General Counsel Publicly Reprimanded: PA Supreme Court Ruling Serves as Stark Reminder of Potential Ethical Issues in Government Investigations
On February 19, 2020, the Pennsylvania Supreme Court publicly reprimanded the former general counsel of Penn State University (“the GC”), finding that the GC had violated multiple ethical rules, in connection with the Pennsylvania Attorney General’s investigation of sex abuse by former Penn State assistant football coach Jerry Sandusky.
The Court’s findings highlight—starkly—several important issues that counsel for organizations may face in responding to government investigations. For one, the Court’s decision makes clear that even when corporate counsel gives an employee “Upjohn” warning, counsel must still avoid creating the impression through their later actions that they are representing the employee individually. Second, the decision shows how and why retaining independent counsel for an employee may be particularly prudent when responding to a government investigation, as opposed to a purely internal one. Third, for all counsel seeking to represent multiple clients in the same matter, the decision demonstrates the need to conduct a reasonable investigation before undertaking multiple representations and to evaluate, on an on-going basis, whether those multiple representations are feasible.
In late 2010, the GC accepted service of four grand jury subpoenas—a document subpoena to Penn State, and subpoenas for testimony from Timothy Curley, Penn State’s Athletic Director, Gary Schultz, a former Penn State Vice President, and Joe Paterno, Penn State’s then-football coach. The GC also later accepted service of a grand jury subpoena for Graham Spanier, Penn State’s president (collectively with Schultz and Curley, the “Administrators”).
The GC met with Curley and Schultz individually only once before their grand jury testimony.1 During her meeting with Curley, the GC advised him that “she was general counsel and could not be Curley’s personal attorney; that nothing Curley said would be confidential; and that Curley could retain a personal attorney.” In her meeting with Schultz, the GC gave him a “corporate Miranda” warning and told “he could get personal counsel” but that she could accompany him to the grand jury.
Shortly thereafter, the GC accompanied both Curley and Schultz to separate interviews with the AG’s office. Immediately after these interviews, Schultz and Curley each testified before the grand jury and were questioned about the Administrators’ response to reports of sexual misconduct by Sandusky. The GC accompanied them to their testimony.2
When asked by the presiding judge whether she was “providing representation for both” witnesses, the GC responded that Schultz was “retired but was employed by the University and [Curley] is still an employee.” In the presence of the GC, the judge advised Curley and Schultz of their rights to counsel, but the GC did not clarify that she was representing only the University. Further, when asked by the grand jury whether they had counsel with them, both Schultz and Curley indicated that they understood the GC was representing them. The GC again did not clarify or specify the scope of her representation.
Several months later, the GC accompanied Spanier to his grand jury testimony, where he was also questioned about the Administrators’ response to the 1998 and 2001 reports of misconduct by Sandusky. As with Curley and Schultz, the GC never explicitly stated she was representing the University and not Spanier in his individual capacity. Months later, the grand jury subpoenaed the GC herself, and she testified about numerous communications between her and the Administrators.
The Pennsylvania AG later charged all three Administrators with, among other things, perjury arising out of their grand jury testimony.
II. Takeaways from the Court’s Decision
As discussed above, the Court found the GC committed multiple ethical violations relating to her simultaneous representation of the University and each of the three Administrators, and her own later testimony before the grand jury.
Of most relevance here are the Court’s discussion of the Upjohn-type warning the GC gave Curley and Schultz and the Court’s discussion of conflicts of interests.
A. Multiple Representations and Upjohn type warnings: Actions Speak Louder than Words
In giving a typical-Upjohn warning, counsel for an organization advises an employee that (i) counsel represents the company in the matter under investigation; (ii) counsel does not represent the interviewee; (iii) the interview is privileged and confidential; (iv) the privilege belongs to the company, not the interviewee; and (v) the company (but not the employee) may decide to waive the privilege and reveal what was discussed during the interview. See The Importance of an Effective Upjohn Warning, available at https://bakerbotts.com/insights/publications/2019/january/toolkit-the-importance-of-an-effective-upjohn-warning.
Here, there was largely uncontroverted record evidence that the GC had told Curley and Schultz that, during her initial interviews with them, consistent with Upjohn, she was “the general counsel” for Penn State and not their personal attorney. Despite this, the Court found that Curley and Schultz reasonably believed that the GC represented both of them in their individual capacities.
Several factors were key to the Court’s decision. First, the GC had accompanied both Schultz and Curley to their grand jury appearances. Indeed, the Court noted that, under Pennsylvania law, the GC could not have accompanied the Administrators to their grand jury appearances unless she was their personal attorney (and not merely an attorney for their employer).
Second, the Court noted that, during the grand jury proceedings, the GC gave, at best, ambiguous answers, in response to questioning about who was representing Administrators and did not respond when each of the Administrators, in separate grand jury appearances, indicated that she was their attorney.
These points demonstrate that, even if corporate counsel gives a “perfect” Upjohn warning he or she must be careful not to subsequently create an impression, through his or her actions, that counsel represents the employee individually.
The Court also noted that “Upjohn warnings are classically given when a corporation is conducting an internal investigation” and are for the purpose of ensuring “that the corporation [can] obtain legal advice.” (internal quotation omitted). In contrast, according to the Court, the events here involved not an internal investigation but response to a grand jury subpoenas, including subpoenas served on the Administrators personally.
The Court’s point here highlights that, although a company can certainly (and often should) undertake its own fact gathering in conjunction with a government investigation, companies should take extra care in deciding whether corporate counsel can and should represent employees in interviews or testimony before governmental authorities.
B. Managing Potential Conflicts of Interest Requires-Reasonable Investigation and Continued Evaluation
The Court also found that the GC’s simultaneous representation of each of the Administrators and the University created “multiple” conflicts of interest. Notably, the Court rejected the GC’s assertion that there were no known conflicts because the Administrators lied to her about their knowledge of Sandusky’s sexual misconduct.
First, the Court noted that the GC had access to “Penn State documents, especially the trove of emails stored on its computer services, [which] were [a] tangible source of information regarding potential conflicts among the four clients.” Indeed, these emails made clear that in their meetings with the GC, the Administrators had, at best, significantly understated their knowledge of Sandusky’s misconduct. An email review would have demonstrated the potential for conflicts among the Administrators themselves and between the Administrators and the University, which faced exposure as a result of the Administrators’ actions and omissions.
Notably, the Court’s analysis here highlights the need for a reasonable investigation of potential conflicts before undertaking multiple representations, taking into account the information available to the attorney.
Second, the Court noted that actual (and not merely potential) conflicts should have been clear to the GC no later than Curley and Schultz’s pre-grand jury interviews with the Pennsylvania AG’s office. During these interviews, at which the GC was present, Curley and Schultz gave “sharp[ly] contrast[ing]” accounts of the University’s response to allegations against Sandusky. The Court explained that faced with these differing accounts, the GC “should have advised Schultz and Curley that she could not represent either of them and obtained a continuance” of their grand jury appearances. Instead, the GC accompanied them into the grand jury (and later represented Spanier before the same grand jury).
Here, the Court’s analysis makes clear that, even if multiple representations appear initially permissible, counsel need to be alert for circumstances which could reveal an actual or potential conflict.
The Court’s decision is a stark reminder of the ethical issues that can arise in responding to government investigations. The Baker Botts team has deep experience in navigating these types of complex issues. If you have any questions or if we can be of assistance in any way, please do not hesitate to reach us.
1Paterno retained his own counsel. (See Opinion at 7 n.1).
2Unlike in the federal system, Pennsylvania procedure allows a witness’s lawyer to be present in the grand jury room with the witness. See Pa. R. Crim. P. 231(A).
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