Corporate Law

As leaders blame GM lawyers for ignition woes, lawmaker asks: Why wasn't general counsel fired?

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During a Thursday hearing before a U.S. Senate commerce subcommittee, top General Motors Co. officials blamed in-house lawyers for the company’s delay in dealing effectively with a deadly ignition-switch issue that caused 54 accidents and at least 13 deaths over the course of a decade.

But that led the subcommittee’s chair to question why the company’s general counsel, Michael Millikin, is still at the helm, according to the Associated Press, the New York Times (reg. req.) and Reuters.

“How in the world, in the aftermath of this report, did Michael Millikin keep his job?” asked Sen. Claire McCaskill, a Democrat from Missouri. The chair of the consumer protection subcommittee, she was referring to an earlier GM-commissioned internal report by Anton Valukas of Jenner & Block. It found “a pattern of incompetence and neglect” but no intentional cover-up of ignition-switch issues that resulted in a series of recalls of 29 million GM vehicles this year. At least six GM lawyers were fired at the time of the report, although the AP says they got retirement packages.

“I do not understand how the general counsel for a litigation department that had this massive failure of responsibility, how he would be allowed to continue in that important leadership role in this company,” McCaskill added.

McCaskill also pointed the finger at the company’s North America general counsel, reports the Times, telling Millikin “I don’t get how you and Lucy Clark Dougherty still have your jobs. This is either gross negligence or gross incompetence on the part of a lawyer. ”

Backed by GM chief executive officer Mary Barra, who said she needed Millikin on her team and spoke of his character and integrity, the general counsel told the subcommittee that “We had lawyers at GM who didn’t do their jobs, didn’t do what was expected of them. Those lawyers are no longer with the company,” reports the St. Louis Post-Dispatch.

Millikin said he only learned of the ignition-switch issue in February of this year and “immediately took action.” Since then millions of vehicles have been recalled and Millikin said he now has members of the litigation department report to him directly and will personally review serious accident cases that are tried or settle to determine if there is any engineering issue. Previously, the company’s lawyers had authority to settle cases for up to $5 million without notifying the general counsel.

During the hearing, Millikin also announced that Quinn Emanuel Urquhart & Sullivan will conduct an internal investigation of the GM legal department. It isn’t clear who will oversee that probe within GM.

He and Barra resisted suggestions by lawmakers that GM needs to expand the scope of ignition-switch claims that will be covered by a GM compensation fund administered by private practitioner Kenneth Feinberg, reports Reuters.

Millikin said the company does not plan to waive bankruptcy protection for pre-2009 claims and Barra said later recalls of large GM vehicles won’t be covered by the fund, according to the AP.

A Department of Justice investigation of GM is ongoing and Sen. Richard Blumenthal, D-Connecticut, said during the hearing that he expected it to reveal a “cover-up, concealment, deceit and even fraud” amidst the GM legal team.

“The failure of this legal department is stunning,” McCaskill said in her opening remarks, contending that “the culture of lawyering up and Whac-a-Mole” at GM as its in-house counsel defended lawsuits while engineers and investigators knew of safety issues “killed innocent customers of General Motors.”

In an earlier interview, she told the Wall Street Journal (sub. req.), referring to Millikin, “I am not a big believer in blaming people beneath you for problems when you have responsibility over the problem. If the people who worked for him thought he wanted to know, he would have known.”

Related coverage: “Prove GM fraud on court, if you can, bankruptcy judge tells lawyers in ignition-switch cases” “Ex-prosecutor seeks pardon for woman convicted after crash now linked to GM ignition-switch issues”

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