Penn State's Legal and Public Relations Costs Reach $10,000,000



Hungarians burn money to keep warm (via AFP)

Yesterday, Penn State announced the hiring of two more public relations firms: PR giant Edelman, and Harrisburg-based La Torre Communications. These firms were hired to aid Penn State during the upcoming litigation phase of the Sandusky matter. Let's go to the press release!

The primary objective of this work is to ensure broader and more transparent communications with key Penn State stakeholders, including current and prospective students, alumni, faculty and staff, parents, local communities, and state and national media. The firms also will support the University throughout upcoming litigation, ensuring rapid and accurate dissemination of information to the extent possible given the ongoing investigations.

"Earlier this year, I announced five promises to guide Penn State in recovery from our recent crisis and rebuild trust with the Penn State community," said Penn State President Rodney Erickson. "Retaining these communications firms puts us more firmly on the path toward accountability, openness and preserving our reputation as one of the world’s leading research universities."

This move ensures Penn State will have a comprehensive communications infrastructure with significant expertise within Pennsylvania and across the country. It also will allow Penn State to continue to accomplish the daily business of the University, including educating more than 96,000 students, conducting breakthrough research, and fulfilling a commitment to service.

Which, yes, it's easy to recognize a steaming pile when a press release is filled with "primary objective", "broader and more transparent communications", "stakeholders", and "comprehensive communications infrastructure". Incidentally, Penn State, "current and prospective students, alumni, faculty and staff, parents, local communities" aren't "stakeholders". They're the backbone of your entire University. They are your University.

Not that anyone reading this needs a refresher, but there's the encapsulated problem with how Penn State has handled this abomination from the very beginning. Thosecurrent and prospective students, alumni, faculty and staff, parents, and local communities remain horrified and think of the scandal in human terms, while Penn State focuses on blame shifting and "comprehensive communications infrastructure".

Penn State will pay Edelman and La Torre $208,000 per month, for twelve months. That's a total of $2,496,000 -- if we assume that PSU isn't paying each firm $208,000 per month, which seems to be a vaguely reported part of this story. So let's go to the Big Board. How much has Penn State spent dumping jet fuel on their own five-alarm fire?

From the FAQ at openness.psu.edu:

Q 14: How much money is the University paying for legal fees, consultants and PR firms associated with the Sandusky matter?

A: Some of the fees and costs set forth below are expected to be reimbursed under the University's insurance policies.

Internal Investigation and Crisis Communications: $5,348,238
-- Freeh Group/Kekst Public Relations
-- Reed Smith/Ketchum Public Relations
-- Domus Inc
-- The Academy Group

University Legal Services/Defense: $1,205,438
-- Saul Ewing
-- Duane Morris
-- Lanny J. Davis and Associates
-- Schnader Harrison Segal & Lewis LLP
-- Jenner & Block LLP
-- ML Strategies
-- Lee, Green & Reiter Inc.

Externally Initiated Investigations: $49,788
-- Margolis & Healy

Officers Legal Defense* (Schultz, Curley, Spanier): $338,545

Other Institutional Expenses: $635,634

Total as of Feb. 29, 2012: $7,577,643

*The Bylaws of Penn State state that "except as prohibited by law, every trustee and officer of the University shall be entitled as of right to be indemnified by the University against expenses (including counsel fees) and any liability (including judgments, fines, penalties, excise taxes and amounts paid in settlement) paid or incurred by such person in connection with any actual or threatened claim, action, suit or proceeding, civil, criminal, administrative, investigative or other." Article 5, Section 2 (a).

Great work, if you can get it.

Add another $2.5MM to that total and we've eclipsed $10,000,000 spent on the Sandusky matter, including legal fees, Louis Freeh's internal investigation, failed public relations, and other costs. Worth every penny, you guys!

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