Lawyer said Strampel was following MSU's orders; then his firm was fired

David Jesse | Detroit Free Press

Three days after a lawyer hired to defend William Strampel said criminal charges against the former Michigan State University dean were unfounded because he was only following orders from MSU's lawyers, the university fired his firm from representing six other MSU employees.

It's a move experts said raised concerns once again about whether the school was more worried about its reputation than the truth. It also sent a signal to law firms being paid by MSU to represent its employees in various lawsuits and criminal matters: Toe the company line or risk losing a lot of money.

"It fits the pattern on MSU under (former president Lou Anna) Simon and (current interim President John) Engler — just run everything through the lens of protecting the university first," said David Jaffe, an attorney specializing in compliance and the former vice president, general counsel and secretary of Guardian Industries Corp. of Auburn Hills, as well as former partner in the law firm of Honigman Miller Schwartz and Cohn in Detroit. Jaffe reviewed correspondence obtained by the Detroit Free Press under an open records request between MSU and and the law firm at the request of the Free Press.

That pattern includes Engler canceling an issue of the MSU alumni magazine that took an unflinching look at the Nassar scandal and replacing it with a version focused on an interview with him touting the positives at MSU. Engler and MSU administrators also drew fire for emails where they disparaged the survivors of Dr. Larry Nassar, the former MSU doctor accused of molesting more than 200 women and athletes, and for releasing personal counseling information about a sexual assault survivor who was suing the school. Simon drew fire for not attending the first day of the Nassar sentencing where victim after victim spoke and even for her resignation letter, where she blamed unnamed people for "politicizing" the issue.

The move to fire Clark Hill could be expensive for MSU — hiring multiple attorneys is likely to cost the university more as each may review the same documentation separately. There are four attorneys now representing the seven MSU employees, with charges ranging from $390 to $465 per hour. Each of the employees is named in a lawsuit against Nassar and MSU.

The decision to fire the firm from representing the six MSU clients other than Strampel was made by Bob Young, then special counsel to MSU and now its general counsel. Clark Hill is still being paid by MSU to represent Strampel in his criminal trial. That was part of a deal reached with Strampel when he resigned from the university.

The general counsel's office is the university's internal lawyers. Emails obtained by the Free Press previously show lawyers for the office were heavily involved in the Nassar investigation, with university investigators emailing the lawyers often about the investigation. At one point, a university lawyer emailed an investigator to say that while she was on vacation, the investigator should contact Kristine Zayko, then the associate general counsel. Zayko left the university earlier this year just as the Free Press began asking questions about her role in this and other investigations.

More on freep.com:

MSU knew about ex-dean's sex comments in '05. It didn't end there.

MSU's legal fees for Nassar scandal pass $17M, university paying part of Strampel defense

MSU and Clark Hill declined to comment for this story.

The spat between Clark Hill and MSU centers on a common question: To whom do lawyers owe their allegiance: the organization that is paying the bill, or the individual employee who is their client?

"The rules are very clear on that," said Stephen Fedo, general counsel for the Chicago law firm Neal Gerber Eisenberg and special counsel to the Illinois Supreme Court’s Board of Admissions to the Bar and its Committee on Character and Fitness. "The lawyer's loyalty is first, last and always to the client."

The issue isn't likely to go away soon. Earlier this fall, the Free Press reported the university is covering half of the legal bills for Strampel and all of the legal bills for the other six employees, including former gymnastics coach Kathie Klages. That sets up the possibility for ongoing conflict about what is in the best interest for the individual versus what is in the best interests for MSU. In other words, will the lawyers for Strampel and Klages give the best defense for their clients if it would hurt MSU?

Clark Hill protests its firing

In late March, Strampel was arrested at his house. He didn't know he was going to be arrested. He called Clark Hill, which was representing him in civil suits against him and several other MSU employees by Nassar survivors.

MSU had agreed to pay for the attorneys for those employees named in the suits. The move, part of a process called indemnification, is common for employers to do when their employees are sued for work they did.

Strampel was charged with four counts, including a felony and two misdemeanors related to his supervision of Nassar. Prosecutors alleged that after MSU cleared Nassar of any wrongdoing in a 2014 investigation, the school placed a series of conditions on how Nassar would interact with patients. Prosecutors allege Strampel was responsible for monitoring those conditions and didn't follow up, allowing Nassar to sexually assault other victims.

After Strampel's arraignment, his attorney, John Dakmak, made his statement outside of the courtroom, including saying that the Office of the General Counsel was heavily involved in the Nassar investigation and follow-up. In doing so, he was, in effect, saying Strampel shouldn't be convicted because he was following the orders of the general counsel and others.

Emails obtained by the Free Press from a source inside MSU show that involvement. As reported on in May by the Free Press, at least two members of the general counsel's office were involved in the investigation, the protocols put in place and the plans for follow-up. The follow-up included new conditions for how Nassar could see patients. It's a matter of dispute over who was ultimately responsible for making sure the rules were followed.

Three days after Dakmak's statement, Clark Hill was told it would be replaced and all the employees MSU was paying for — except Strampel — would be placed with other lawyers.

On April 3, Clark Hill's Steven Stapleton, one of the lawyers involved in defending all of the MSU employees, including Strampel, wrote to MSU to protest the move, according to documents obtained by the Free Press under a Freedom of Information Act request.

After recapping the statement, Stapleton clarifies Strampel's defense, saying Strampel "acted at the direction of the Office of General Counsel and did what he was instructed to do by the OGC and others in the Administration."

That portion of the letter was redacted and heavily blacked out in the copy provided to the Free Press by MSU. A source close to Engler provided the Free Press with an unredacted copy of that page.

The letter goes on to note that a big settlement meeting is scheduled for three weeks from the date of the letter. "It is highly unlikely that any new counsel can then adequately represent the interests of our clients. Nor will new counsel have time to gain the clients' confidence such that their individual interests are being protected. For these reasons, we do not believe new counsel is ethically appropriate for our clients at this critical phase ..."

The latter was not redacted by the university in the version given to the Free Press by MSU.

Five days later, Reginald Turner, a partner with Clark Hill, called Young, the MSU special counsel, and followed up with an email. After thanking Young for talking to him, Turner starts a new paragraph with a sentence that was redacted by MSU. Then Turner asks for an external mediator to get involved because Clark Hill has questions about MSU's ethical behavior. Turner references a rule of professional conduct that says, "A lawyer shall not accept compensation for representing a client from one other than the client unless ... there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship."

Eight days later, Young responds in a letter back to Clark Hill and notes that part of MSU's policy on paying for an outside attorney for employees requires the employee to "cooperate fully on a continuous basis with the University Attorney." Experts say that could imply blaming the general counsel's office would not be an acceptable defense.

He then goes on to say Clark Hill has the ethical problem — a conflict of interest in representing Strampel and others who he may accuse of wrongdoing.

"After careful consideration of the concerns expressed by Clark Hill in its recent correspondence, it is clear to the University that because of the conflicts identified herein, the real potential for other similar conflicts in the future, and Clark Hill's demonstrated lack of judgment in handling these issues, the University cannot in good faith continue to indemnify the individuals with Clark Hill as their attorneys."

A case of divided loyalties?

There's little doubt among experts that having an organization pay the bills for the lawyer representing one of its employees can lead to ethical issues. That's because what's best for the employee isn't always what is best for the organization.

And there's no doubt that MSU placing all the employees with the same law firm — something done by Young's predecessor Robert Noto — had the potential from the beginning to have issues as individual employees' interests diverged.

Experts said they aren't surprised that was worrisome to Young.

"There seems to be a legitimate concern on Young's part that was handled pretty ham-handedly," Jaffe said. "(Young is) writing as if these lawyers owe an obligation to the university because MSU is paying the bills."

In his letter to Clark Hill, Young notes university policy lays out clearly what has to happen if an employee wants MSU to pay for a lawyer, including the condition that the employee has "to cooperate fully on a continuous basis with the university attorney."

That could be read to mean that if an employee wants MSU to pick up the legal bills, it calls the shots.

Young goes on to say in the letter that cooperation "includes the University's selection and/or approval of an outside attorney."

Young, through an MSU spokeswoman, did not respond to requests for comment on this story.

"When an employer is (paying for the outside attorney for an employee), it is fraught with tension," Fedo said. "That's why professional rules of conduct exist that say the lawyer's responsibility is to represent the best interests of the employee. There's always the chance the interests are going to diverge.

"The question here is how heavily involved was the university? I suspect, based on the communication, it was heavily involved."

Contact David Jesse: 313-222-8851 or djesse@freepress.com. Follow him on Twitter: @reporterdavidj