Legal Ethics

Pointing The Finger At The California Bar After Major Legal Scandal

The role of the California Bar in the Tom Girardi scandal.

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Thomas Girardi

The utter collapse of the legal career of Tom Girardi is one of the biggest legal stories (not having to do with COVID-19 or the 2020 election) of the last 12 months. It’s been called an “almost Shakespearean tragedy.”

The toxic torts lawyer who rose to national prominence thanks to Erin Brockovitch, declared bankruptcy in December (as did his firm Girardi Keese), following allegations he misappropriated client funds designated for the families of victims of the 2018 Lion Air crash. His assets have mostly been frozen. A federal judge ordered the appointment of an interim trustee “to immediately take possession of the books and records” of what money he has and who he owes. His own lawyers have suggested Girardi, 81, is no longer competent and his brother says he suffers from short-term memory loss. Oh, and his wife of 21 years, Real Housewives of Beverly Hills star Erica Jayne, filed for divorce.

Though all the details of the Girardi financial labyrinth are still being sussed out by the courts, one thing we know is that, despite complaints about the attorney to the California Bar, his record remained “pristine.” The Los Angeles Times launched an investigation to figure out exactly how that happened:

Yet through it all, Girardi’s record with the State Bar of California, the government agency that regulates attorneys, remained pristine. The bar took no action to warn the public despite receiving what The Times has learned were multiple complaints. That spotless license allowed him to continue marketing himself as one of the nation’s most renowned civil lawyers, and to sign up thousands of new clients, some of whom would later say he absconded with millions of dollars of their settlement money.

The headline of that investigation by Harriet Ryan and Matt Hamilton declares “Tom Girardi seduced the State Bar,” and provides a deep dive into how “he was able to stay in the bar’s good graces for decades while attorneys accused of similar wrongdoing were reprimanded, suspended or disbarred.”

What’s revealed by Ryan and Hamilton are Bar officials lavished with expensive gifts that at least give the appearance of impropriety:

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Girardi cultivated close relationships with bar officials that at times appeared improper. Agency staffers received annual invitations to a Las Vegas legal conference, where Girardi hosted over-the-top parties at the Wynn casino featuring Jay Leno and other celebrity entertainers, according to attendees, event programs and an internal bar investigation.

And:

After the bar’s executive director, a longtime Girardi pal, violated policy by using a state credit card to pay for a trip to Mongolia, the Girardi Keese law firm sent a $5,000 check to reimburse the agency, according to the internal investigation and court records.

While under investigation for misconduct in 2010, Girardi bankrolled a lavish retirement bash for the chief justice of the state Supreme Court, which oversees the bar, even booking crooner Paul Anka to perform, according to news reports, court records and interviews with attendees.

They also delve into Girardi’s relationship with Bar investigator Tom Layton:

He forged a particularly tight relationship with a bar investigator named Tom Layton. Over the decade and a half Layton worked at the bar, Girardi routinely treated him to pricey meals at the Jonathan Club, Morton’s and the Palm, according to Layton’s sworn testimony. The investigator rode on Girardi’s private jet and two of his children got jobs at Girardi Keese, according to the testimony and an online resume. When he and his wife were sued by the contractor building their “dream house,” Girardi provided years of free legal work, records of the case show.

There was open talk at the agency about whether the legal titan’s connections had shielded him from discipline, according to interviews with more than 15 current and former bar officials.

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Though Layton says he never investigated complaints against Girardi Keese, the Times’s reporting reveals a strikingly close relationship between the pair:

He and Girardi, two decades his senior, were often seen side-by-side at political fundraisers and restaurants, according to interviews with associates and sworn testimony. Girardi held extravagant Super Bowl parties and annual Christmas feasts, where Layton mingled with a powerful crowd of judges, attorneys and politicians.

With Girardi’s support, Layton also became known for helping ambitious attorneys who sought judgeships. He assisted governors Gray Davis and Arnold Schwarzenegger as they vetted applicants, according to Layton’s sworn testimony and news accounts.

His official duties as a bar investigator were less high profile. The post paid under $42,000 a year when he started in 1999, payroll data show, and consisted mainly of interviewing disgruntled clients and tracking down records. It did give him access to a river of confidential information about lawyers and their alleged misdeeds.

It’s unclear what Layton knew about complaints that came in against Girardi over the years. After he left the agency in 2015, he was questioned under oath about his relationship with the attorney, and insisted he never worked on an investigation involving Girardi Keese.

Layton’s two children also worked at Girardi Keese at various points. Additionally, Girardi represented Layton pro bono in a case with a contractor over renovations to Layton’s home.

State law caps the value of gifts or services many public employees can accept from one individual, with the current limit at $520 per year. Investigators like Layton, however, were not covered by the law until 2014, the final year of the contractor litigation.

That year, he did not list Girardi’s legal services as a gift in a mandatory disclosure form. It’s unclear if Girardi Keese was still working for free. The value of Girardi’s legal work was not disclosed, but his opposing counsel’s total fees tallied in court papers offer some idea: $114,000.

Ann Ravel, former chair of the California Fair Political Practices Commission, which enforces public employee ethics laws, called the free legal representation “incredible.”

“There are some exemptions for gifts, but this would not be one of them,” Ravel said, adding, “Not thousands of dollars for someone who clearly would come under the authority of the individual who is receiving those gifts.”

The LA Times uncovered many dissatisfied clients and subsequent actions: “[Girardi] and the firm have been sued at least 45 times for legal malpractice or misappropriation of client money, according to court dockets. In at least 14 other cases, attorneys or expert consultants have alleged he stiffed them out of fees.”

It wasn’t just financial mismanagement — as serious as that is — that was alleged against Girardi over the years. In one case filed by Nicaraguan banana workers against Dole over the use of a particular pesticide, a judgment was entered against “Dole Food Corporation” in Nicaragua; the only problem is that entity does not exist, it is Dole Food Company that operated the plantations. However, when Girardi, working with other attorneys, filed papers in the American court system to collect, the name of the defendant was changed. And he faced rebuke and a fine from the federal court system as a result:

Girardi, who claimed he hadn’t read the court papers before filing, was found to have “recklessly” made false statements and fined $125,000. In a recent interview, Alex Kozinski, then chief judge of the U.S. 9th Circuit Court of Appeals, described it as “about as serious a case of misconduct as I had ever seen.”

[Yes, the LA Times cites disgraced former judge Alex Kozinski opining about legal ethics with ZERO sense of irony or even acknowledgement that Kozinski retired amid a sexual harassment scandal that rocked the legal world. They go further, using him as the moral authority expressing his shock when the state bar declined to impose further sanctions on Girardi:

Kozinski described the outcome as “very surprising.” Referencing the recent revelations about Girardi, he said that if the bar had taken its investigation more seriously, “Maybe some of this would never have happened.”

The effort to rehabilitate Kozinski and make him into a respected legal commentator continues.]

But what’s notable about all the allegations against Girardi, is the underlying sense… a bunch of people had throughout the years. Munger, Tolles & Olson was hired to do an investigation into Layton’s role at the Bar and others working there who could be serving “private or personal agendas.” And they pointed out Girardi’s outsized role at the Bar:

Though they hadn’t uncovered instances of misconduct involving Girardi, the investigators [at Munger] concluded, it was “striking” how frequently he and his firm turned up in their investigation.

“The closeness of the relationship between some senior managers and that firm does raise potentially troubling perceptions that the Board should take action to rectify going forward,” the Munger Tolles lawyers wrote.

For their part, a state bar spokeswoman cited the confidentiality of bar investigations when questioned about the relationship between the bar and Girardi, and went on to note:

“Beyond those constraints is the reality that much of what you are asking about concerns a time period many years past,” the spokeswoman said in a statement. “The current Board of Trustees and staff leadership team have no knowledge of the information you are seeking.”

The Times’s investigation is a great dive into the machination of the California Bar. And while I don’t know if the promised “seduction” happened, it definitely isn’t a great look for the Bar.

headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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