Penn State: A Massive High-Risk Non-Profit With No General Counsel

David Mackey has this important commentary about the Sandusky matter at Penn State.  He notes that Penn State did not have general counsel between 2001 and 2010 - and that this might be why one reason university administrators botched the handling of the 2001 McQueary sexual abuse report.   From Mackey:

Because Penn State didn’t have a general counsel, a university senior vice president called outside legal counsel. Outside counsel’s bill reflects a telephone call, some legal research, and then another telephone call: 2.9 hours in all. Outside counsel, based on advice from his own lawyer, has now refused to discuss the legal work that took place that Sunday. But two things seem clear: There was no report to any law enforcement or child protection agency, and no record of any follow-up from outside counsel to Penn State to ensure the matter had been properly reported and that the child had been identified and treated.

It's mind-boggling to think that a school like Penn State didn't have a GC for a decade.  Can you imagine any other entity with over 11,000 employees having no GC?  And how about one involved in a highly regulated, and high stakes business?  (I was thinking here of federal research money, and the danger of violating false claims laws...but you might have been thinking FOOTBALL!)  I can hardly think of a better piece of evidence on the NCAA regulatory concern:  the lack of  institutional control.

We don't know what transpired in those critical 2.9 billable hours from outside counsel but we do know the aftermath: untold damage to human and professional lives - and reputations.

There is no guarantee a GC would have done anything differently.  But Mackey is right: institutions and companies must take compliance seriously.  I'm baffled that is news to anyone.

Comments

[Larry Rosenthal]

Although I quite agree that it seems quite unusual that Penn State had no in-house counsel for so many years, it is worth noting that a lawyer named Cynthia Baldwin was hired as general counsel in January 2010. The account in the Freeh report of Ms. Baldwin's representation of the University is distressing, to say the least. It is also worth noting that Ms. Baldwin retired on June 30, 2012 (hmmmmm). To my eye, the lack of an in-house counsel has quite limited explanatory power here. It seems more likely that this is yet another case in which a lawyer for an entity worried more about keeping the person who functioned as her boss on a day-to-day basis happy than the interests of the entity itself. In that sense, perhaps outside counsel might have done a better job. After all, if outside counsel had insisted on giving a candid briefing to the Board over the objections of the President, the worst thing that could have happened was that outside counsel would have lost a single client. Ms. Baldwin, in contrast, was probably worried about losing her one and only client.

Larry Rosenthal
Chapman University School of Law

[JoshBlackman_]

For years, Penn State was represented in almost all matters (employment, IP, etc.) by a local law firm, McQuaide Blasko. As a student, I heard the relationship described as "cozy."