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August 3, 2012

DON'T BE THE NEXT PENN STATE -- LESSONS LEARNED FOR IN-HOUSE COUNSEL RESPONDING TO CRIMINAL INVESTIGATIONS

531240_football.jpgThe former General Counsel of Penn State University, Cynthia Baldwin, has recently become the subject of intense criticism based upon the now public findings of the 267-page report prepared by former FBI Director Louis Freeh. In his report, Mr. Freeh described Ms. Baldwin's representation of the University as "seriously deficient." Mr. Freeh and other critics have cited the following examples of Ms. Baldwin's allegedly deficient performance:

(1) Two members of Penn State's Board of Trustees believed that Ms. Baldwin personally represented each of them when she accompanied them to testify before the criminal grand jury and failed to clarify that she only represented the University. (The grand jury ultimately returned an indictment of both of those Board members.)

(2) Ms. Baldwin failed to retain experienced criminal counsel to represent the University in the criminal investigation and advised the Board of Trustees against conducting an internal investigation.

(3) Ms. Baldwin failed to adequately communicate to the Board the nature and extent of the Attorney General's criminal investigation and the potential civil liability that could result from the criminal allegations.

The headline grabbing Penn State scandal provides an excellent opportunity to remind organizations and their in-house counsel of the importance of recognizing the tremendous risks associated with criminal investigations and how to best mitigate those risks. In-house counsel can avoid catastrophic damage to their organizations by remaining cognizant of a few basic principles when handling such criminal investigations.

This post is the first installment of a three-part series that will outline best practices for in-house counsel faced with criminal investigations that relate in any way to the organization's officers, directors or the organization as a whole. Check the blog next week for the second installment in the series, which will address the potential conflicts of interest that can arise between organizations and board members in criminal investigations and how in-house counsel can avoid such conflicts.