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01/10/95

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Lawyers brief managers on university legal issues

STANFORD -- Sexual harassment, employment law, anti- trust regulations, environmental regulations and indirect cost were topics covered in a periodic forum for university managers on Dec. 14.

General Counsel Michael Roster also reviewed the reasons for reorganizing the operation he took over 17 months ago.

Roster is reducing his staff of 26 lawyers and paralegals to a core of nine serving both the university and Stanford Health Services. He has contracted with three outside firms for legal assistance. The distinction between staff attorneys and outside lawyers should be invisible to university client departments, he said. The three firms are McCutchen, Doyle, Brown & Enersen of San Francisco; Pillsbury Madison & Sutro, also of San Francisco; and Ropes & Gray of Boston.

The new system should save the university $500,000 to $1 million annually on legal costs that had reached $7.5 million to $8 million annually, excluding expenditures for extraordinary issues such as indirect costs, Roster said.

Stanford will not be "held hostage," Roster said when asked if the university would tend to settle more cases to avoid legal costs.

Sometimes the university will spend a great deal to preserve its reputation, he said. "In the indirect cost matter, we spent $35 million primarily on accountants, but also lawyers, to demonstrate to the federal government that we had done nothing wrong. It would have been easy to roll over. We don't intend to do that," he said.

Roster cited other reasons for the change, including the need to obtain outside expertise in specialized areas and the need to respond to fluctuations in areas of legal need.

Roster advised the managers that the Legal Office should not be used "to fill management gaps." Because lawyers are good problem solvers and because "we get bored practicing law," the legal staff would sometimes get involved in management issues, he said.

However, managers must manage, and legal resources must be reserved for areas of highest legal risk for the university, he said.

At any given time, Stanford has more than 200 items in litigation, arbitration or dispute, Roster said.

His colleagues discussed some of the key areas:

  • Environmental regulation - Sally Drach, of McCutchen, Doyle, Brown & Enersen, said there has been a "tremendous explosion" in recent years in environmental regulation. New standards are complex and ambiguous, she said. Many of the laws were developed for the manufacturing environment, but now are being applied to universities.

The regulatory environment in California is aggressive, with enforcement activities now generating substantial funds to support the agencies, Drach said. As part of a $1 million settlement this year with the state Department of Toxic Substances Control, the university soon will conduct campuswide training sessions for those who produce hazardous wastes.

  • Anti-trust rules - Staff attorney Tom Fenner said the federal government is increasingly applying to universities anti- trust laws originally designed to promote business competition. Faculty and staff may think of other higher education institutions as "sisters," but the Justice Department views universities as competitors, he said.

Five years ago, the Justice Department began an investigation of the Ivy League institutions and Stanford on allegations of price fixing in tuition, financial aid and faculty salaries. "Stanford was investigated as vigorously as the others, but no charges were brought against us," Fenner said. The Ivy League schools entered into a judgment saying they would not collaborate in the future, he said.

Fenner advised managers not to divulge Stanford's future plans about tuition, financial aid, research costs and salaries until they have been announced in Campus Report. Nor is it appropriate to inquire about the plans of other institutions, he said.

  • Employment regulations - Staff attorney Mike Vartain said that employment is one of the most highly regulated areas, with a great proliferation of new workplace regulations in California and nationwide.

Discussing the three-year union contract he helped negotiate last fall with 1,200 maintenance, technical and service workers at Stanford, Vartain said the terms are "much more modern than they have been before." The agreement includes worker- productivity committees, which Vartain said would help the university meet budgetary goals. Dispute resolution procedures have been modernized and should help "prevent the kind of expensive litigation that is a drain on your resources and time," he told the managers.

  • Sexual harassment - Rico Rosales, of McCutchen, Doyle, Brown & Enersen, urged the managers to study University Guide Memo 23.2 on sexual harassment so they are familiar with the provisions and can discuss them with subordinates.

Managers should "think seriously" before getting romantically or sexually involved with subordinates. Aside from problems that could arise if it turns sour, the relationship could lead to charges of favoritism by other employees.

He also suggested that excluding members of one sex in social functions could be viewed as hostile.

After discussing in detail a recently publicized sexual harassment case involving a San Francisco law firm, Rosales described procedural steps managers should take to eradicate sexual harassment. He suggested avoiding sexually oriented language, including jokes, and computer screen-savers that are suggestive.

The university has a right to seek removal of questionable material from an employee's office, Rosales said. In the competition between free speech and the institution's interest, Rosales said he would err on the side of guarding institutional interests.

Roster added that managers should not rip material from the wall of an employee's office, but instead treat the person as an adult and explain that the material is offensive to others. Managers or university lawyers also could say "don't be a damn fool" to a recalcitrant employee, Roster said.

  • Indirect cost controversy - Deborah Zumwalt, a former staff attorney who is now with Pillsbury Madison & Sutro, described the history of the indirect cost controversy and explained its recent settlement. She said that the issue is not yet fully resolved because of the private qui tam lawsuit filed by Paul Biddle, former contract officer for the Office of Naval Research. Therefore, managers should not throw away documents relating to costs that date back to 1981, she said.

Zumwalt also talked about the Code of Conduct booklet distributed to faculty and staff. It says that managers are responsible for ensuring that they and their employees comply with all rules regarding indirect costs.

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