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"Consultants at McK are labeled as 'conflicted' if they have served a competitor of a client in a given industry." and in couple of years consultant runs out of industries.

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Only if they've been burned so many bridges that they can't do further work for the firms they've worked with in the past.

I believe it is common in Law firms as well.

http://en.wikipedia.org/wiki/Chinese_wall#Law

Once McK consultants reach a certain level, they tend to work with the same clients over and over again.

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