There’s a heartbreaking moment deep in the internal investigation report GM released Thursday, detailing the company’s botched response to a sometimes fatal defect in Cobalt ignition switches. A young lawyer named Nabeel Peracha, who had joined GM in April 2012, was at a meeting just a few months later with other GM lawyers. Their topic was the settlement of a West Virginia product liability case stemming from a crash in 2009 of a Chevrolet Cobalt that skidded on black ice, ran off the road and hit two trees. The front-seat passenger sustained head injuries when the Cobalt’s airbag failed to deploy.
The crash investigation showed that the car’s ignition switch was off at the time of the impact. That was potentially a big problem for GM, according to its outside defense lawyers at Eckert Seamans, because the victim’s expert had turned up a 2007 Indiana University study identifying a link between Cobalt ignition switch defects and air-bag deployment failures, as well as a GM service bulletin from 2006 that noted the Cobalt’s unexplained stalling problem. Moreover, the lawyers from Eckert Seamans warned, the plaintiff’s lawyer knew about other Cobalt crash cases in which ignition switches were in the off position and the air bags never deployed. If GM didn’t settle, the lawyers said, it risked seven-figure punitive damages.
The in-house lawyers at the weekly Roundtable meeting to discuss important settlements agreed that GM’s litigation posture was only going to get worse, so it made sense to settle. Peracha, the rookie lawyer, piped up: Considering the Eckert Seamans evaluation of Cobalt problems, why hadn’t GM issued a recall on the cars? According to the GM report, “The response from the other attorneys was that engineering did not know how to fix the problem, that the incident rate was low, and that ‘we told engineering and they’re looking into it.’” Almost two years later — after the Cobalt defect exploded into a huge corporate scandal — Peracha told GM investigator Anton Valukas of Jenner & Block that the other GM lawyers at the 2012 meeting, who’d been at the company longer than he had and had been hearing about these Cobalt ignition-switch cases since 2006, conveyed the impression that they had already done everything they could.
Valukas concluded — resoundingly — that they had not. In fact, one of the most powerful and disturbing themes of the former prosecutor’s 276-page report is how many times GM’s in-house lawyers seemed to disregard opportunities to mitigate the crisis their company is now mired in. Valukas’ firm, of course, has worked closely with the GM legal department as one of the company’s regular outside counsel, so skeptics may question the report’s implication that GM’s in-house attorneys weren’t badly intended when they failed over the course of more than seven years to sound alarms about the Cobalt’s safety defect. No one, however, can doubt that Valukas and his Jenner colleagues believe GM’s lawyers didn’t serve their client — or GM’s customers — well enough.
Corporate lawyers ought to play “a critical and unique role” in identifying and resolving safety concerns, Valukas said in a concluding section of the report. He suggested various improvements in GM’s communications, training and procedures for lawyers to make sure the company doesn’t repeat the Cobalt fiasco. Those are helpful, I suppose, but for lawyers, the real message of Valukas’s report is that when your decisions can have fatal consequences, it’s not enough to say, “We tried,” or “We did enough.”