Some think Girardi downfall could tarnish the profession

There is a growing concern among some trial lawyers over how the spectacular downfall of Thomas V. Girardi might negatively impact the plaintiffs' bar.

"I think that we have to recognize that it's embarrassing," said Brian S. Kabateck of Kabateck LLP. "And I think that the plaintiffs' bar has a responsibility to clean up and to take some overall general responsibility for what's happened here."

The famous plaintiffs bar is accused of stealing millions of dollars from clients. Creditors have forced him into bankruptcy and the State Bar has started disbarment proceedings.

Girardi's national stature along with that of his chanteuse wife, Erika Jayne, a member of the cast of "The Real Housewives of Beverly Hills" TV show, have given the saga a tabloid narrative that allowed the alleged wrongdoing to penetrate into popular culture in a way most attorney scandals do not.

Kabateck said it is clear that the plaintiffs' bar must do more to police itself.

"We came out of a time when President George H.W. Bush made a comment about trial lawyers in the State of the Union speech and we were constantly in the '80s and '90s ridiculed and made fun of -- ambulance chasers, those types of jokes," Kabateck said. "All that stuff persisted. And then, fundamentally, we got to a point today where we've allowed this to persist."

Joseph W. Cotchett, the nationally known consumer and mass tort trial lawyer, said Girardi's downfall is rightfully causing a lot of discussion.

"It is tragic when plaintiffs are denied their proper recoveries and then become victims of scams by lawyers," Cotchett said. "Unfortunately, it sometimes happens due to a lack of proper administration and oversight of the proceeds of verdicts or settlements."

One problem, he said, is state courts do not have adequate resources to monitor these cases.

"In your federal court class or mass actions, the judges spend a great deal of time making sure recoveries are properly distributed and the proper fees and costs are allocated to the attorneys. Unfortunately, in a number of mass tort or consumer cases in state court, there is little or no administrative supervision or review," Cotchett said.

Already, Illinois lawmakers are considering a bill that would make it easier for plaintiffs to sue when they suspect wrongdoing by their lawyer.

Trial lawyer Jay Edelson of Edelson PC is pushing the bill that would make it illegal for attorneys to make false statements about the existence of a settlement fund to potential clients. He also wants a task force in Illinois that would push for reforms in the plaintiffs' bar, such as tying attorney fees to claims rates.

Edelson said he hopes other states including California will follow.

"The problem right now is you can file a lawsuit and then you're talking about years of litigation, and Tom had arbitration clauses or made people file suit in jurisdictions that were very friendly to him and the suits just didn't go anywhere," Edelson said.

Some plaintiffs' attorneys are too focused on building their personal brand to increase the value of a case instead of doing what is best for the client, Edelson said.

"I definitely believe in the skill of attorneys," he said. "But the idea that all the value of the case comes from the attorney isn't true. The clients are the most important part of the equation and your actions have to benefit your clients."

Kabateck was appointed the new class counsel in a ratepayers' action against the city of Los Angeles after suspicions were raised of fraud and collusion between the lawyers involved in the $67 million settlement.

Los Angeles County Superior Court Judge Elihu M. Berle recently sanctioned one of the lawyers involved for contempt for refusing to cooperate with Kabateck's investigation and ordered that attorney to return nearly $2 million in fees.

"That's the kind of work that more of us have to do to clean up the bar when this kind of stuff happens," Kabateck said.

But for Gerald B. Singleton of Singleton Law Firm in San Diego, Girardi's deep connections with the judiciary are emblematic of a bigger issue about the relationship that judges and attorneys sometimes have.

"To me, the bigger lesson to be learned here is that you need more transparency in court," Singleton said. "And you need to have a system where judges cannot have the cozy relationships that they do now with so many of these attorneys, and that you have a lot more disclosure so that things like that don't happen."

Some lawyers said they were aware for a long time that Girardi was prone to skirt ethical guidelines and wondered why the State Bar hadn't done more to police him.

Kabateck said he saw Girardi hanging out with State Bar investigators and other high ranking bar employees in Los Angeles and at the same time avoiding disciplinary action, even after being fined for trying to hide a clerical error in a high profile case involving Dole Food Co. and Nicaraguan field workers. A federal judge did spot that problem and the 9th U.S. Circuit Court of Appeals disciplined Girardi.

For Micha Star Liberty, a plaintiffs' lawyer with Liberty Law in Oakland and a former vice president of the bar Board of Governors, the issue goes beyond the plaintiffs' bar.

"The simple truth is the State Bar failed and enabled this misconduct," Liberty said. "They are there to protect the public and they didn't do that here. There were multiple complaints made to the bar and yet the office of chief trial counsel was picking and choosing who to prosecute."

Liberty, however, was a president of the Consumer Attorneys of California, which often feted Girardi like a rock star because of his reputation for winning big settlements.

"It's profoundly disappointing," Liberty said. "So many of us held him [Girardi] in high regard and unfortunately, he was allowed for way too long to take advantage of clients."

On Tuesday, the bar filed 14 disciplinary charges against Girardi and placed a consumer warning on his online attorney profile, saying that he is being investigated on accusations of misappropriating client funds.

But the bar's actions only came after media reports revealed Girardi's connections to the agency.

Girardi and his law firm also face a host of lawsuits and claims in bankruptcy court, including from his former law partner, Robert M. Keese, and his son-in-law, David Lira, who was a lawyer at the firm.

On Thursday, the former Girardi Keese Chief Financial Officer, Chris Kamon, told a Los Angeles Bankruptcy Court judge that he intends to plead the Fifth Amendment to avoid testifying about the firm's finances, citing an ongoing federal criminal investigation in the Northern District of Illinois.

Stuart Zanville, executive director of the Consumer Attorneys Association of Los Angeles, said that few lawyers achieve the same prominence as Girardi, which is why his actions are so shocking.

The association recently rescinded awards it had given Girardi over the years.

Zanville said he believes Girardi's situation was unique and that he is doubtful that the accusations will harm other trial lawyers.

"The legal practice is so highly regulated and competitive," Zanville said. "And there's so much transparency. I'm only familiar with our association, which has a certain type of plaintiffs' civil attorneys.

"But I don't think that it will impact them," Zanville added. "I think we're all aware of it. I think we're all shocked by it. And they certainly don't condone this type of activity."

Deborah Chang, current president of the Consumer Attorneys of California, said she was shocked by the number of complaints about Girardi that went to the bar. She said the current system is unfair, where prominent attorneys are allowed to skip the hurdles that many everyday lawyers have to go through.

Chang called the recent revelations a wake-up call for lawyers to be more vigilant in protecting their clients. But she said people have to be careful not to paint the entire profession with a negative brush.

"I do believe that what we have in place has to be looked at carefully and to make sure that people are enforcing the rules that are in place," Chang said.

"I would just hate from all of this for people to worry that their money is not safe or that their attorneys are going to steal their money," Chang said, "because it is not the norm. It definitely is not. It is a highly regulated industry and people do it because their hearts and minds are in the right places."