July 16, 2014 at 10:10 pm

GM revamps legal department, retains outside firm for review

Washington — General Motors Co. has hired an outside law firm to conduct a review of GM’s litigation practices and revised its handling of civil lawsuits to require all serious civil cases of injuries or deaths to be reviewed by the company’s general counsel and engineering staff, the company’s top lawyer will tell the Senate.

GM General Counsel Michael Millikin will tell a Senate Commerce subcommittee on Thursday that the company has taken swift action to respond to the ignition switch crisis. GM admitted to delaying a recall of 2.6 million Cobalt, Ion and other cars for years linked to 13 deaths and 54 crashes.

The outside firm is conducting a “zero based review,” Millikin’s testimony says. GM officials described that approach as meaning the review is starting from scratch.

“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,” Millikin will say, according to a copy of his testimony obtained by The Detroit News. “We now have to correct our mistakes. And, we are. But this is only the beginning. All of us at GM are committed to setting a new industry standard for safety.”

GM CEO Mary Barra, who is also testifying, fired 15 people in the wake of an internal report into the recall, including many longtime company lawyers. That report harshly criticized the GM legal department. She will tell the committee she “aligned the legal staff to help assure greater transparency and information sharing among that staff and other business units across GM.”

Barra will also defend GM’s record setting 29 million vehicles recalled this year in 54 campaigns, including 25.7 million in the United States.

“Yes, we’ve recalled large volumes of past models — a result of our exhaustive review coming out of the ignition switch recall. But, we also conducted 12 recalls of less than 1,000 vehicles and 4 recalls of less than 100 this year. In this way, we are keeping the vehicle populations small and limiting the risk and inconvenience to fewer customers. This demonstrates how quickly we are reacting when we become aware of an issue.”

Millikin disclosed a number of changes at GM. He said GM’s legal staff has been bolstered by “attorneys from two outside law firms to assure the proper level of engagement.” He also disclosed that now “before any settlement or trial of a case involving a fatality or serious bodily injury, the case be brought to me for review, with a focus on any open engineering issues.”

Prior to February, GM lawyers could settle cases for up to $5 million without notifying the general counsel.

“I first learned about the Cobalt ignition switch defect during the first week of February of this year. I immediately took action. Had I learned about it earlier, I would have taken action earlier,” he will say. “I personally have a responsibility to make sure this never happens again.

Millikin said he has reorganized the legal staff “to foster sharing of information and the identification of emerging trends, including elevating a senior attorney to be the chief legal adviser to Jeff Boyer, vice president of Global Vehicle Safety, with a direct reporting line to me and a dotted reporting line to Mark Reuss, executive vice president of Global Product Development.”Millikin said some on the legal staff “failed the company. The GM legal staff is dedicated to helping GM become the leader in automotive safety.”

The panel’s chair, Sen. Claire McCaskill, D-Mo., said in an interview Tuesday she will focus on problems at GM’s legal department in her questions on Thursday, saying “legions of lawyers at GM and the engineers that supported them were clueless.”

McCaskill criticized “the dysfunction that allowed this to happen, and a lot of it sits at the feet of the legal department and so I’ve got a lot questions about that,” she said. She pointed at the failure of GM lawyers to “connect the dots,” and that GM sent dealers safety bulletins “and the legal department didn’t even know about it.” She questioned why the role of some senior GM lawyers were “not really in the Valukas report.”

She said she wasn’t sure whether Millikin should have been fired. “That’s one of the things this hearing is going to help me with,” she said.