General Motors is overhauling its legal department as the automaker tries to break down bottlenecks that delayed the recall of millions of cars for a defect linked to 13 deaths, people familiar with the matter have told Blomberg News.
One news agency source said GM’s general counsel Michael Millikin has assigned a legal adviser to work with the heads of global safety and vehicle development so information about defects is shared more quickly between departments. He anticipates further changes once an internal investigation is completed in coming weeks, Bloomberg’s source added.
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Bloomberg said transforming GM’s legal culture won’t be easy because in-house lawyers have spent their careers battling to keep potentially incriminating safety information out of the hands of trial lawyers. In one case, lawyers tried to bury an internal memo that calculated the cost to the automaker of fuel-fed fire deaths, according to internal documents reviewed by Bloomberg News. Employees were discouraged from using words including decapitation, deathtrap, eviscerated and mutilating that could be used against GM in court, according to an internal memo released by the US government last week.
In GM’s legal department, North America general counsel Lucy Clark Dougherty will advise the newly appointed head of global safety, Jeff Boyer, on legal matters, the sources said.
In a statement cited by Bloomberg, GM said Millikin, who turns 66 in August, has no “current plans to retire” and will remain in his position “at an important time for the company”.
Anton Valukas, chairman of the Jenner & Block LLC law firm, is leading the internal investigation. He has the remit to follow the facts where they lead and there are no sacred cows, one of the people said. Yet some of the lawyers helping Barra find out what went wrong spent their careers at GM.
‘Breaking down the silos’ between departments will be hard because automakers have been keeping potentially damaging information compartmentalised since the early 1970s, when trial lawyers began targeting carmakers, Steve Hantler, Chrysler’s assistant general counsel from 1990 to 2007, told Bloomberg News.
Sometimes employees offer an opinion about the safety of a part that a plaintiff’s lawyer can use as a “smoking gun”, Hantler added. For example, in 1973 a young GM engineer wrote a memo in which he said it might not make economic sense for the company to pay more than US$2.20 per vehicle to save drivers from fuel-fed fires.
GM lawyers tried to keep the memo from becoming public with one calling it one of the “potentially most harmful and most damaging” internal documents ever produced. Years later, trial lawyers got hold of the memo and used it to suggest that GM had known for years that some of its fuel tanks were unsafe.
Bloomberg noted that GM CEO Mary Barra last month told a senate panel that preliminary results of the Valukas investigation showed that information known in one part of the company wasn’t “communicated as effectively as it should’ve been to other parts”.
