California bar suspends 1,600 attorneys for violating rules set up after Tom Girardi allegedly stole millions

More than 1,600 attorneys have been suspended by the California State Bar for violating rules about client trust accounts that were set up after disgraced L.A. attorney Thomas Girardi allegedly stole millions of dollars from his clients.

The Client Trust Account Protection Program, which went into effect last year, requires attorneys to register their client trust accounts annually with the state bar, complete a yearly self-assessment of their practices managing client trust accounts and certify with the state bar that they comply and understand the requirements for safekeeping funds.

After the reporting component is fulfilled, the state bar will then begin compliance reviews and investigative audits when appropriate.

Originally, more than 1,700 attorneys were found in violation of the rules and enrolled as “inactive” with the bar, meaning they’re not legally allowed to practice law. As of Thursday afternoon, that number has dropped to 1,641 after some of the attorneys fulfilled their requirements, according to Special Counsel Steven Moawad, who works for the bar’s attorney discipline system.

Moawad emphasized that the suspension is administrative and not disciplinary; none of the nearly 1,600 attorneys who were suspended were found to have been stealing money from their trust accounts.

“The noncompliance with the rules is simply the reporting for now,” he said. “It may be that people declined to report because they were stealing money from their trust accounts and they didn’t want to be found out.”

Another possibility is that some of the attorneys who were suspended may have already died, but the state bar doesn’t have a database in order to track that status.

“The only way we can find out about that is if the family member comes forward and says this person has passed on,” he said. “There could be any number of reasons in-between for not reporting.”

Attorneys had from Dec. 1 until Apr. 3 to comply with the new rules. The people who didn’t comply with the reporting requirement were then fined $75 for a noncompliance fee and told they needed to comply by June 30. The attorneys who were suspended were the ones who hadn’t complied by June 30 and still hadn’t turned in anything by July, when the bar began moving people to inactive status.

Moawad acknowledged that the program was set up in part as a direct response to the allegations against former attorney Girardi, 84, who was indicted earlier this year in Los Angeles and Chicago on fraud charges for allegedly stealing more than $18 million from clients.

“We knew we had to do a better job of educating attorneys about what their responsibilities are with client trust accounts so we started to do this,” he said. “It’s a combination of Girardi and the fact that this is something that is just necessary.”

The state Supreme Court stripped Girardi of his law license last year. The State Bar acknowledged mishandling decades of allegations against Girardi, saying in a statement that the indictments serve as “further evidence of the seriousness of the abuse and malfeasance that ultimately led to Mr. Girardi’s disbarment.”

Girardi got a national profile after his now-defunct firm Girardi & Keese won a case against Pacific Gas & Electric, in which the company agreed to pay $333 million to residents of Hinkley who blamed cancers and other diseases on contaminated water leaking from a gas pumping station. The case inspired the 2000 film “Erin Brockovich” starring Julia Roberts.

A government expert concluded last month that Girardi is mentally fit to stand trial despite being diagnosed with Alzheimer’s disease. He faces the possibility of a decades-long prison sentence if convicted.

The Times extensively reported on how Girardi escaped discipline by the State Bar of California even after decades of accusations that he stole and misappropriated his clients’ money.