Legal and PR Bills for Penn State to Cost Millions

As news broke across the country about the sex abuse scandal at Penn State University, the school hired its first public relations firm. Then the school hired a second public relations firm and then two law firms were added to its payroll after that. The scandal involves former football defensive coordinator Jerry Sandusky and two high ranking school administration officials, one of whom was the school’s president, who has resigned from his post.

Penn State has yet to release information regarding how much the school will spend in legal fees and public relations fees. Information regarding agreements in place about those costs or how long those agreements would remain in place has also not been released. An estimated calculation shows that the school could spend millions of dollars in legal fees and public relations fees. Penn State’s board of trustees has hired the law firm of Reed Smith and the public relations firm of Ketchum to handle the sex abuse scandal.

The special investigative committee is headed by former FBI Director Louis Freeh and his law firm of Freeh, Sporkin & Sullivan. Freeh and his law firm will conduct an investigation into how the university handled the allegations that Sandusky sexually abused eight boys. Both Freeh and Kenneth Frazier, who is the head of the trustee committee, commented that they did not know how long the investigation would last or how much it would cost.

Penn State is the subject of a number of investigations according to Craig Staudenmaier, an attorney from Harrisburg, Pennsylvania. Staudenmaier is the general counsel at the Pennsylvnaia Freedom of Information Coalition. Staudenmaier said that work done by senior attorneys, law clerks and paralegals is charged by the hour and can add up thousands of hours of work.

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“I think it will be in the millions of dollars by the time all is said is done,” Staudenmaier said.

The law firm of Reed Smith is the largest in Pennsylvania, boasting gross revenue of $1 billion in 2010. The media hourly rate for law firms in Pennsylvania with partners that have between 11 and 20 partners was $330 in 2010.

The minority chairman of the Senate Banking and Insurance Committee, Senator Mike Stack, submitted a letter to Penn State president Rod Erickson. The letter asked the president if the school has enough liability insurance to cover the costs of the law firms and the public relations firms. Stack also warned the university against using tax dollars to cover those costs.

“We appreciate your cooperation as we grapple with an understanding of the sexual assault allegations and where to go from here,” Stack wrote. “I’m sure you would agree, my heart and sympathies lay with those who have been affected by these terrible acts. With that said, I have concerns about the financial future of the (u)niversity that I’d like to bring into question. I am not alone in my concern.”

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Posted by jim on December 5, 2011. Filed under Home,Law Firm News,New Cases. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry