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GM Attorneys Axed



June 11, 2014 – Comments (0) | RELATED TICKERS: GM

Board: Macro Economics

Author: notehound

Among the folks in any public company who work hard for their pay, I can say from personal experience that the in-house legal staff deserve every dime they earn. The jobs of in-house counsel, compliance counsel and litigation counsel rank among the most difficult work in many companies for a number of reasons. Among them is the delicate balancing act of advising management of the risks associated with any particular policy, practice or product, without becoming such a naysayer that management decides to get rid of you for being an obstacle to their business.

The following excerpts from an article in Corporate Counsel magazine indicate that GM decided to get rid of some of its long-employed in-house legal, compliance and litigation staff as a result of its internal investigation into the poor handling of the ignition switch recall.

...GM CEO Mary Barra said Thursday that 15 high-level employees were “removed”; presumably that means some were allowed to retire. “Some were removed because of what we consider misconduct or incompetence,” Barra said. “Others have been relieved because they simply didn’t do enough: They didn’t take responsibility; didn’t act with any sense of urgency.”
Barra and GM declined to release details on those who were removed, but names have leaked out to various news media.... names of the departed were sprinkled throughout the internal investigation report that the company released Thursday.

Among those reported ousted:

•Michael J. Robinson, vice president for environmental, sustainability and regulatory affairs since October 2009, and previously general counsel for GM North America for one year. Robinson, 59, joined GM in 1984 and has held a number of positions on the legal staff... GM compliance activities and led development of the company’s “Guidelines for Employee Conduct.”

•Lawrence Buonomo, administrative head of product litigation in GM's legal department and, since March 2012, chairman of the legal review committees that decided whether to settle significant lawsuits... Buonomo joined GM 20 years ago as a litigation attorney...

•William Kemp, counsel for GM’s global engineering organization, who was widely regarded as GM’s most knowledgeable, experienced and trusted safety lawyer, according to the report. He served as liaison between the engineers and the GC’s office, and reported directly to the North America GC. He also sat on the legal review committees that decided settlements in the fatal crashes since 2006 but, according to the report, never alerted [GM's General Counsel] to the ignition-switch problem.

•Jennifer Sevigny, an attorney who leads GM's field product assessment group. As head of this group, Sevigny often worked with the litigation staff on lawsuits and legal claims. She is mentioned numerous times in the report as having worked on assessments of the ignition problem...

GM also dismissed two department directors for their roles in not identifying and fixing the safety issue. They were Gay Kent, general director of vehicle safety and crashworthiness, and M. Carmen Benavides, who also served as director of product investigations and safety regulations until March, when she was reassigned to director of safety improvement initiatives...

I don't know about the corporate culture at GM, but I know that in many organizations, management does not want to know about the specific problems that are handled by employees in regulatory affairs or discovered in compliance audits. Instead, the senior managers just want to know that any problems have been fixed or that they are not serious.

When it comes to disclosure of legal issues and risk factors, Sarbanes-Oxley attaches criminal liability to officers, such as General Counsel, CFO and CEO, whose signatures appear on SEC disclosures. For this reason, many in senior management prefer to be kept ignorant of specific risks and bad practices in order to maintain "plausible deniability."

It seems to me that some of the ousted high-level lawyers, compliance, regulatory and litigation folks who "failed to bring the ignition switch problem to management's attention" had been trained and steeped in a corporate culture designed to keep management ignorant of the specifics of safety and litigation risks - otherwise they would never have survived for 20 or 30 years in the GM organization.

Sometimes, when a person works in the legal or regulatory compliance department, they feel like they need "whistleblower protections" in order to avoid being fired every time they have to bring bad news to management's attention.

Having been in the situation of having to inform senior management of lack of internal controls and poor compliance practices, I can honestly say there is no way to do your job without being constantly at risk of being fired for actually doing your job.

Darned if you do, darned if you don't...

It's high time that some aspects of corporate culture start to change. Unfortunately, in the case of GM and auto manufacturers in general, it seems that people have to die in order for the corporate culture to change. I only hope that the company will empower the remaining compliance, regulatory and litigation staff to actually report problems and suggest changes in the future without fear of retaliation. 

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