Conflicts and confidences are the ethical tripwires of our profession. What may seem like a reasonable assumption about the alignment of parties and the necessity of maintaining confidences at the outset of a case can quickly become a quagmire, especially in the context or organizational or joint representations. The Cynthia Baldwin matter demonstrates how difficult these issues are, especially in the criminal defense context.
Before delving into the lessons learned from this high-profile disciplinary proceeding, an important point of procedure must be discussed. While the recent Hearing Committee Report does conclude that Baldwin did not violate the Rules of Professional Conduct, this is only the first of three levels of de novo review of the facts and the law in the Pennsylvania attorney disciplinary process. The matter is far from over and may not be finally decided for several months.
In Pennsylvania, a Petition for Discipline is tried to a Hearing Committee of the Disciplinary Board of the Pennsylvania Supreme Court; the Hearing Committee is composed of three volunteer lawyers serving three-year terms as committee members after being appointed by the board. At the hearing, the Office of Disciplinary Counsel (ODC) has the burden of proving a violation of the Rules of Professional Conduct (the rules or RPC). Afterwards, both parties submit briefs and the Hearing Committee writes a Report and Recommendation (the report). This report is transmitted to the board for a second level of de novo review. Either party may file objections to the report after it is transmitted. The board has the authority to dismiss the complaint, impose private discipline, or forward the matter to the court with a recommendation for public discipline. When the board chooses to forward a matter to the court, the court conducts another level of review and, of course, has final authority. (See generally Pennsylvania Rules of Disciplinary Enforcement, Rule 208(d).)
So, while things are looking up for Baldwin, she must wait for the Disciplinary Board’s decision dismissing the petition before celebrating. In the meantime, how did the Hearing Committee reach its conclusion?
As you are probably aware, this case arose during the Office of Attorney General’s (OAG) investigation of Jerry Sandusky and Penn State University; this investigation coincided with former Supreme Court Justice Henry Baldwin’s tenure there as general counsel. The university was served with four subpoenas: one for documents, and three to Penn State executives, Timothy Curley, Gary Schultz and Joseph Paterno for testimony before the grand jury. Paterno hired his own counsel, but Curley, Schultz, and later, President Graham Spanier, were represented by Baldwin when they testified. (After the individuals were charged as defendants, they each obtained separate counsel.) Baldwin later testified at the grand jury and disclosed client confidences provided by her former clients, see Commonwealth v. Spanier, 132 A.3d 482 (Sup. Ct. 2016). The misconduct alleged by ODC to have arisen from these events were violations of Rule 1.1, the duty to provide competent counsel, Rule 1.7, prohibiting concurrent conflicts of interest and Rule 1.6, governing client confidences. Let’s turn to the committee’s analysis of 1.7 first.
Rule 1.7 defines a prohibited concurrent conflict as one which is either directly adverse, or creates a “significant risk that the representation of one … client will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.” The rule flows from the foundational premise that each client is owed an attorney’s independent judgment and undiluted loyalty. For example, it may be that Client A has provided confidences, the revelation of which could harm Client A but help Client B. Thus, the representation of Client B is materially limited by the responsibility to keep Client A’s confidences. A concurrent conflict can also exist when a lawyer represents both an organization and its employees, as occurred here. While Rule 1.13 permits a lawyer representing an organization to also represent its agents, this representation must still be permissible under Rule 1.7.
In this case, Baldwin argued that there was no concurrent conflict because she only represented the individuals as agents of the corporation. The hearing committee disagreed and found that she had represented the employees in their individual capacity, not as agents. However, the committee found that this distinction did not harm the individuals as Baldwin had taken reasonable steps to assure that the interests of the individuals were in alignment with the university and had provided the individuals with adequate warnings and disclosures on the risks of joint representation, including the possible limits on confidentiality. The committee found that the employees understood the risks and were properly informed.
The committee correctly acknowledged that its determination of whether Baldwin’s decision to engage in the joint representation was misconduct had to be analyzed from the perspective of what Baldwin knew at the time of the decision. At that time, Baldwin believed that the three respected, high-ranking executives, were truthfully disclosing the information they knew and that these disclosures were consistent with the interests of the university. The committee concluded that Baldwin’s assumption that the interests of the individuals and the university were aligned was not unreasonable and therefore, the representation did not violate Rule 1.7.
As to Baldwin’s duty of competence, this analysis partially hinged on the pivotal issue of whether Baldwin had advised the individuals of their right to take the Fifth Amendment. The committee found that “ODC failed to produce any evidence that she did not advise them of this right.” Further, the committee stated that the grand jury judge provided each individual with a thorough colloquy on this issue. The committee also found that Baldwin had done an appropriate investigation into the facts of the case before attending the grand jury with the witnesses and had acted competently in this regard.
On the issue of Baldwin’s testimony to the grand jury, the committee found that Baldwin’s revelation of client confidences did not violate Rule 1.6 for three reasons. First, Baldwin testified to discussions she had with the individuals about the subpoena for documents; the revelation of these discussions was “impliedly authorized in order to carry out the representation …” See RPC 1.6 (a). Second, Baldwin believed that the individuals had used her as part of their scheme to obstruct justice in their response to the subpoena and therefore, she was authorized to disclose this information to mitigate the use of her services in the commission of that crime. See RPC 1.6 (a). Third, Baldwin was suspected by OAG of participating in the scheme to obstruct justice and therefore, her disclosures were permitted to “establish a claim or defense.” See RPC 1.6 (c)(4). The committee also noted that, prior to her grand jury testimony, Baldwin had secured both criminal and ethics counsel who had advised her on the permissibility of her testimony.
While the committee found there was no misconduct here, there are certainly lessons to be learned. Unless an employee is testifying as a corporate custodian of records, an employee individually subpoenaed to the grand jury faces individual criminal exposure and, as a best practice, should not be represented by corporate counsel. The employee needs independent counsel to provide advice relating to the Fifth Amendment and the very grave dangers faced by a witness who testifies at a grand jury without immunity. Experienced criminal counsel with a knowledge of grand jury procedures should be brought in to represent the employee.
In addition, when corporate counsel meets with an employee to conduct an investigation of potential wrongdoing, counsel must make clear that the organization is the client, that the duty of confidentiality is owed to the corporation, and that the corporation is in control of whether to waive that confidentiality. These warnings, known as Upjohn warnings, can be put in writing and counter-signed by the employee. In addition, when a company is served with a subpoena for documents, in-house counsel should think carefully about who will be involved in the collection of documents and, if economically feasible, should consult with or hire an expert to manage the review and production of these documents. If you represent a small or midsized company, it is also a best practice to have procedures in place for how to handle a document request, government subpoena or even a search warrant.
The Baldwin matter demonstrates how difficult and nuanced these issues can be, even for a lawyer of the highest caliber and integrity. However, if you carefully and clearly establish and maintain the line between the entity and the employee, you will avoid being tripped up by these dangers. And, now, with Baldwin, we wait to see how the board and the court will view this matter.
Ellen C. Brotman, of Brotman Law in Philadelphia, represents individuals before licensing boards, providing effective, caring and efficient assistance. She has served as an assistant federal defender in Philadelphia and practiced in small, medium and large firms with a focus on criminal defense, appellate advocacy, professional responsibility and ethics.