By Deborah Wolfe
One of the many facets of serving on the SDCBA’s Legal Ethics Committee (“LEC”) (in addition to penning articles for “Ethics in Brief “and “For the Record”) includes providing MCLE seminars for other lawyers focusing on legal ethics requirements. I frequently observe on such occasions the panicked looks on attendees’ faces when something I’ve said makes them fearful about possibly having missed a conflict of interest situation, or providing a client with appropriate disclosures within ethical boundaries. The purpose of the seminars is not to scare practitioners into compliance, but merely to remind them of the high standards lawyers are expected to meet. Lawyers’ ethics require us to put our clients’ interests ahead of our own; no other profession requires such an extreme level of duty to one’s clients. To the point, Business & Professions Code section 6068(e) requires lawyers to maintain the confidences of our clients at “every peril” to ourselves. I have always interpreted this section to mean that even faced with a loaded gun, I should take a bullet rather than betray any client confidence or secret. Despite its antiquated language, subsequent case law and State Bar decisions have held this section to convey that in addition to confidences and secrets, it requires lawyers to maintain the highest level of fiduciary duty and undivided loyalty to their clients.
The idea behind keeping lawyers up to speed with legal ethics information, and meeting the rather modest requirement of 4 hours of required legal ethics training for every three years’ MCLE requirement, is to uphold these lofty standards, to maintain the dignity and respect of our profession as a whole. The agency behind enforcing these requirements, The State Bar of California, is supposed to be a consumer protection agency — not a protectionist guild for lawyers. I and many of my fellow LEC members also undertake the role of Special Deputy Counsel for the Office of Chief Trial Counsel(“OTC”), the prosecutorial agency within the State Bar, on the occasions when the OCT would have a conflict of interest in pursuing a particular lawyer. Special Deputies are supervised by other outside attorneys who have been appointed by the State Bar to assign and to oversee the activities of Special Deputies in acting as both investigators and if necessary, prosecutors in enforcing discipline. Just as the OCT is supposed to do, the Special Deputies are to conduct investigations, interview witnesses, request and review documents, file charges that can be proven by “clear and convincing” evidence, and try cases before the State Bar Court, should the situation warrant it. For many years, the compensation paid to Special Deputies was nominal — $100 per hour — or pro bono, at the Special Deputy’s request. Recently, the hourly rate has increased to the slightly more reasonable amount of $250 per hour. I know from personal experience how seriously Special Deputies take on these assignments, and how hard they work to ensure fairness to lawyers being investigated with the idea of maintaining the standards of the legal profession.
When a Special Deputy is assigned to a particular investigation, after having cleared any possible conflicts of interest between the complaining witness, respondent, and other involved parties and witnesses, the strictest confidence is observed. Meaning that the Special Deputy communicates about the investigation only with their supervising attorney, until the matter is filed (or not) as a State Bar complaint.
Which brings us to the title of this article. Unless you have been living under a rock for the past two years, as a legal practitioner you are no doubt aware of the tragic results of the State Bar’s failure to impose discipline on Los Angeles attorney Tom Girardi. Girardi has apparently been “robbing Peter to pay Paul” from his client trust account — to which only he had access and signing authority — for more than 20 years. How did this happen? While all of the facts have not been fully discovered, or at least, publicly disclosed[1], the gist of it is that Girardi himself cultivated close friendships and associations with individuals in highly placed positions within the State Bar. One in particular, is reported to have received over $600,000 from Girardi, in addition to perks such as trips in Girardi’s private jet, football game tickets, dinners at the prestigious Jonathan Club in Los Angeles, and other benefits. Girardi employed two of the official’s children in his law office, and provided work to the official’s wife, an accountant. All during the time that the official was employed by the State Bar. At some point, the official made a complaint against his employer, the State Bar, on which Girardi represented him. From that time on, any time a complaint was made by anyone against Girardi, Girardi invoked his right to “unbiased” counsel outside of the OTC. Hundreds of consumer complaints were made against Girardi over the subsequent years, all being assigned out to individual Special Deputies, who were not permitted by the Rules to disclose the investigations nor their results with anyone except their supervising counsel.
Somehow, despite stealing millions of dollars from his injured and grieving clients, Girardi was never formally disciplined by the State Bar until 2022. It wasn’t the State Bar which uncovered Girardi’s theft. Instead, one of Girardi’s co-counsel, an Illinois lawyer, who also represented victims of an Indonesian airline crash, had asked and then demanded, an accounting of the funds Girardi had received from the settlement. That attorney finally blew the whistle on Girardi. A cascade of facts came out that showed the millions of dollars Girardi had received on behalf of his clients in that case were only the tip of the iceberg. The full extent of Girardi’s theft is still being investigated. After an expose in the Los Angeles Times, the State Bar took on an outside investigation of Girardi, and what had happened within the organization to allow Girardi’s massive malfeasance. Then the reports came from a law firm tasked with undertaking an outside investigation. The report unmasked not only the State Bar described above misdeeds, but those of numerous others within the State Bar.
The State Bar, in a classic case of “locking the barn door after the horses have escaped”, took action in the form of imposing stringent new trust accounting rules and oversight of ALL California attorneys (known as CTAPP). The Bar has not been shy about imposing sanctions, and taking a hard line against any attorney who can’t account for every penny in their client trust accounts ever since. Being “just an associate” doesn’t spare an attorney from this requirement.
Meanwhile, on September 7, 2023, a class action lawsuit was filed in LA Superior Court against a number of individuals formerly employed by the State Bar. The list of defendants includes Joe Dunn — the former Executive Director and California State Senator, Tom Layton, and after a government claim was filed and rejected, the State Bar was named as a defendant. In summary, the Bar is charged with gross negligence, reckless misconduct, negligent supervision, intentional infliction of emotional distress, and civil conspiracy, along with violations of the government tort claims act, for its failure to impose discipline long ago on Girardi, before his clients had lost the millions of dollars due to them that Girardi cavalierly stole. From his Client Trust account. The Plaintiffs, Ana and Arturo Agaton, had hired Girardi to represent them in a wrongful death case. Their 7-year-old son died from a brain tumor caused by toxic waste from a nearby cement plant. The total recovered by Girardi on behalf of them and other victims in settlement was $31,000,000. The Agatons haven’t seen a penny.
As to what will happen as a result of this litigation, none of us can know. But what I can tell you is that Girardi’s deceit and the State Bar’s failure to take action is now going to make it very difficult on all California lawyers in terms of avoiding discipline or expecting mercy for violations of any of the Rules of Professional Conduct. The reason for this article is to provide a Word to the Wise: Read the Rules. Know what you are responsible for. And reconcile your client trust account every month.
[1] Two reports, one redacted, of the results of independent investigations have been publicly disclosed and disseminated to all members of the State Bar, and to outside news sources. Only the publicly available information is referenced in this article.
Another fantastic article by a wonderful lawyer!