Legal Ethics Lessons from the Penn State Scandal B Y C HRIS M C L AUGHLIN ost headlines about the Pennsylvania State University (PSU) child abuse scandal focused on the connections between convicted child molester Jerry Sandusky and the PSU football program.1 The scandal cost legendary coach Joe Paterno his Mjob and tarnished his otherwise sterling rep- utation as a coach who was unwilling to sac- rifice his values for victories.2 But the repercussions went far beyond the football program. Graham Spanier, PSU’s former president, Gary Shultz, a for- mer vice president, and Tim Curley, former athletic director, are currently facing a vari- ety of criminal charges including perjury, obstruction of justice, and failure to report tion’s attorney can arise in more common zational attorneys to protect their clients’ child abuse.3 scenarios. Any time an organization’s attor- interests and to insulate themselves from alle- The university’s general counsel at the ney investigates alleged misconduct by that gations of unethical conduct. The saga at time, Cynthia Baldwin, has also garnered organization’s employees, potential conflicts PSU demonstrates how important these legal unwanted attention due to her role in the may arise between the organization and its safeguards can be. While the specifics of scandal. Former PSU colleagues, outside employees. Those conflicts present an even Cynthia Baldwin’s predicament may be investigators, and a state court judge have greater risk if the organization’s attorney has unique, the ethical issues involved offer les- suggested that Baldwin confused her repre- close professional and personal relationships sons for any attorney who represents any sentational roles and her professional loyal- with those employees, as is often the case type of organization.4 ties. with attorneys who have represented organi- Few attorneys will face situations as zations for long periods of time. Baldwin’s Role in the Penn State dreadful as that faced by Cynthia Baldwin. In recognition of this risk, state bars and Scandal But confusion about the role of an organiza- courts require proactive measures by organi- Baldwin had worked closely with PSU’s 18 WINTER 2014 senior executives for years, first while serv- representational role. succeed in balancing its multiple roles in ing as president of the university’s alumni The only time Baldwin clarified her role either a professional or socially satisfactory association and later as chair of PSU’s as PSU attorney was when she spoke with manner.”9 Board of Trustees. She was appointed the grand jury judge privately in his cham- Baldwin resigned as PSU’s counsel in PSU’s general counsel in January 2010 just bers. None of the PSU witnesses was present 2012, but the ethical controversy surround- as the Sandusky criminal investigation was for this conversation, meaning they did not ing her conduct in that position has not dis- heating up. hear and could not benefit from Baldwin’s sipated. A report on the scandal commissioned by explanation to the judge that she was repre- PSU and conducted by Louis Freeh, former senting PSU and only PSU in the Sandusky The Legal Ethics Rules for director of the Federal Bureau of matter. Organizational Attorneys Investigation, concluded that PSU’s board Schultz, Curley, and Spanier say that Before examining the legal ethics rules was not kept adequately informed of the Baldwin’s actions during the Sandusky most relevant to organizational attorneys growing scandal and its implications for the investigation led them to assume that she like Baldwin, a caveat is needed: neither this university.5 According to the report, Spanier was representing them individually in addi- author nor any other commentator knows repeatedly downplayed the importance of tion to representing PSU. “I think this was a for certain whether Cynthia Baldwin acted the Sandusky investigation throughout crashing failure of due process,” Spanier’s inappropriately while serving as PSU’s gen- 2010 and 2011. current attorney Elizabeth Ainslie told the eral counsel. No state bar ethics charges have This obfuscation apparently occurred Philadelphia Inquirer. “No one explained to been filed against her. The Freeh report— with Baldwin’s assistance or acquiescence Graham Spanier that the person he thought one source of troubling allegations about even after she learned that criminal charges was his lawyer was not his lawyer.” Baldwin—has come under heavy criticism were likely to be leveled against high ranking The three ex-PSU officials argue that for alleged errors and omissions.10 That PSU officials. Freeh’s report suggests that they, not PSU, controlled the attorney-client said, if the allegations made by Spanier and Baldwin consistently allowed Spanier to privilege that applied to their confidential his co-defendants are true, then Baldwin make the final decisions as to when and how conversations with Baldwin. If that is true, clearly failed to satisfy her ethical obligations the trustees would be updated about the cri- then Baldwin breached her duty of confi- several times over. sis. dentiality to Schultz, Curley, and Spanier Pennsylvania’s rules of professional con- Potentially even more problematic was when she testified before the grand jury duct are similar to those that apply to attor- Baldwin’s conduct while accompanying about her private conversations with those neys practicing in North Carolina. Rule Schultz, Curley, and Spanier when they tes- men. 1.13 governs the obligations of organiza- tified before the Sandusky grand jury in All three witnesses-turned-defendants tional attorneys and demands ultimate loy- early 2011. have asked the Pennsylvania courts to dis- alty to the organization’s governing board. If When asked if he was represented by miss the charges based on Baldwin’s (alleged) the attorney knows of misconduct by counsel, Schultz, Curley, and Spanier each misconduct and the prosecutor’s knowledge employees that could be imputed to the indicated that Baldwin was his attorney. of that misconduct. Spanier also filed a sim- organization and could cause substantial Baldwin was present for these questions and ilar motion in federal court, seeking the rare injury to the organization, the attorney is never took advantage of the opportunity to remedy of federal intervention in a state obligated to report the issue to the govern- clarify her legal role. When asked directly by criminal prosecution. ing board unless the issue is resolved satisfac- the supervising judge if she was representing In April 2014 a Pennsylvania state court torily by other organizational officials. And the witnesses, Baldwin made no distinction judge rejected the motion to dismiss on when dealing with the organization’s between her role as PSU’s general counsel jurisdictional grounds. But in doing so the employees, the attorney must explain the and her possible role as counsel to the indi- judge raised substantial questions about true identify of her client when the attorney viduals.6 Baldwin’s actions and inactions during the has reason to believe that the interests of the The following year Baldwin herself testi- grand jury proceedings.8 According to the organization may be adverse to the interests fied before the grand jury against Schultz, judge, Baldwin arguably demonstrated of individual employees. Curley, and Spanier. Her testimony laid the “poor judgment and/or improper ethical Baldwin’s alleged failure to keep the PSU foundation for the state’s decision in conduct in her handling of the investiga- trustees appropriately informed about the November 2012 to indict Spanier and to tion.” Sandusky investigation would have violated levy additional charges against Schultz and Quoting a law review article written by Rule 1.13 as well as Rule 1.4, which sets the Curley.7 Duke Law School’s Deborah DeMott on the standards for adequate attorney-client com- Baldwin says that when the grand jury roles of general counsel, the judge com- munication. Baldwin would have violated subpoenas first arrived she told each witness, mented, “A contemporary general counsel another section of Rule 1.13 if she did not “You know, I represent the university. You often occupies other roles as well [besides take appropriate steps to make clear to can get your own lawyer.” The three witness- advising the board and senior management], Schultz, Curley, and Spanier that she did not es strenuously deny this assertion. But even each complex and additionally interlinked represent them as individuals. That failure if Baldwin did offer this half-hearted warn- in many ways...[A] general counsel’s posi- might also have violated Rule 4.3, which ing to the witnesses, it apparently was not tion has often been characterized as ambigu- prohibits giving legal advice to unrepresent- sufficient to eliminate confusion over her ous.... [N]ot all occupants of the position ed parties that are likely to be in conflict THE NORTH CAROLINA STATE BAR JOURNAL 19 with the attorney’s client—in this case, PSU. for its (somewhat convoluted) test for of what can go wrong in organizational rep- Finally, Baldwin’s failure to clarify her repre- determining the scope of the attorney- resentations. Cynthia Baldwin’s predicament sentational role to the grand jury judge may client privilege for organizational clients in nevertheless offers helpful lessons to organi- have violated Rule 3.3, which requires can- federal court.11 More relevant to Baldwin’s zational attorneys who face more mundane dor to the court. predicament is Upjohn’s discussion of situa- concerns. Again, it is not clear that Baldwin violat- tions that might require an organization’s First, an organizational attorney cannot ed any ethical rules. But even if her version attorney to warn employees about the abdicate the roles as legal advisor to the orga- of events is taken as fact, it is apparent that attorney’s role, and the fact that the organ- nization’s governing board no matter how Baldwin did not do as much as she could ization rather than the employee controls much the attorney trusts the organization’s have to protect her client, position individ- any privilege that may attach to their con- senior management.