General Motors faces a litigation plague of biblical proportions. Last month the manufacturer recalled 1.6 million vehicles because of an ignition switch defect that can cause cars to shut down—as in just go dead in the middle of 60-mile-an-hour freeway traffic. Not good. Unless you’re a plaintiffs’ lawyer, in which case, very good. Herewith, four blunt points on the incipient legal mess:
1. For GM, early signs look ominous. Companies make mistakes. We all do. Companies buy insurance to cover the costs of mistakes. This case, however, has the earmarks of something worse than mistakes. As my cousins at Bloomberg News are reporting, GM’s own engineers knew about the ignition problem a full decade before the manufacturer came clean with the recall. Thousands of pages of documents already in the hands of plaintiffs’ lawyers show worried internal discussions among GM employees. Combine consumer deaths—at least a dozen fatalities so far have been linked to ignition flaws in small Chevrolet, Pontiac, and Saturn vehicles—with corporate awareness and a failure to act promptly, and you’re bound to have lawyers alleging a coverup. Which top executives knew what, and when did they know it? GM is refusing to answer media inquiries about how many suits have been filed. You can bet that whatever that figure is today, it will grow in coming weeks.