On Jan. 22, 2010, former Pennsylvania Supreme Court Justice Cynthia Baldwin became the first general counsel of Penn State University — more than a decade after allegations of child sexual abuse against former university assistant football coach Jerry Sandusky surfaced in the late 1990s.

Yet in the course of Baldwin’s two-and-a-half year term, which ended with her retirement last month, those allegations came to a boil and posed serious tests of her decision-making. As scrutiny of Sandusky’s conduct intensified, she was tasked with deciding how to confront a grand jury investigation that involved Sandusky and other Penn State officials, determining what to share about that investigation with the university’s board of trustees, and considering whether the “Sandusky issue” warranted an independent investigation by an outside group.

On July 12, a verdict on the counsel provided by Baldwin was announced: It wasn’t enough, according to special investigative counsel Louis Freeh, who led a probe into how university officials responded to Sandusky’s conduct between 1998 and 2011, the results of which amounted to a damning 267-page report. The former FBI director concluded that legal counsel at Penn State during the period in question was “seriously deficient.”

While Sandusky was convicted of multiple counts of child abuse in June, the July report’s documentation of failures by top leaders and the board is expected to provide plenty of ammunition for forthcoming civil litigation. At the same time, higher-education legal experts say, the probe holds important lessons for university law departments about a general counsel’s obligations to an institution.

“It’s not uncommon for general counsel in these situations to be caught in the middle,” said Stephen Hirschfeld, a founding partner at Curiale Hirschfeld Kraemer who specializes in employment law and internal investigations at universities. “They feel a great loyalty to the president, because that’s their day-to-day client, but their real duty-of-loyalty and ethical obligations are to the institution, not to an individual.”

Ada Meloy, general counsel of American Council on Education, said, “The report is something that virtually any college or university counsel could read and learn from. It provides insights into relationships between counsel, the administration and the board that can be instructive.”

To start with, there was no in-house legal function at Penn State in 1998, when university officials first learned of allegations of sexual misconduct occurring in Penn State locker rooms between Sandusky and young boys. At the time, Penn State relied on the outside firm McQuaide Blasko to take care of most of its legal work. Firm partner Wendell Courtney served as Penn State’s outside legal counsel from 1980 to 2010, and declined to be interviewed for the Freeh report.

“A general counsel who is very familiar with the operations and policies of an institution should be in a better position than an outside lawyer to understand the ramifications of events on campus,” Meloy said.

In 2009, the university’s board of trustees “reassessed” its legal services model, following a study that was conducted by the senior vice president for finance and business, according to Freeh’s report. The board established the Office of the General Counsel for the university, and in January 2010, then-president Graham Spanier appointed Baldwin to fill the role. The board approved.

For her part, Baldwin, a past chair of Penn State’s board, and an alumna of the university’s Allegheny campus, left private practice at Duane Morris to take the position.

Key findings about Baldwin’s role that are highlighted in the report date from December 2010 and early 2011, after two prosecutors in the Pennsylvania Attorney General’s Office informed Baldwin that the office would be issuing subpoenas for three PSU officials: former senior vice president for finance and business Gary Schultz, former head coach Joe Paterno, who died in January of this year, and former athletic director Timothy Curley.

“Baldwin did not seek the assistance of an attorney experienced in addressing criminal investigations or conducting internal investigations at that time,” the report states.

Not retaining an outside expert on criminal law was a “major mistake,” Hirschfeld said. Particularly given the special rules that govern grand jury investigations, “you need someone who knows that inside and out,” he said.

“Some general counsel may come with a background and experience in criminal law, but most would not,” Meloy said.

Baldwin attended grand jury appearances by Curley and Schultz on Jan. 12, 2011, and on March 22, 2011, she attended a meeting between the attorney general’s investigators and Spanier regarding Sandusky. On March 24, the Attorney General’s Office “issued a subpoena for Spanier to testify before the grand jury,” the report states.

Then, within days, Baldwin was alerted to the fact that The Patriot-News planned to run a story about the grand jury investigations of Sandusky. That article appeared on March 31, 2011.

But neither Spanier nor Baldwin ever told the board of trustees about the grand jury investigation “or the potential risk to the university” — at least not until a board meeting on May 11, 2011, “and, then, only at the request of a trustee who had read the March 31, 2011, article,” according to the report.

Once the two did brief the board on the investigation, they “minimized its seriousness by not fully describing the nature of the allegations or raising the issue of possible negative impact to the university,” the report states. Neither Spanier nor Baldwin provided updates to the board at subsequent board meetings held in July and September.

Regardless of Spanier’s decisions, keeping the board informed about a matter “with serious potential for liability and a public relations disaster” was Baldwin’s responsibility, Hirschfeld said. “These are independent decisions you have to make after assessing the legal risks to the institution.”

Hirschfeld also believes the general counsel should have initiated an independent investigation into the Sandusky matter, as early in the process as possible. “There was obviously a decision made not to conduct an independent investigation on that campus,” he said. “With so many relationships on the campus already, and so much potential for conflict of interest, you’ve got to have a lawyer … whose only duty is to get the facts and arrive at conclusions.”

Even after charges were brought against Sandusky on Nov. 4, 2011, the report found that “Spanier and Baldwin opposed an independent investigation of the Sandusky issue.” In an email, Baldwin stated, “If we do this, we will never get rid of this [outside investigative] group in some shape or form. The Board will then think that they should have such a group.” Spanier agreed.

In response to a request for comment about how her actions were portrayed in the report, Baldwin’s counsel, Fox Rothschild partner Charles De Monaco, said, “In light of the ongoing legal proceedings, it would be inappropriate to comment publicly on specific issues referenced in the Freeh report. However, Cynthia A. Baldwin, as the vice president and general counsel of the Pennsylvania State University, along with the university’s Office of General Counsel, cooperated fully with the special investigative counsel led by Judge Freeh.”

In a statement emailed to Legal affiliate Corporate Counsel after this article was first published, De Monaco said that “much of the information in the Freeh report is factually inaccurate as it relates to Ms. Baldwin, and no one should draw conclusions until all the facts are known.” To read the full statement, visit http://goo.gl/LbPSS.

Catherine Dunn is a reporter for Corporate Counsel, a Legal affiliate based in New York. •