GM’s legal department increasingly the focus of investigations after ignition switch defect

Three senior lawyers were among the 15 GM employees who lost jobs following the internal investigation led by former U.S. Attorney Anton R. Valukas.

There is increasing focus on the legal department at General Motors as investigations continue on the company’s controversial response to an ignition switch defect. Last week, The New York Times reported that the legal department’s response will be a top priority in expected Congressional hearings on the ignition system and associated recall.

It was also reported that the legal department’s activities “ultimately worked against” GM, according to NYT. GM lawyers allegedly “kept their knowledge of fatal accidents related to a defective ignition switch from their own boss, the company’s general counsel, Michael P. Millikin,” NYT said. Millikin was absolved of wrongdoing in an internal review by GM.

But three senior lawyers were among the 15 GM employees who lost jobs following the internal investigation led by former U.S. Attorney Anton R. Valukas. One of the three lawyers, William Kemp, was leading GM’s legal strategy and internal investigations for more than two years on the defective ignition switch.

Kemp did not tell Millikin until February of the “deadly consequences of the flawed part,” The Times reported. GM associated 13 deaths and 54 crashes to the ignition system defect. Lawrence Buonomo and Jennifer Sevigny, both lawyers, were also dismissed, news reports said.

Secrecy ruled at the company, and GM employees did not take notes during meetings on safety issues “because they believed GM lawyers did not want notes taken,” according to the internal report.

In addition, The Detroit Free Press reported – based on the Valukas report – there was a “dysfunctional” environment “in which engineers deferred to lawyers who elevated legal concerns above solving a defect that proved lethal.”

In fact, the Valukas report showed that GM’s legal department was set up “to give attorneys significant authority and autonomy. For example, there is the policy that allowed a committee to authorize a $5-million settlement without consulting the general counsel,” The Free Press reported.

Also, GM’s legal department “resisted investigating the delayed recall as recently as February — for fear of exposing GM to liabilities in ongoing lawsuits,” the Free Press reported.

In addition, GM lawyers “conducted annual audits of some employees’ emails that could be used as evidence in lawsuits against the company,” The Times reported.

In response to GM’s actions, the U.S. Department of Transportation fined GM $35 million, the maximum, for failing to report the defect earlier to the government.

It was also reported by The Wall Street Journal that plaintiffs’ attorneys who are “known for large civil settlements” are lining up to sue the company over defective ignition switches. As of this week, more than 80 ignition-switch-related civil lawsuits have been filed against GM, The Journal said.  

The lawyers representing GM in the case include attorneys at King & Spalding and Kirkland & Ellis.

Earlier this year, GM spokesman Greg Martin told InsideCounsel, “The company has taken responsibility for its actions and will continue to do so amid civil and legal obligations as it relates to injuries involving recalled vehicles.”

In addition, there are pending issues that relate to economic loss now before the bankruptcy court in New York, as well as the location of where class-action lawsuits will be held.

 

For more on the GM recall issues, check out these stories:

GM report leads to the dismissal of 15 employees

GM’s legal department reportedly being investigated in internal inquiry, company pays record fine

Economic loss is focus of Bankruptcy Court proceeding related to GM recall

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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