Former Girardi Keese lawyers face troublesome ethics questions

As former lawyers at Girardi Keese are trying to avoid responsibility for withholding client funds, ethics lawyers see other potential issues on the horizon.

After allegations that Thomas V. Girardi stole settlement money from the families of the passengers who died in a Boeing jet crash in Indonesia, U.S. Judge Thomas M. Durkin of the Northern District of Illinois quizzed former lawyers at the firm on any role they might have had in an alleged embezzlement.

A filing made on Jan. 8 by Jay Edelson of Edelson PC in Chicago, who represented clients in the Boeing case alongside Girardi, also questioned Los Angeles-based lawyers Keith D. Griffin and David R. Lira’s arguments that they did not have access to the client trust fund.

According to Edelson, Griffin and Lira, who is Girardi’s son-in-law, had been presented as partners in court and in newspaper ads, and also that Lira was a signatory on the account. In re: Lion Air Flight JT 601 Crash, 18-CV07686 (N.D. Ill., filed Nov. 19, 2018).

Griffin and Lira have instead argued that Girardi was the sole proprietor of the firm with access to client funds. Lira stated in court documents that he was never a partner, but a salaried employee.

Griffin made similar statements: that he was not a signatory on the firm’s bank accounts and could not sign checks for the law firm client trust accounts or operating accounts.

According to Edward J. McIntyre, an ethics lawyer in San Diego, even if the lawyers had no access to client trust fund accounts, they had other obligations to make sure that the payments were distributed under the Business and Professions Code Section 6103, which concerns court orders.

“If they knew, as their declarations say, that Mr. Girardi was not obeying those orders — even accepting their statements that from a banking perspective they had no authority over the client trust account — I believe they had an ethical obligation to inform the court that they could not carry out its order and why,” McIntyre said.

In court documents, three former employees also submitted declarations testifying to Girardi’s stronghold over the firm and its bank accounts. The lawyers worked at the firm for more than 20 years.

Griffin and Lira said that they had urged Girardi to pay out the funds and he assured them that he had it under control.

“The rules are written such that a subordinate attorney cannot hide behind the orders of their supervising attorney when told to clearly breach the ethical duties they owe to their clients,” said Carl I.S. Mueller at the Maloney Firm APC.

Kendra L. Basner, partner at O’Rielly & Roche LLP, pointed out that while each attorney working for a client is obligated to make sure ethics rules are followed, Girardi’s control over the firm put them in a precarious situation.

“When you’re an individual who is trying to follow the rules and you are precluded from doing the right thing because you physically don’t have access to the trust account, you don’t have the authority with the banks to be able to withdraw that money for the client, what do you do?” Basner asked.

Attorneys who have stated publicly that they were employees and not partners at Girardi Keese could argue that they had satisfied their obligations, Basner said.

“These ‘partners’ and the other attorneys will have to look to the 5.2 rule for a subordinate attorney, which may allow them to argue that, ‘We communicated to Girardi that we wanted the settlement money to be paid. We were begging him to do so, so we’ve satisfied our obligation because we couldn’t physically force him to do it,’” Basner said.

But McIntyre said other issues could arise if attorneys at the firm presented themselves as partners.

“If these lawyers were holding themselves out as partners of Girardi Keese, but were only associates and paid employees, then they should have concerns about violation of Rule 7.1, making false or misleading communications about themselves when advertising their services,” McIntyre said.

Lawyers for Griffin and Lira declined to comment.