A new rule from the California Supreme Court requires increased oversight among attorneys, a mandate long present in other states, and now here following high profile cases of wrongdoing including now disbarred attorney Thomas Girardi.
“California lawyers now have a duty to report the misconduct of other attorneys,” Jess West, an associate with Hinshaw & Culbertson LLP, said in an email response to the Northern California Record. “This impacts the relationship lawyers have with other lawyers, who now have a responsibility to report to the State Bar if the other has committed a criminal act or engaged in conduct involving, fraud, dishonesty, deceit, etc.
"Hopefully, this duty holds lawyers to a higher standard and brings previously undetected misconduct into light. This has been the rule in most states for many years. It is unusual that California (which is often on the forefront to changes in the law) took so long to adopt the provision.”
According to a State Bar news release, California had considered and rejected the rule two times since 2010.
“Apparently, there were nearly 200 submitted comments opposing the new rule,” West said. “Most of these comments argued that the rule would overwhelm the State Bar disciplinary system and would curb the lawyer/client relationship. In the past, these concerns might have swayed the Bar to reject a misconduct reporting rule. However, the California State Bar has been under intense scrutiny after the Girardi scandal, where one lawyer amassed 205 disciplinary complaints and proceedings alone.”
The rule went into effect earlier this month.
“Whether or not you agree with such a rule, this rule is aimed at fostering integrity and public trust of the legal system,” West said. “While some are worried this ‘snitch’ rule will overwhelm the Bar, or chill the attorney/client relationship, or be used offensively against lawyers by their adversaries, this rule will hopefully expose some crooked lawyers taking advantage of their clients. Additionally, the State Bar has confirmed that lawyers who fail to report conduct as required by Rule 8.3 may be subject to disciplinary action by the State Bar themselves.”
A State Bar letter also outlines reforms brought forth following the Girardi matter.
Before his misconduct was exposed, Thomas Girardi stood as one of the most prominent and influential trial lawyers in California and the U.S. His empire crashed, however, in 2020, when he was first accused by other trial lawyers, led by the Edelson firm, of using settlement funds obtained for the victims of a 2018 plane crash to fuel his own luxurious appetites and lifestyle.
In the years that have followed, reports have revealed he used his influence to create a network of connections to smash and bury a mound of ethical complaints against him in California.
Girardi, 83, has since been disbarred, and faces criminal charges and bankruptcy.
Victor Gómez, executive director of Citizens Against Lawsuit Abuse (CALA) told the Record by email that the new rule inspired by the Girardi debacle should help, as the the misconduct reporting mechanism now also encompasses the courts.
“This is a tremendous rule because the State Bar has a longstanding backlog of attorney cases already and this will certainly lift the burden off the State Bar by being able to report it to the courts,” Gómez said. “The trial bar is extremely influential in California. They donate millions of dollars to legislators to help certain legislators get elected and then encourage them to sponsor bills that promote more litigation. This is called the cycle of lawsuit abuse.”
In the wake of the Girardi case, the State Bar has also launched the Client Trust Account Protection Program (CTAPP), which requires firms to register and comply with requirements and prohibitions applicable to the safekeeping of funds and property of clients.
The CTAPP rule, developed to ensure attorneys comply with their trust accounting responsibilities, went into effect with the beginning of the 2023 licensee renewal cycle.
Failure to comply with CTAPP results in the attorney being administratively enrolled as inactive, Steven Moawad, Special Counsel, State Bar Division of Regulation, said in response to questions from the Record.
“There were originally 1,920 attorneys who were administratively enrolled as inactive,” Moawad said. “As of today, 1,429 attorneys who were put on inactive status due to noncompliance remain there.”
Once attorneys comply with CTAPP’s reporting requirements, including noncompliance and reinstatement fees, they can apply for reinstatement.
“The failure to report, in and of itself, does not necessarily mean that the attorney has mishandled client funds,” Moawad said. “In the future, State Bar will require compliance reviews and, if appropriate, investigative audits, to ensure attorneys are complying with their record-keeping and trust fund handling duties.”
Jonathan Bilyk contributed to this report.