California Bar Looks Ahead as Girardi Affair Showed Corrupt Ways

The California Bar was excoriated as an agency unduly influenced by disgraced former attorney Thomas Girardi for violating its own rules and the law as leaders and lawmakers look to make it a model of reform.

The question lawmakers focused on during a three-hour joint Senate-Assembly Judiciary committee oversight hearing Tuesday is what the state legislature, its supreme court, and the bar can do to restore public trust in the mandatory membership agency after Girardi’s decades-long practice of stealing from clients and evading responsibility.

“The problems revealed by the Girardi scandal are at bottom problems of the corrupting influence of wealth and power, that influence gains its scope to the fullest degree when allowed to fester under the cloak of secrecy,” said Scott Cummings, University of California Los Angeles professor who teaches legal ethics and professional regulation.

Girardi manipulated relationships with bar executives and board members in a scheme to avoid discipline, an internal report found.

“While it is certainly distressing that California now holds the dubious distinction of being the leading symbol of bar dysfunction,” the bar has the unique opportunity along with legislators to emerge from this scandal as an innovator to institute evidence-based reforms that strengthen oversight and public protection, Cummings said.

The bar is a different agency than it was a decade ago in part because of legislatively mandated changes, including splitting the bar’s regulatory and lobbying functions, to become a purely regulatory entity, board chair Ruben Duran said.

The board and staff members accused of being unduly influenced by their tight connections with Girardi are no longer at the agency, Duran said. “And it’s the beginning of the path forward,” the Best Best & Krieger LLP partner said.

Shattered Trust

Legislative and lawyer frustration at the bar’s inaction for so long was clear.

“We’re licensed by y’all, and if we can’t trust the organization that licenses us, then how can the public be expected to trust you?” said Assemblymember Eloise Gómez Reyes (D), a member of that house’s Judiciary Committee. The bar’s inaction “for me was an active cover up” and “that’s a serious concern,” she said.

Board members were dismayed by how the bar allowed more than 205 complaints to be filed against Girardi without taking any real action until 2021, long after clients reported money being stolen.

Bar insiders failed to adequately divulge their close relationships, as well as gifts they received from Girardi as part of their conflicts-of-interest disclosures, the report said.

“The failings of the state bar have shattered public trust. I take that very seriously,” said Trustee Hailyn Chen, co-managing partner of Munger, Tolles & Olson LLP.

Chen, who is a member of the ad hoc committee on oversight and accountability reform recommending operational changes to the full board, agreed with Gómez Reyes that there was a cover up. “Absolutely. How could there not have been for that conduct to have gone on for so long? We failed,” she said.

The report conducted by Aaron May with Halpern May Ybarra Gelberg LLP “revealed deep fissures of corruption that are diametrically at odds with the board’s mission of protection,” said Trustee Arnold Sowell Jr.

Bar Chief Trial Counsel George Cardona noted that Girardi, when questioned by bar investigators, invoked the Fifth Amendment protections against self-incrimination.

The bar made referrals to law enforcement including the Los Angeles District Attorney’s office, the Fair Political Practices Commission, and to a federal enforcement agency with which it was collaborating before the May report’s release, General Counsel Ellin Davtyan said Tuesday.

Steps Taken

The bar has adopted specific measures to avoid conflicts and potential conflicts, Cardona said. It barred Office of Chief Trial Counsel employees from receiving gifts from licensed attorneys unless there’s a previous personal relationship. It adopted a system that identifies attorneys with 15 or more complaints closed or pending over the last five years. And internal investigators and lawyers must comply with mandatory training on client trust funds.

Bar trustees passed May 18 a flurry of measures ahead of the oversight hearing. Itadopted the ad hoc oversight committee’s recommendation to seek legislative approval for an inspector general. The discipline monitor would, among other duties, regularly review performance measures for the bar’s discipline system and assess effectiveness of policies, procedures, initiatives, and internal controls.

Other legislative proposals include making the bar subject to the Political Reform Act and conflicts statutes and to include the State Bar in the California budget process conducted by the executive and legislative branches.

The board also adopted a new whistleblower antiretaliation program the state Justice Department would administer where individuals could directly send complaints for review and investigation without the bar’s prior review.