Page 22 - CCCA 247020 Magazine Spring 2016

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What began as a simple recall of cars became
front-page news. on february 7, 2014, general
Motors ordered the recall of 800,000 vehicles
due to faulty ignition switches. gM told the
public that the switches could malfunction,
causing the engine to stall and the airbags not
to deploy. gM revealed that it knew as early as
eanwhile another car compa- 2004 about the faculty switches that caused management knew that there was
ny is in the middle of a crisis. something wrong, that the damage
mIn 2014, American and Euro- 124 deaths and 275 people to be injured. is so broad that they had to have
pean regulators noticed discrepan- after an internal investigation conducted by known,” she explains. “So the trust
cies in Volkswagen vehicles when external counsel, 15 executives were fred. by between the companies and the pub-
testing emissions. This was not an lic is undermined.”
accident. Volkswagen programmed the end of 2014, nearly 30 million cars were “With Volkswagen, if there isn’t a
their cars to show low levels of emis- recalled and $900 million was paid out to the regulatory authority, they’re not go-
sions in laboratory testing when in u.s. government for a compensation fund for ing to admit to it,” says Bench. “Tak-
real-world scenarios the car emits up victims’ families. ing ownership of the issue helps
to 40 times the legal limit of nitrogen with corporations in their reliabil-
oxide. By September 2015, under ity. I’ve been practicing law for 29
pressure from U.S. regulators, Volkswagen admitted to cheating. years and in the beginning we said we don’t answer questions
Crises destroy companies. While GM and Volkswagen may except in front of the courts. We can’t do that anymore. Don’t
seem like rare nightmare scenarios, their tales of lies and cover- try to avoid questions. Take your lumps.”
ups can happen to any organization. In-house counsel must be

prepared for the worst and help their organizations be in the Step 1 Know Your Role
best position not only to survive but be better.
GM and Volkswagen are good examples of what should and The frst step in a crisis is to know your role as in-house counsel.
should not be done in a crisis. Even though the automakers Organizations need their legal departments to help create and
have similar issues, both took a very different approach. implement emergency plans. In a crisis, the legal role involves
“Volkswagen is more of the old-style approach, where you issue spotting. Bench recommends having relevant legislation
try to get all the information frst,” says Mary Ellen Bench, City ready digitally and in paper format.
Solicitor for the City of Mississauga. “They deny, confuse and “The frst thing I do is gather as many facts as I can,” says
blame instead of meeting the problem head on. GM reminds Bench. “You have very little time so make sure to get as much
me of Loblaw/Joe Fresh, where they met the problem head on. input as possible. You can’t provide good advice without good
They didn’t justify the problem but dealt with it head on. That facts. We’re incorporated into communications and we have
gets the public confdence.” our checklist. I have all the legislation I need on my iPad and a
Jane Shapiro, SVP National Practice Leader for Crisis Com- box with paper copies in case of an emergency.”
munications at Hill and Knowlton Strategies, describes GM The role of in-house counsel has evolved over the past few
and Volkswagen’s problems as a matter of trust. “With GM and years. Traditionally in-house counsel were responsible for legal
Volkswagen, whether it’s true or not, people believe that senior issues, risk management, liability and regulatory considerations.

22 CCCa MaGazInE | SPRInG 2016 PRInTEMPS