G.M. lawsuit may lead courts to overrule attorney/client privileges

In addition to a host of lawsuits revolving around ignition defects in G.M. vehicles, last week, plaintiffs asked the Manhattan Federal District Court to rule that G.M. and its outside attorneys covered up the defect, an act that may be considered criminal or fraudulent.

This request is made all the more ambitious by the fact that a ruling in favor of the plaintiffs could result in judges overruling the attorney-client privilege that keeps communication regarding a case confidential. According to the crime fraud exception, courts can require the disclosure of not only confidential communication, but also any documents, called work product, that were prepared by the attorneys if the client asked for or was given advice on how to engage in a crime or fraud now or in the future.

As a recent New York Times article points out, G.M. now faces a difficult situation, as the result of its pending settlement with federal prosecutors will have an effect on whether the attorney-client privilege is negated. A guilty plea could support the plaintiffs’ accusation that conversations with G.M.’s attorneys, King & Spalding, were a part of covering up the faulty ignition switch. Likewise, a deferred-prosecution agreement wherein G.M. would pay a major fine to avoid being forced to plead guilty could still involve G.M. admitting to criminal conduct. Both options could help the plaintiffs’ case against G.M. and contribute to a court decision requiring the company and King & Spalding to produce details of their communications.