Tom Girardi scandal puts focus on reporting corrupt lawyers

When a blue-ribbon commission met in 2015 to improve the ethics rules for attorneys in California, a federal prosecutor named George Cardona was hired to research a proposed rule that would require attorneys to report misconduct by colleagues.

Forty-seven states already had reporting laws, and two others had laws requiring attorneys to make such reports. California was the only exception. In the Golden State, there was no expectation—let alone an obligation—that attorneys would bring wrongdoing within their ranks to the attention of the authorities, no matter how egregious or harmful the wrongdoing.

Nevertheless, after much debate, Cardona and the majority of commissioners rejected the proposal.

Seven years later, Cardona has a new job and a different opinion. As chief prosecutor, or chief prosecutor of attorneys, he grapples daily with the debris of the Tom Girardi scandal, in which one of the state’s most prominent attorneys got away with embezzling client funds for decades.

“One of my primary goals is to restore confidence in the discipline system. And I think ultimately, adopting such a rule could help,” Cardona recently told The Times.

California’s legal community of 266,000 attorneys is the largest in the country, has long resisted a mandatory registration law. Some opponents have cited the state’s uniquely sweeping client confidentiality obligations, while others have expressed a general disdain for talking about a fellow professional, regardless of how compromised.

The feeling that reporting unethical behavior is disloyal is so pervasive in California that many attorneys and the State Bar, the public agency that oversees the area of ​​law, have used mob jargon to describe the requirement as a “snitch.” – or to designate “advice” rule.

This is contrary to the prevailing opinion in other states. In Louisiana, where one version of the rule has been on the books for 35 years, “it’s not the subject of much conversation or fear,” said Charles Plattsmier, who has been the chief prosecutor in the Louisiana Office of Disciplinary Counsel since 1996. Attorneys “recognize that it’s a duty they have and we get pretty good compliance.”

Although the number of mandatory reports he receives is small, he said, “these are usually some of the most important reports we receive. It brings to our attention some of the most serious wrongdoings that we need to act on quickly to alert the public.”

In Girardi’s case, there was evidence in court cases as early as the 1990s that he misused settlement funds and bilked colleagues for attorneys’ fees, but fellow attorneys said they were reluctant to turn the powerful trial attorney over to prosecutors. Girardi cultivated influence with agency investigators and other officials, and avoided discipline until his company collapsed two years ago.

As a matter of fact, It was attorneys not in California but in a state with a strict registration law – Illinois – that finally brought Girardi down. In 2020, a Chicago law firm that worked with him in a plane crash lawsuit went to the judge handling the case over millions of dollars the LA attorney failed to pay widows and orphans.

US District Judge Thomas Durkin in Chicago referred Girardi to federal prosecutors for investigation and opened an investigation into what two other attorneys at his firm, Girardi Keese, knew and did about the suppressed plane crash settlements.

Testimony at a hearing last year showed that Girardi’s son-in-law, David Lira, and another senior attorney for the firm, Keith Griffin, knew he had withheld severance pay and sent letters of false excuses to the grieving families. Neither of them reported Girardi to prosecutors — and in fact, they weren’t required to do so under California rules.

“I am satisfied that Mr. Griffin and Mr. Lira knew those letters were outrageously false,” the judge said during a hearing. He has yet to decide whether to despise the couple.

Both Lira and Griffin have denied wrongdoing, saying they are employees of the company who had no control over their boss’s actions or handling of money.

Other testimony underscored the idea that Girardi’s ethical failings were widely known in his home state. Two witnesses from the Chicago law firm testified that Robert Finnerty, who had worked at Girardi Keese for years, consulted another LA attorney, Robert Finnerty, and advised them to find a quiet solution to the missing settlement funds.

“Everyone knows Tom has been stealing money for years,” Chicago attorney Jay Edelson quoted Finnerty as saying. Edelson testified that the seemingly tacit acceptance of Girardi’s theft disgusted him. “After that I had to shower about 15 times.”

Finnerty did not testify at the hearing. In an interview, he denied the statement: “I didn’t say any of those words.” He admitted knowing Girardi had stolen millions from another client, a fire victim and his family, two years earlier, prompting him to leave the firm. He said he was investigating at the time whether California had a reporting law.

“I was surprised we didn’t have one,” he said. He did not notify the authorities but did help the fire victim’s family to secure a conviction against Girardi.

According to correspondence with Edelson verified by The Times, prosecutors are investigating Girardi’s colleagues Lira and Griffin for representing the plane crash clients. In a letter last year, a prosecutor wrote to a prosecutor’s office that the lack of a reporting law precluded a full investigation into what they knew of corruption at the company.

Edelson, whose firm was seeking a fuller investigation, said prosecutors at the prosecutor’s office called the law a “spy rule” over the phone. The phrase also appeared in a prosecutor’s publication a dozen years ago.

Cardona, the bar association’s chief prosecutor, said he found the nickname “unfortunate,” adding, “It should be seen as a rule that would place fundamental duties on attorneys to engage in ensuring that the profession functions appropriately.”

Reporting laws in other states are based on a model rule from the American Bar Assn. 1983: “An attorney who knows that another attorney has committed an infringement … which raises a material question as to the probity, good faith, or fitness in other respects of that attorney shall notify the appropriate professional body.”

Laws vary from state to state, with some jurisdictions imposing stricter or looser standards for misconduct to be reported, and Georgia and Washington use language that makes reporting a colleague an expectation but not a requirement.

There is no publicly available current data on how often attorneys in states with the laws report wrongdoing or how often those complaints lead to fruitful investigations.

Some states, including Louisiana, have long cracked down on those who fail to produce mandatory reports. The most dramatic case in Bayou state involved a former prosecutor who was dying of cancer and confided to a lawyer friend that he had withheld exculpatory blood in a case years earlier.

The friend did not alert the authorities. Five years later, a man the former prosecutor had charged with murder came close to being killed by lethal injection. His defense uncovered the exculpatory bloodstains just a month before his scheduled execution. The lawyer friend then came forward and testified at a hearing about the former prosecutor’s confession, but officials still prosecuted him for violating the Reporting Act. He retained his license but was publicly reprimanded.

California first considered and rejected a reporting law in the 1980s. The legal community traditionally considered itself too large and established to be advised by an outside group like the ABA. In addition, some attorneys have found it difficult to comply with the state’s sweeping confidentiality obligations, which require an attorney to keep confidential any information he or she obtains through representing a client unless the client agrees otherwise . (Attorneys are permitted to disclose confidential information in order to “prevent a criminal act which the attorney reasonably believes is likely to result in death or serious physical injury to any person.”)

Two decades later, in 2010, a state attorneys’ commission presented what appeared to be a solution, a proposal that would require attorneys to report wrongdoing if it didn’t violate their confidentiality obligations and the misconduct amounted to a “felony felony.”

Kevin Mohr, a professor at Western State College of Law and adviser to the commission, knew the idea was controversial among common attorneys across the state, but he said: “I felt the proposed rule was sufficiently nuanced [State Bar’s governing board] might accept it.”

They have not. After controversial debates, in which some speakers mockingly spoke of “snitching”, the measure was defeated. A re-examination in 2016 also failed.

“There was… questioning how effective that would be,” Cardona recalled of that decision.

Although he has reconsidered his position, other commissioners interviewed said they had not.

Toby Rothschild, the former General Counsel of the Legal Aid Foundation of LA, said a lawyer’s job is to represent clients.

“Clapping isn’t one of them,” he said. Although some lawyers voluntarily report wrongdoing, he said “there should be a verdict. A lawyer should be able to say… Will filing a complaint help or hurt my client?”

Another commissioner, Glendale Attorney James Ham, described a mandatory reporting law as “window dressing” that would do little to stop actual wrongdoing and unleash a spate of unsubstantiated reports.

“Lawyers are constantly trying to complain that the other side broke this rule or that rule,” Ham said. “A spy rule would only make it worse.”

Similar predictions were made a decade ago when Kentucky became one of the last states to adopt a version of the mandatory rule.

“There was concern that there would be a ‘tsunami’ of attorneys against attorneys if the rule went into effect,” said Jane Herrick, chief attorney for the Kentucky Bar Association, in an email. “It never happened.”

She said her office has never penalized anyone for not turning in a colleague, but that attorneys “generally comply.”

Many who oppose the laws point out that there is nothing stopping California attorneys from reporting each other to prosecutors right now. Proponents find this argument unconvincing.

“It’s about norms. It changes normal behavior,” said Tim Casey, a professor at the California Western School of Law. “Having an obligation … in a way gives attorneys the opportunity to say, ‘I didn’t have a choice here, I had to report this.'”