The Girardi Effect on State Bar Discipline (and Us)

By Larry Doyle

the matter of Tom Girardi.

My last column discussed how and why the Legislature squelched the State Bar’s efforts to expand its role from protecting the public from bad lawyers to devoting its energies to ways to close the so-called justice gap. The Legislature did this by amending the Bar’s annual funding authorization bill, AB 2958 (Statutes of 2022, chapter 419), to prohibit the Bar from establishing a regulatory “sandbox." This "sandbox" was supposed to be used to test proposals to increase the legal services available, such as permitting corporate ownership of law firms and allowing lawyers to split legal fees with non-lawyers.

Fans of the “sandbox” claimed that the legislators who inserted the prohibiting language in the Bar’s annual funding legislation (Senate Judiciary Committee Chair Tom Umberg and Assembly Judiciary Committee Chair Mark Stone) were in the thrall of vested “big law” interests that didn’t want the competition. The legislators’ counterargument was succinct and to the point: until the State Bar shows that it can perform its primary job of protecting the public from bad lawyers, it had no business trying to expand its job description.

Exhibit A in the lawmakers’ case:

Thomas V. Girardi was a Los Angeles attorney who was admitted to the Bar in 1965 and rose to become one of the most powerful and influential lawyers in California. His firm, Girardi and Keese, achieved many multi-million-dollar settlements in mass tort and class action suits. Girardi lived a lavish lifestyle consistent with his image. It turns out, however, that Girardi was funding that lifestyle with money that belonged to his clients. Many of those clients filed complaints with the State Bar –some 205 clients over 40 years. None of those complaints went anywhere, for reasons that are still under investigation, but involve allegations of political influence and possible corruption within the Bar’s discipline system, as well as procedural impediments.

The State Bar’s disciplinary system has been under fire for at least a half century, when dissatisfaction with the prior discipline system staffed by volunteer attorneys gave way to the current system of professional prosecutors and a State Bar Court. Since then, the State Auditor has issued regular Statements of Correction to the State Bar, many of which have raised concerns about the efficacy of the discipline system. But most of those audits have dealt with dry issues such as an excessive backlog of unresolved discipline complaints. In contrast, the Girardi case offered the vision of a massively powerful lawyer with extensive political connections, living a lifestyle of excess, using his wealth, connections, and influence with the State Bar to stay above the law.

In the face of outrage going far beyond the usual legal press, the State Bar has taken a number of steps to respond to the Girardi matter. Although these changes will not have any impact on Girardi, they will impact California lawyers in many substantive ways.

The first change the State Bar made was to revisit the language of the statute (Business & Professions Code 6086.1(b)(2)) relating to the circumstances under which confidentiality of disciplinary proceedings can be waived. Historically, the statute had been interpreted to permit publication of disciplinary matters only when necessary to protect consumers from specific attorneys who posed an ongoing threat to consumers. The new interpretation allows the Bar to publicize ongoing discipline against attorneys (like the disbarred Girardi) who no longer pose a threat, but whose actions may serve as a cautionary tale. It also has been used by the Bar to trumpet its actions in politically popular cases, such as charging attorney John Eastman with making false and misleading charges in his efforts to overturn the 2020 presidential election.

The second change implemented by the State Bar was to revise the rules relating to the Client Trust Accounts, which attorneys are required to maintain for their clients.

The Client Trust Account Protection

Program (CTAPP) imposes much stricter reporting requirements on attorneys. In CTAPP’s initial phase, which took effect January 1, 2023, actively licensed attorneys are required to:

• Report annually to the State Bar whether they are responsible for client trust accounts and provide basic account information. Law firms will be able to report account information for lawyers who work for them.

• Complete an annual self-assessment that highlights specific rules and requirements for managing a client trust account.

• Annually certify that they are in compliance with the applicable Rules of Professional Conduct related to safeguarding funds.

The revised rules also give the Bar’s Office of Chief Trial Counsel the authority to audit attorney client trust accounts under circumstances yet to be specified.

The third proposed change inspired by the Girardi affair, at least in part, is a renewed attempt to enact a California version of Model Rule of Professional Conduct 8.3, the so-called “snitch rule” that requires attorneys who are aware of misconduct by another attorney to report it to the State Bar if it raises a “substantial” question about that lawyer’s honesty or fitness to practice. California is one of only three states that has not adopted a variation of this rule, most recently rejecting it as part of the wholesale revision of the California Rules of Professional Conduct that were enacted in November 2018. The argument against the rule is that it risks conflicting with the attorney’s duty of confidentiality and can be abused by attorneys seeking an advantage in litigation.

In the Girardi instance, there’s real doubt that the rule would have made any difference. The State Bar was well aware (through the aforementioned 205 client complaints) that something bad was happening, so it’s not clear what confirmation by lawyers would add. On the other hand, the Girardi case didn’t gain any traction with the State Bar until an allegation was made by an attorney in a case in another state. Whatever the circumstance, there is a real movement in support of adopting such a rule this year. The State Bar’s Board of Trustees recently tasked the Standing Committee on Professional Responsibility and Conduct (COPRAC), which develops and interprets the Rules of Professional Conduct, with reviewing the issue for at least the third time in the past decade. COPRAC has responded with a narrow rule which limits the reporting responsibility only to criminal acts of which the attorney has personal knowledge, and varies the ABA Model Rule in other, smaller ways.

Meanwhile, the Legislature has added its own impetus to the issue with the introduction of SB 42 by Senator Umberg, which would add a new Section 6090.8, duplicating the ABA Model Rule to the State Bar Act. It is possible that both efforts will be successful and both the new Rule of Professional Conduct and B&P Code section will be enacted.

In the meantime, the author of all this sturm und drang reportedly is unaware of the collapse of his former empire and the chaos he has caused. Thomas V. Girardi has been disbarred, and he and his firm have filed for bankruptcy. His house and his possessions have been sold, he is suffering from Alzheimer’s disease, is subject to conservatorship, and is in an assisted living facility. Not exactly justice, but maybe a bitter irony.