressful for the animal to be surrounded by food but unable to eat.

One thing we notice from these commandments is that they go far beyond merely avoiding active cruelty to animals. In most cases the commandment is to take positive action to alleviate distress, and in many cases it is distress that falls short of actual cruelty.

Another thing we notice is that commandments are ultimately limited in scope. Only animals belonging to a Jew, who himself is commanded to keep the Sabbath, needs to be given rest on the Sabbath; humane kosher slaughter is a requirement only when the animal is to be eaten, but not for example if it is needed for fur or leather. While we many not muzzle an ox as it threshes, there is no general requirement to allow animals to eat freely; this commandment refers specifically to when it is actually working with the food.

I believe that these two aspects are related. Ethical obligations to animals are commensurate with the benefit they provide us, and our relationship with them. Animals that work for us all week long rest on the Sabbath day; animals that help us with our loads should be helped when they are overburdened; animals which provide us with vital sustenance need to be slaughtered in a humane fashion.

Cruelty is of course forbidden towards any creature, but the higher levels of obligation are commensurate with the degree of connection with and benefit from the animal.

This answers what some people consider a paradox of the Jewish approach to animals. Some people ask, if Judaism acknowledges ethical duties towards animals, why does it let us use them for our benefit? In fact, the duties to animals are a consequence of the benefit we derive from them. Ethical duties don’t arise in a vacuum; they generally stem from a combination of empathy and reciprocity. Reciprocity doesn’t have to mean tit for tat; animals won’t go on strike and refuse to help us if some people treat them meanly. In this context, reciprocity means that we acknowledge the benefit animals provide us and requite it with basic standards of humane treatment.

Next week we will study in more detail the nature of animal suffering rules in Judaism, and their relationship to the underlying principles we have examined so far.

Animals and people are kindred spirits, but far from equals

Question: Is it forbidden to purchase products that were produced due to animal suffering, such as cosmetics tested on animal?

Answer: We have related to animal welfare questions before, but because of the importance of the topic this time we will discuss it at greater length, in order to express the underlying principles.

Animals have always been an important part of human existence; from the dawn of history until only a few generations ago, virtually every person from the poorest to the richest lived in the intimate company of domestic animals. So it is hardly surprising that the Torah devotes much attention to the place of animals in creation and to their relationship with mankind.

Indeed, following the creation of man the first thing God does is to define his place in creation. First we learn that only man is created in God’s image; in the following verse He gives man “dominion over the fish of the sea, and the fowl of the air, and over every living thing that creeps upon the earth”. (Genesis 1:26.) Yet in the very next verse He qualifies: “I have given you all the herbs bearing seed on the whole face of the earth, and every tree bearing fruit giving seed, I have given you to eat.” Man is meant to dominate the animals, but he is not allowed to eat them, indicating that the animal soul is worthy of consideration.

In the second chapter of Genesis, God sees that Adam needs companionship, “a help corresponding to him.” First Adam seeks this companionship among the animals, but he doesn’t find it there, but only with Eve, a human companion. Again we see that animals are in some sense kindred spirits to man, but they are not truly friends of companions.

Only two chapters later, we find an additional nuance helping us define the exact relative standing of animals and people. The brothers Cain and Abel both sought to bring a sacrifice to God; Cain brought produce, whereas Abel brought an animal sacrifice, “from the first-born and the fat of his flock.” (Genesis 2:3-4.) Given the meaningful standing of animals, we might have think that Abel’s sacrifice would have been shunned, but we find on the contrary that specifically his offering was accepted. So while eating animals was not permitted, sacrificing them was evidently proper.

In chapter 6, we again find that man and beast have their fates interlinked; faced with rampant immorality, God decides to blot out “both man and beast.” Subsequently, there is a noted change in the relationship; we learn that after the flood, mankind is suddenly allowed to eat animals. This could be interpreted to mean that man’s status is suddenly elevated, but it is more likely the opposite: that given man’s bestial behavior before the flood, man needs a sign of his status to remind him that he is distinguished from the beasts.

As mankind’s holy mission is renewed on Mount Sinai at the giving of the Torah, animals are again not neglected; already in the Ten Commandments we find the commandment to give beasts rest on the Sabbath Day. (Exodus 20:9, Deuteronomy 5:13.)

Later we find a host of commandments mandating humane treatment of animals. These include: helping to unload an overburdened draft animal (Exodus 23:5); not muzzling an ox as he helps in threshing the grain. (Deuteronomy 25:4.)

We also find a limitation on the post-diluvian permission to eat meat, as the children of Israel are permitted only certain animals, only after humane slaughter, and without consuming the blood. Many commentators view this is a sign that the giving of the Torah marks the turning point in man’s evolution, and sets him back on a path of ethical advancement returning to his exalted status at the time of creation.

Next week we will continue with an explanation and elaboration of the role of animals in Jewish tradition, but the starting point of all is the statements in the Torah that we have seen today.

If you bill by the hour, adopt an equitable policy for interruptions.

Question: I bill my clients by the hour. Do I have to sit with a stopwatch to deduct the time I spend on a brief phone call to another client, a cup of coffee, or a trip to the bathroom?

Answer: Surprisingly, this is one of the most common questions I receive. Many years ago I wrote a column on this topic in which I insisted on deducting all idle time; since then I have adopted a more nuanced view. My answer always is that this is not an issue between you and the rabbi, or you and the ethicist; it is an issue between you and your client. The best policy is the one mutually agreed upon between the parties.

However, after dealing with this question so many times, I would like to present some important considerations in making such a policy.

There is no perfect method of billing, and every one has advantages and disadvantages. Paying by the hour fails to reward efficiency, whereas paying by results can result in payment which is grossly unfair in individual cases where the work takes much longer or shorter than expected.

Even within the methodology of paying by the hour, there are advantages and disadvantages to counting seconds. On the one hand, the client can ask himself, do I really have to pay for my consultant to drink a cup of coffee? Probably not. On the other hand, he can ask himself, do I want to pay for time when my consultant is tired and thirsty? Do I want to pay for time my consultant is spending on the phone with another client? Probably not. But on the other hand, do I want him to charge me for a thirty-second phone call when he is in the middle of working for someone else?

And do I want him to work with a stopwatch in hand, concentrating on how much time he spends rather than how well-spent that time is?

Even though there are no hard and fast rules, there are certain guidelines. The best policy is to avoid conflicts as much as possible. Try to devote specific blocks of time to specific projects, and to avoid distractions during that time. If you get a phone call during time devoted to one client, try to reschedule it later in the day. To the extent practical, schedule coffee and bathroom breaks between these blocs.

If you work on a computer, you can benefit from a number of good programs that track your time. These programs can help you not only with billing, but also with assessing and improving your productivity.

Ultimately, you have to create a system you feel is fair and be open with your client. If you are the kind of person who is driven to distraction by a stopwatch, and you feel that client phone calls tend to balance out in the end, you can tell your clients that you will not stop the clock when another client calls briefly during your time – but you will also not charge them for a brief phone call on someone else’s time.

The ideal of total devotion to the client is exemplified in a remarkable story in the Talmud about Abba Chilkia: (Talmud Taanit 23a-b)

When the world needed rain, the rabbis would send to him and he would seek mercy, and the rains would come. One time the world needed rain, and the rabbis sent a pair of rabbis to him so that he could seek mercy and bring rain. They went to his house but did not find him; they went to the field and found him hoeing. They greeted him but he didn’t [even] turn to them.

The Talmud then tells that when he arrived home, he went up to the roof with his wife where both prayed secretly, so that no one would know that it was his prayers that brought the rain; then the rain began to fall. So Abba Chilkia is held up as the ideal of an individual who is outstandingly scrupulous in his business obligations and is specially beloved by God.

Yet the level of devotion displayed by Abba Chilkia is nowhere recorded as binding law, and in fact it is not forbidden to greet someone while you are at work, unless there is a specific workplace rule forbidding it.

The best idea is to give careful thought to the billing policy which will be the most fair to yourself and your clients, and to be totally open about what the policy is and why it is in everyone’s interest. Once the policy is in place, you should give your clients the benefit of the doubt.

Saving others from loss doesn’t have to come at your expense

Question: In a recent column, you advised a person working in a criminal environment how he can avoid personal responsibility for wrongdoing. Isn’t this evading ethical responsibility for preventing crime?

Answer: A number of readers wrote with variations of this valid question. Due to restrictions of time and space, each column can deal with only one aspect of a question; the aspect I related to was the one most relevant to the asker. But the one you raise is equally important and we will discuss it now. I emphasize that everything in this column refers only to causing monetary harm, and does not necessary apply when an employer’s activity involves danger to life.

Any time we witness wrongdoing, we have a responsibility to intervene. The first responsibility is to the wrongdoer. Even if the crime is a totally victimless one such as a ritual transgression (for example, desecrating the Sabbath), we have a responsibility to reprove the wrongdoer, to remind him of his religious and ethical obligations and help him return to the proper track. This is the essence of the Torah commandment of reproof: “Surely reprove your fellow, and don’t bear sin towards him.” (Leviticus 19:17.)

Another aspect of the responsibility to protest is the problem of condoning wrongdoing, as mentioned in the previous column. Anyone who is present when wrongdoing takes place and fails to protest may be seen as condoning the wrongdoing and being to some extent complicit in it.

Anyone who has the ability to protest the members of his household but doesn’t protest, is held liable for the members of his household. For the residents of his city – he is held liable for the residents of his city. For the entire world – he is liable for the entire world. (Shabbat 54b)

Again, this can apply even in a “victimless crime”. We could view this as a responsibility to ourselves, to decisively disassociate ourselves from sin.

Above all, there is an ethical responsibility towards the victim. The Torah commands, “Don’t stand idly by the blood of your neighbor,” (Leviticus 19:16), thus creating an affirmative duty to protect others from harm. This above all creates a general ethical obligation to warn someone if he is being defrauded. (As we have mentioned in previous columns, disclosure is proper only if it is necessary for protecting the interests of the victim and doesn’t cause disproportionate harm to the perpetrator.)

However, all of these obligations have their limits. Just as we don’t have to incur significant bodily danger in order to save others from bodily danger, likewise a person doesn’t have to incur financial loss in order to save others from financial loss. That means that if you are not personally involved in the wrongdoing, you are exempt from warning others if it involves personal loss – especially if it is irretrievable personal loss.

Rabbi Moshe Isserles writes in his authoritative glosses to the Shulchan Aruch (authoritative Code of Jewish Law):

Even though a person is obligated to protest wrongdoers, and anyone who doesn’t protest and has the ability to protest is liable for that transgression, even so a person is not obligated to spend money on this. Therefore it is customary to take a lenient approach to transgressors, when there is a fear they may harm our person or possessions. (Yoreh Deah 334:48)

Sadly, experience shows that so-called “whistle-blowers” usually suffer great personal loss and anguish. They almost invariably lose their jobs and in many cases lose their careers. Therefore, while it is certainly praiseworthy to protect people from fraud as soon as possible, I generally advise people to think through the consequences very carefully before they take such a far-reaching step. The essential first step is to make sure that you yourself are not participating in any wrongdoing. Usually the next step is to try to disengage yourself from the morally toxic work environment, by finding a new job. For most people, only then it will be practical for them to contemplate righting the wrong by blowing the whistle.