A recent Corporate Counsel article highlights the potential mistakes GM made in conducting its internal investigation into the ignition-switch failure that led to the recall of 2.2 million GM cars. The article also suggests ways GM could have acted differently to ensure the objectivity of the investigation. Specifically, the article maintains that businesses should hire a team of “outsiders” -- one that does not include the "go-to" law firm that conducts its routine legal work -- to conduct high-stakes internal investigations. And internal investigations are also most likely to be perceived as credible and comprehensive if they involve independent subject-matter experts and are started as soon as possible.
Contrast that advice with the approach GM took to its internal investigation of the ignition-switch failure. As the Corporate Counsel article recounts, GM tapped Michael Milliken, a former prosecutor and in-house lawyer with nearly 40 years of GM experience, to lead its internal investigation in 2011. GM also retained two top-tier law firms with deep GM ties that had considerable experience handling complex internal investigations. The choice of Milliken to lead the investigation was surprising because the company was already under investigation by multiple entities and GM's legal department had become a focus of the investigation, presenting potential conflicts. The selection of outside law firms with GM ties to conduct the investigation -- while understandable due to the pre-existing relationship -- was also a misstep because prosecutors may perceive that affiliated law firms will feel pressure to soften the blow of the investigation's findings to protect the client's reputation and the long-standing attorney-client relationship. That is precisely why some companies, as a general rule, do not hire firms that do routine work for them to conduct internal investigations.
Besides hiring an outside law firm, retaining subject matter experts, and starting the investigation as soon as possible, what else can a company do to ensure the objectivity of an internal investigation? The Corporate Counsel article suggests preparing "a detailed scope of work at the outset, establishing a clear protocol for addressing ancillary issues as they arise (perhaps having separate counsel handle ancillary investigations), and establishing clear lines of communication and periodic reporting procedures." Additionally, it could be useful to consult with the regulatory or investigating agency before starting the investigation to confirm the agency’s criteria for finding an internal investigation credible. As the article notes: "This, of course, may not be possible if a criminal investigation has already been opened, as with GM, but it never hurts to ask—and it could save a lot of time, money and headaches in the long run."