Senior lawyers’ mental health can trigger obligations of junior lawyers

A new ethics opinion from the State Bar provides guidance on what subordinate lawyers should do when their supervisors' mental impairment risks violating ethical duties toward clients.

The guidance, issued Tuesday, comes as lawyers who worked at the Girardi Keese law firm have been accused of knowing that its famed founder, Thomas V. Girardi, used client settlement funds for personal expenses. Girardi has been diagnosed with Alzheimer's disease, according to court testimony.

The opinion from the bar Committee on Professional Responsibility and Conduct describes a scenario where an impaired lawyer, who is the rainmaker at a law firm, appeared confused in a litigation matter. The lawyer also did not communicate a settlement offer to the client.

"An impaired lawyer's conduct can also trigger obligations for the impaired lawyer's subordinates, supervisors and other colleagues who know of the impaired lawyer's conduct," the ethics opinion states, "These ethical obligations may include, but are not limited to, communicating significant developments related to the lawyer's conduct to the client and promptly taking reasonable remedial action to prevent or mitigate any adverse consequences resulting from an impaired lawyer's actions."

In an email, the bar clarified that when the committee issues an opinion, "it stands on its own with regard to its content." The opinion went out for public comment in August 2020, before Girardi's alleged misconduct became widely known.

The opinion has been in the works since 2014, said Neil J. Wertlieb, a founding member and co-chair of the California Lawyers Association ethics committee. But he said the timing is interesting, given the Girardi case.

"California law is pretty clear on this," Wertlieb said. "But this opinion just makes expressly clear that in the case of Tom Girardi, if and to the extent he is impaired, that impairment does not excuse his compliance with the rules and his other obligations."

The opinion appears to apply to former employees at Girardi Keese, Wertlieb said.

Two former lawyers, David R. Lira and Keith D. Griffin, who worked at Girardi Keese have been sued in Illinois by a law firm seeking to hold them, and Girardi, responsible for withholding millions of dollars from a large settlement paid by Boeing Co. to the families of victims of a plane crash in Indonesia.

Counsel for Lira and Griffith have argued that they had no control over what Girardi and their former firm did with the money. Moreover, according to court documents, Girardi had also ensured Lira and Griffin that he would pay out the money. Edelson PC v. Girardi et al., 20-CV07115 (N.D. Ill., filed Dec. 2, 2020).

"If there were other attorneys at the firm who were aware of his impairment and had knowledge that impairment could impact his performance as an attorney, including his compliance with safekeeping client funds, then those other attorneys had an obligation to take steps to protect the client," Wertlieb said. "It's a question of what they knew and what they were aware of at the time."

Jason M. Rund, the trustee for Girardi's personal bankruptcy, filed a motion on Wednesday seeking approval for a settlement with one of the creditors, California Attorney Lending II, for over $6 million. In addition, another law firm previously secured a judgment in excess of $11 million against Girardi and his firm on behalf of the Ruigomez family. The family, who were victims of a gas pipeline explosion in San Bruno, claimed in their lawsuit that Girardi withheld the settlement money he secured for them from PG&E.

"Once CAL II is paid in full from this Case and the Girardi Keese bankruptcy case, the sale proceeds shall be distributed in accordance with the Settlement Agreement previously approved by the Bankruptcy Court between the Trustee and the Ruigomez Creditors," the motion stated. In re: Thomas Vincent Girardi, 20-BK21020 (C.D. Bankruptcy Ct., filed Dec. 18, 2020).