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In-House Attorneys' Duty to Report Problems up the Food Chain

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By Casey C. Sullivan, Esq. on October 29, 2015 12:37 PM

It was one of the biggest product defects ever, a faulty ignition switch in General Motors cars which lead to at least 124 deaths. GM settled a federal investigation over the switches last month for $900 million. Shutting down a series of private lawsuits cost the carmaker another $575 million -- relatively small amounts compared to what might be in store for automakers like Volkswagen.

But if GM and its executives are getting off light, the company's in-house counsel aren't coming away unscathed. If there's one clear lesson to come out of GM's deadly fiasco, it's that in-house attorneys can't ignore problems and have a duty to report issues up the food chain.

Your Job Isn't to Cover Up Problems

As the bodies piled up, GM's in-house attorneys didn't just stay quiet, they actively resisted corrective action. GM's lawyers settled cases that indicated their ignition switches were at least defective, if not deadly, yet the company issued no recall. Its attorneys ignored inquiries from the National Highway Traffic Safety Administration for months, delayed investigations and resisted disclosing the defect.

GM's legal team was not only aware of the problems, it discouraged its junior attorneys from bringing them up. "We told engineering and they're looking in to it," was their response to an in-house attorney who suggested recalling defective cars. The GC and other higher-ups were kept in the dark.

When the Valukas Report, GM's internal postmortem investigation, was released, one thing was abundantly clear: GM's legal department had failed the company and its customers. For those outside of GM, the report highlight's inside counsel's responsibility to escalate potentially damaging, if not disastrous, problems up the food chain.

In-House Attorneys Need to Take Ownership

That report was recently the subject of a panel on GM at the Association of Corporate Counsel's annual meeting in Boston. Allie Wright, associate GC at Allegis Group, said that the report meant that in-house counsel, especially lower-level attorneys, "have to be able to speak up to people who are in control and can make decisions," the National Law Journal reports.

Joseph O'Dea Jr., a commercial litigation partner at Saul Ewing, urged in-house attorneys to be more proactive, according to the NLJ. His advice: "Don't let a meeting conclude without saying who's got ownership. Who owns the issue."

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