The New Normal
Was Rutgers GC blamed for properly managing a process to the wrong outcome?
Posted Apr 11, 2013 8:40 AM CDT
By Paul Lippe
If you follow college basketball, you haven’t been able to avoid the Rutgers University athletic department’s meltdown over the last week in which (i) a disgruntled former assistant coach provided a videotape of abusive behavior in practice by the head basketball coach, (ii) the athletic director first chose to discipline, but not fire, the head coach, but then (iii) after the tape became public, (iv) the athletic director did fire the head coach (v) then himself resigned and (vi) John Wolf, the Rutgers general counsel—who presumably managed much of this process—also resigned from his post (though he will stay on as a university attorney, ESPN and other sources report.)
All this while Rutgers was joining the Big Ten, a potentially hugely important move. Note two relevant quotes from Rutgers' press conference (Star-Ledger) and one from the athletic director's letter to the university president (Star-Ledger):
Rutgers President Robert Barchi: "The coach was not fired for cause ...The outside counsel says that could not be done ... I fired him. Not for cause. I just fired him."
Board of Governors chair Ralph Izzo says of their legal counsel: "We paid dearly for good advice. I'm not sure we got good advice."
Outgoing athletic department head Tim Pernetti in a letter to Barchi: “As you know, my first instincts when I saw the videotape of Coach Rice's behavior was to fire him immediately. However, Rutgers decided to follow a process involving university lawyers, human resources professionals, and outside counsel."
What exactly happened at Rutgers? We don't know. I imagine there was a discussion in the earlier phase that went something like this “the coach clearly did something troubling, but other coaches do too. There haven’t been complaints [or maybe there was a quick investigation and mild complaints] from the players, and we have no clear standard for terminating a coach for being rough with players. And besides, if we terminate the coach, he might have a cause of action against us.”
What probably went unsaid (or at least undocumented) but was in the mind of everyone in the room was that a coaching scandal would not enhance the move to the Big Ten.
That said, if the core of the story about Rutgers general counsel Wolf is as reported, then I would argue it is the biggest news of the year for lawyers: holding a lawyer accountable for managing a process when in hindsight that process yielded the wrong outcome, even though the process itself was appropriately managed. Call it the triumph of substantive due process over procedural due process.
Lawyers very often suggest more process as the cure for what ails us. It’s kind of our preferred playbook, and we resist being held accountable if the process yields a outcome we can no longer defend.
Think due diligence for an M&A transaction that goes bad. We say, “well, we did the due diligence.” Think of an internal investigation for a stock option backdating scandal—the investigation may be drawn out for nine months and leave the company “dead in the water,” but we did our job by managing a “thorough” investigation.
As my conferee Pat Lamb said: “Rutgers should remember that when the matter may become public, do right and damn the process because no one except lawyers cares about the process. It could not have been worse if they had simply said 'you’re fired, these are not our values and this behavior is not acceptable' and dealt with any litigation later.”
I’m probably among the least “process-loving” of lawyers, because I don’t pretend that process is neutral or cost-free. That doesn’t mean process is bad, it just means that the expense, opportunity cost, confusion, conflict and likely biases of any process must be considered.
I was once involved in an M&A deal where the outside lawyers offered, for a substantial fee, to provide further analysis of whether we’d get a second information request. When I asked them what the likely change in their handicapping would be from the additional work, all the possible outcomes were still unacceptable. So the smarter course was simply to abandon the deal, rather than manage a thoughtful process that would still yield an unacceptable outcome.
The Rutgers story illustrates the practical reality that in-house lawyers play a management role in deciding which processes to emphasize, how to guide processes and what decisions to reach. In-house lawyers get criticized for lack of objectivity, but that misses the point. Few people get to the top of an organization without knowing how to avoid “hot potato” decisions and shift the burden to the in-house lawyers. Perhaps outside lawyers are more objective, but my experience is they invariably advocate for more process (sometimes appropriate and always remunerative), which is not the same as objectivity.
Rutgers also illustrates that in a transparent world it’s crazy to think that a damaging video won’t eventually become public; adapting to this uber-transparency is not easy for anyone, but maybe we’ll all get to a saner place eventually.
Ours is a time of fear and inertia, where in most organizations anybody can ask for ‘more process,’ and lawyers certainly aren’t the only ones. But if, as Rutgers suggests, lawyers (and others) will now be held accountable for substituting process for judgment, that is indeed the story of the year for all of us.
Paul Lippe is the CEO of the Legal OnRamp, a Silicon Valley-based initiative founded in cooperation with Cisco Systems to improve legal quality and efficiency through collaboration, automation and process re-engineering.