SAN JOSE, Calif. – If the Hewlett-Packard spying scandal has a silver lining, perhaps it is as a case study on the perils of managing a high-profile crisis.

The Palo Alto, Calif., computer and printer company has drawn huge headlines and a Newsweek cover story since admitting last week that it had hired private detectives who snooped on personal phone records of directors and journalists to find the source of media leaks on its board. The scandal culminated in a shakeup of the company’s board. California’s Attorney General has said that criminal charges are likely against people inside and outside HP.

HP leaders faced a serious dilemma in trying to address the unauthorized disclosure of confidential boardroom discussion, but handled it in disastrous fashion, said more than a dozen business observers interviewed by the San Jose Mercury News, including executives, scholars, shareholder advocates, and corporate attorneys.

“It was a cascading failure scenario,” said longtime Silicon Valley executive Bill Coleman, founder of software firms BEA Systems and Cassatt.

“It’s a catastrophe,” said professor Jeffrey Pfeffer of Stanford’s Graduate School of Business.

The imbroglio, experts agree, reinforces a classic warning: Don’t do anything you wouldn’t want to read about on the front page of the newspaper.

The overarching lessons can be broken down into four areas: the leak, the investigation, disclosure, and repair.

Lesson One: A leak is a serious problem, but a clandestine investigation is often worse.

HP Chairwoman Patricia Dunn took a perilous step, many say, by taking the “whodunit” beyond the confines of the boardroom.

“Leaks are damaging, but investigations into leaks create more damage and should be avoided,” said professor Charles Elson of the University of Delaware’s Center for Corporate Governance. “The better approach is you get everyone in the room and you deal with it within the room.”

HP had attempted what Dunn would later describe as the “gentlemanly” approach in early 2005, after press reports describing directors’ dissatisfaction with then-CEO Carly Fiorina’s leadership. At Fiorina’s behest, HP’s outside counsel Larry Sonsini, questioned each board member but failed to identify a suspect.

HP spokesman Ryan Donovan said the company felt it had exhausted efforts to handle the leak internally. “From our point of view, the leak of confidential information that articulates strategy and could tip the hand of competitors – that’s pretty serious stuff,” he said. “We have never apologized for the intent of the investigation. The intent was always right.”

Lesson Two: If a deeper probe is authorized, be sure it’s done properly.

“Obviously, we would agree with that,” Donovan said.

After Fiorina’s ouster, Dunn assigned HP’s legal department, headed by general counsel Ann Baskins, to oversee the investigation. Some observers suggest this was a mistake, because it put Baskins and her staff in the awkward position of snooping on HP directors, their overseers.

More typically, an investigation would be assigned to outside counsel – presumably, in this case, Wilson Sonsini Goodrich & Rosati.

HP has not disclosed who its outside investigative firm was or who used false pretenses to obtain the private phone records of directors and journalists.

The lesson for investigations is not to do anything “that can blow up on you,” said John Gibbons, chief executive of The OSO Group, a San Francisco investigative firm that specializes in corporate counter-espionage.

Gibbons, a former federal prosecutor, said wiser detective work would start with the company’s own property, including office and mobile phone records, e-mail and expense reports. Digging through trash, known as “Dumpster diving,” is legal if it doesn’t involve trespassing.

It is one thing for a private eye to trick a suspect or a source into voluntarily talking, Gibbons said, quite another to obtain private records under false pretenses.

Lesson Three: Make sure disclosures and documentation are complete; allegations of a “cover up” compound the problem.

After venture capitalist Tom Perkins quit HP’s board in a huff, he objected to the company’s cursory description of his resignation in a Securities and Exchange Commission.

Facing pressure from Perkins, HP later issued more details that acknowledged the investigation and also revealed that HP’s outside counsel could not vouch that investigators’ work was always within legal bounds.

The sequence of events unnecessarily exacerbated HP’s troubles, said attorney Carl Metzger of Goodwin Procter in Boston, and underscores the importance of carefully documenting the rationale for important decisions.

“Boards have to be conscious of the fact they could have scrutiny not only for the decision, but also how they came to the decision. They need to document the who, whats, whys and hows of how they reached their decision,” said Metzger.

Lesson Four: Make amends, make changes and move forward.

In the fallout, HP has now reshuffled its board, with CEO Mark Hurd scheduled to take on the additional responsibilities of chairman in January. “We took some steps that we believe are the right steps,” Donovan said.

Some critics, however, say HP hasn’t gone far enough, and questions persist about the future of general counsel Baskins and her subordinates, as well as speculation that a wider board overhaul may be in order.

The decision for Hurd to serve as both CEO and chairman, replacing Dunn, has drawn criticism. “Optimally, you really want a chairman and a board that has oversight of the CEO,” said Pat McGurn, vice president of Institutional Shareholder Services. But HP may prove to be an exception, McGurn added, if Hurd can create a collegial board.

The moral of the story might be obvious to children.

“These are lessons you learned in kindergarten,” McGurn said. “First, don’t lie. Second, don’t spy. Third, try to make friends with people.”