Code of Ethics: Definition, What's Included
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What Is a Code of Ethics?
A code of ethics, also referred to as an ethical code or statement of ethical principles, is a document that sets forth the expectations, standards of practice, and principles of conduct for a business or organization. This type of policy statement details clear penalties for employees or members who violate the code. Absent these sanctions, the code of ethics serves more like a list of expected duties.
A code of ethics sets higher standards of behavior than what is required by law. Ethical behavior is more complex than legal behavior. For example, it is unethical to be dishonest, but it is not illegal to lie except under certain circumstances. Business ethics demand a higher standard of behavior.
The History of the Code of Ethics
The social responsibility movement in the 1960s contributed to the development of business ethics. While the origin of business ethics goes back much further, it was in the 1960s when companies started to embrace social responsibility. The social responsibility movement states that individuals should act in a way that benefits society as a whole rather than simply protecting one's own personal interests. In the 1980s, many governments and corporations began to set forth formalized codes of behavior.
Here is an analysis of 150 of these corporate codes of ethics completed in 1989. This found five key elements that were similar among many of them. These codes of ethics addressed:
- The proper treatment of employees
- How to handle whistleblowers
- Guidelines for inter-employee relationships
- Regulations regarding employees' political contributions and actions
- Instructions for preventing bribery and handling conflicts of interest
How a Code of Ethics is Published
A code of ethics must be a published document, but it can take many forms. The code of ethics might exist in several forms within a single organization with each document tailored to a specific department, such as finance or sales. In some companies, employees are required to sign a document verifying that they have read the code of ethics. This requirement may apply to all employees or only to corporate officers.
The code of ethics may stand alone, or you might find it accompanied by the organization's mission statement, corporate values, and other policies. If you are an investment advisor, the code of ethics must be available if the corporation trades its stock publicly and is regulated by the Securities and Exchange Commission (SEC).
In addition to the code of ethics produced by an individual organization, you will also find codes of ethics which apply to entire industries, such as:
- The National Society of Professional Engineers (NSPE) Code of Ethics for Engineers
- The Institute of Internal Auditors (IIA) Code of Ethics
- The Code of Ethics for the Nutrition and Dietetic Registration Board
- Association for Institutional Research (AIR) Statement of Ethical Principles
- The Code of Ethics and Standards of Practice of the National Association of REALTORS
What's Included in a Code of Ethics?
A code of ethics includes both internal guidelines for ethical behavior and an outward statement of commitments and values as well as guidelines that an individual's behavior can be measured against. The code of ethics should include:
- Introduction: This preamble makes a clear statement about the company's values and commitment to supplying and enforcing an ethical code for conduct. This may appear as a message from the CEO.
- Statement of Company Values: This details the company's mission statement, financial objectives, social aspirations, and professional goals. Here, the organization may refer to other professional standards or standard-setting bodies that it follows, such as the American Medical Association (AMA)'s Code of Medical Ethics, which applies to physicians and dental practitioners.
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Rules of Conduct:
This is the bulk of your code of ethics, outlining all of the rules that employees are expected to follow. It may discuss topics such as:
- Compliance with industry regulations
- Regulations for disclosure and privacy
- Truth in advertising
- Moral values, such as respect, responsibility, fairness, kindness, and trustworthiness
- Involvement and interactions with the community
- Discrimination policies
- Handling of interpersonal relations
- Rules regarding conflicts of interest
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Implementation and Sanctions:
This section details how the code of ethics is enforced and what consequences will occur if the code is violated. This will specify:
- Guidelines for reporting a violation of the code of ethics
- Consequences for code violations
- Handling of employee termination or litigation
- Additional Resources: The code of ethics should conclude with compliance resources that refer to laws, policies, and procedures relevant to this code. You should also provide contact information for your department of ethics or human resource department. These resources will make it easier for employees to understand the code in depth.
How to Implement a Code of Ethics
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A code of ethics is a beneficial document for nearly any type of business that will serve the company well alongside other essential contracts. When drafting a code of ethics, it's important to carefully consider the company's values, goals, and potential challenges. The code of ethics can mitigate many problems by setting forth clear rules and guidelines that employees review upon hiring.
To develop a code of ethics, you should:
- Collaborate with leaders throughout the organization. Set forth clear objectives, values, and regulations that are easily agreed upon.
- Review laws and regulations in your industry. Ensure that your code of ethics adheres to all the latest regulatory developments in your area of business.
- Simplify the language. Avoid legal jargon, so the code of ethics is easily understandable for employees, investors, clients, partners, and anyone else interested in your company.
Here is an article with some common provisions to consider for your code. Once a code of ethics has been reviewed, edited, and approved, it's ready for implementation. This code is only effective when it's disseminated properly throughout the organization. To do this, you must:
- Have the code of ethics endorsed by the Chairman and CEO.
- Circulate the code throughout the company and have employees review and sign as needed.
- Integrate the code into daily business operations.
- Implement procedures for managers and other leaders to review the code with employees regularly.
- Set forth a schedule for corporate management to review and update the code routinely.
- Detail the process of enforcing the code.
- Train all leaders involved in enforcement in the proper way to uphold the code and implement consequences.
The Value of a Code of Ethics
A well-written code of ethics will:
- Provide guidance for the actions of individuals within the organization
- Provide a public statement of values which serves as a form of marketing
- Mitigate risk by outlining the consequences of ethical misconduct
- Establish benchmarks for personal and professional evaluation
- Promote quality standards of practice
A code of ethics is an important document for any well-established business. Drafting and implementing this code early on will help solidify the company's values and morals. Consider having a contract lawyer review your code of ethics prior to publication to ensure that it is clear and easily enforceable.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
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Ted A.
Equity Investments, Agreements & Transactions | Securities & Lending | Corporate Governance | Complex Commercial Contracts | Outside General Counsel & Compliance
"Ted was extremely responsive, knowledgeable, easy to work with and was able help me the same day. I would confidently recommend him in the future."
Jeremiah C.
Jeremiah C.
Creative, results driven business & technology executive with 27 years of experience (17+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.
"Jeremiah was pleasant to speak to and provided high quality work. I appreciate that he took the time to call me personally instead of a paralegal. Work delivered early and high quality! Highly recommend"
Elizabeth J.
Libby Jamison founded E. Grace Law Firm after nearly two decades practicing law across federal agencies, private firms, and nonprofit organizations. She has advised at the highest levels of government and built a career defined by tackling complex, high-stakes legal and policy challenges. Her practice focuses on business, employment, veteran, and family law matters, drawing on her wide scope of experience including nearly seven years as counsel at the Department of Veterans Affairs. Her legal experience spans federal agency counsel, firm ownership, and nonprofit work. She is licensed to practice in California and Washington and was admitted to the U.S. Supreme Court. Beyond legal practice, she has led as a nonprofit president, chaired a U.S. Chamber of Commerce economic empowerment zone, and served on an American Bar Association Standing Committee on Legal Assistance for Military Personnel. Her work has been recognized by: Mighty 25 Awardee (2023) Changemaker of the Year, Military.com (2019) Bush Institute Stand-To Veteran Leadership Scholar (2019)
"I have really enjoyed working with Elizabeth. I truly appreciate her professionalism, efficiency, and attention to detail. Her work is very thorough, and she has been a pleasure to work with. I had been looking for a good attorney for quite some time after my previous attorney retired, so I am very happy that I was able to connect with Elizabeth through this platform. It has been a very positive experience, and I greatly value her knowledge, responsiveness, and the quality of her work."
Daehoon P.
Daehoon P.
Corporate, M&A & Securities Lawyer | Managing Attorney, DP Counsel PLLC Practice Areas: Business Formation | Commercial Contracts | Contract Drafting & Review | Mergers & Acquisitions | Venture Capital | Securities Offerings | Franchise Law | Employment & Equity Compensation | Intellectual Property | Cross-Border Transactions About/Bio: I represent companies, investors, and fund sponsors in corporate transactions, commercial contracting, and private securities matters, from entity formation and early-stage financings to acquisitions, exits, and ongoing strategic counsel. As Managing Attorney of DP Counsel PLLC, I help clients structure transactions clearly, allocate risk thoughtfully, and move deals forward with documentation that is practical, enforceable, and aligned with business objectives. My practice includes both day-to-day commercial matters and more complex transactional work, including venture financings, private offerings, M&A deals, fund-related documents, and cross-border structuring. What I Do: Corporate & Commercial • Entity formation and structuring for corporations, LLCs, and limited partnerships • Operating agreements, shareholder agreements, and governance documents • Commercial contract drafting, review, and negotiation • Vendor, distribution, manufacturing, SaaS, and licensing agreements • Employment, consulting, confidentiality, and equity compensation agreements • Outside general counsel support for growing companies Securities & Private Capital • Private offerings under Regulation D and Regulation S • Private placement memoranda, subscription agreements, and investor documents • SAFE, convertible note, and priced equity financings • Venture capital and private fund formation matters • Fund governing documents and offering document packages • Securities law analysis for private capital raising transactions Mergers & Acquisitions • Letters of intent and term sheets • Stock purchase, asset purchase, and merger agreements • Due diligence coordination and transaction support • Disclosure schedules, closing documents, and post-closing matters • Earnouts, rollover equity, indemnity structures, and related deal terms • HSR, CFIUS, and related regulatory issue spotting for qualifying transactions Digital Assets & Emerging Technologies • Federal-law digital asset and token securities analysis • Entity structuring for blockchain and Web3 ventures • Digital asset fund and operating structures • AML/KYC documentation support and regulatory issue spotting Franchising • Franchise Disclosure Documents (FDDs) • Franchise agreements • Master franchise and area development agreements • Franchise structuring and registration coordination Real Estate Transactions • Commercial real estate acquisitions and dispositions • Real estate joint ventures and syndications • Commercial lease drafting and negotiation • Real estate investment structures and related offering documents Cross-Border & International • U.S. market entry and entity structuring for international clients • Delaware and multi-entity holding structures • Cross-border transaction planning and documentation • Coordination with foreign counsel and tax advisors on cross-border matters Why Clients Hire Me: • Big-law-level drafting with boutique responsiveness • Practical, business-focused advice grounded in execution reality • Clear scoping and transparent fee arrangements • Experience across financings, acquisitions, fund formations, and cross-border transactions Typical Projects: • Contract drafting and negotiation • Entity formation and governance packages • Private offering document suites • Venture financing documentation • M&A transactions from LOI through closing • Fractional or outside general counsel support Industries Technology | SaaS | FinTech | Digital Assets | E-commerce | Healthcare | Real Estate | Food & Beverage | Professional Services
"Solid drafting work on a B2B paid services agreement with a nuanced surcharge model. Daehoon delivered on time across two rounds, cited actual Illinois case law where relevant, and proactively flagged edge cases I hadn't specifically asked about. His initial bid was the sharpest of the seven I received — he clearly read the parameters carefully. One note for future buyers: scope discipline runs both ways with him. He'll flag scope creep quickly and quote a supplemental fee (in my case $600 on a $1,200 base) for revisions beyond the follow-up envelope. That's fair and clearly communicated, but budget for it if you expect iteration. Would hire again for drafting work where scope is well-defined upfront."
Michael B.
Michael has extensive experience advising companies from start-ups to established publicly-traded companies . He has represented businesses in a wide array of fields IT consulting, software solutions, web design/ development, financial services, SaaS, data storage, and others. Areas of expertise include contract drafting and negotiation, terms of use, business structuring and funding, company and employee policies, general transactional issues as well as licensing and regulatory compliance. His prior experience before entering private practice includes negotiating sales contracts for a Fortune 500 healthcare company, as well as regulatory compliance contracts for a publicly traded dental manufacturer. Mr. Brennan firmly believes that every business deserves a lawyer that is both responsive and dependable, and he strives to provide that type of service to every client.
"Very thorough with reviewing our contract and making the appropriate suggestions. Quick response time and very professional."
February 21, 2025
Nicholas M.
Since getting my license to practice 3 years ago, I have been spent my time as a trial attorney with district attorneys office and insurance defense covering disputes with contracts, landlord-tenant, auto accidents, premises liability, and contract disputes.
February 26, 2025
April W.
I close residential and commercial real estate transactions. Myself and my paralegal work hard to ensure that every closing is properly executed. I can write title insurance policies with two companies First American and AmTrust. We are a small title company, but we are capable and efficient. I love what I do and I would love to provide closing services for you as well. I am also a licensed real estate agent. I do not actively practice real estate in the sales agent capacity because of my real estate closing practice. I remain current with policies, procedures, issues and trends. I am available to help anyone buy or sell a home or refer them to someone who will do an excellent job.
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