Bloomberg News report
DETROIT (May 21, 2014) — General Motors Co. is overhauling its legal department as the auto maker tries to break down silos that delayed the recall of millions of cars for a defect linked to 13 deaths, according to people familiar with the matter.
GM 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, one of the people said. Mr. Millikin anticipates further changes once an internal investigation is completed in the coming weeks, said the person, who requested anonymity because the matter is private.
Transforming GM's legal culture won't be easy because 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 auto maker 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 U.S. government last week.
“Corporate counsel is a reflection of management,” said James Butler, a Columbus, Ga., lawyer who has fought GM over defects for 25 years and claims a 35-to-0 record against the auto maker. “You have to change the whole culture.”
Legal shakeup
Mary Barra, GM's CEO since January, already has shaken up the car maker's communications, public policy, human-resources and engineering teams. In the legal department, North America General Counsel Lucy Clark Dougherty will advise the newly appointed head of global safety, Jeff Boyer, on legal matters, the people said.
In a statement, GM said Mr. 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.”
The U.S. is investigating why GM took more than a decade to recall Chevrolet Cobalt and Saturn Ion cars with defective ignition switches that could be jarred into the “off” or “accessory” position, cutting power to the car and shutting off the air bags. Last week, the U.S. Transportation Department fined GM $35 million, the maximum allowed by law, for its handling of the recall.
On May 20, GM recalled another 2.42 million vehicles, raising its recall total for the year to more than 13.6 million vehicles.
Sacred cows
Anton Valukas, chairman of the Jenner & Block L.L.C. 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.
Mr. Millikin, who's co-leading the investigation, joined the legal staff in 1977 and was named associate general counsel in 2005, the same time many of the ignition-switch problems came to light. King & Spalding L.L.C., the law firm hired to help Valukas with the internal probe, also has a long history with the company, going back to fuel tank litigation in the 1970s.
