In-house Counsel

GM legal department is reportedly under scrutiny by prosecutors


Employees in the legal department at General Motors are among GM workers reportedly being scrutinized by federal prosecutors who want to know whether evidence of a faulty ignition switch was concealed from regulators.

The Wall Street Journal (sub. req.) reported the news, based on anonymous sources who are familiar with the matter. The probe is part of a larger criminal investigation into whether current and former GM employees made misleading statements to regulators, the story says.

A GM Spokesman told the newspaper that the company is cooperating in the investigation. The concealment probe is at a preliminary stage and could end without any charges, the story says.

GM agreed to pay a $35 million civil penalty in May for delays in responding to defective ignition switches that could change to the “accessory” position, disabling air bags and making steering and braking more difficult. The company launched an internal probe that found “a pattern of incompetence and neglect” but no intentional cover-up of ignition-switch issues. Six in-house lawyers were reportedly among 15 employees fired after the investigation.

University of Richmond law professor Carl Tobias told the Wall Street Journal that prosecutors face high hurdles. “You would need strong evidence,” he said. “You’d have to show [the employees] knew the vehicle was defective, it posed serious risks, and [they] didn’t do anything anyways.”

Attorney-client privilege could also be a problem, unless it is waived by GM or disclosure is allowed under the “crime-fraud” exception, which applies when a lawyer’s services are used to further a crime or fraud.

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