Two lawyers at Tom Girardi's law firm sanctioned over mishandling of client money

Jan. 23, 2024 3 AM PT

Tom Girardi’s son-in-law and a second lawyer who worked at his firm have been sanctioned by a State Bar judge for not doing enough to protect clients from the disgraced legal legend’s misappropriation of their settlement funds.

David Lira, who is married to Girardi’s daughter and worked for his firm for more than 20 years, is barred from controlling bank accounts that hold client money and must work under the supervision of another attorney, according to a decision last week by Judge Phong Wang.

The restrictions will be in effect until an upcoming trial, at which Bar prosecutors will seek his disbarment on the basis of moral turpitude, mishandling of settlement funds and other charges related to cases he handled at the Girardi Keese law firm.

Separately, the same judge suspended the law license of Keith Griffin, who had worked with Girardi for two decades. Griffin, one of the last attorneys to leave as the firm crumbled, is prohibited from practicing law for six months and is on probation for a year.

The judge found that Griffin had concealed information about settlement funds from a group of firm clients — Indonesian widows and orphans whose loved ones died in a Boeing plane crash — and Chicago-based attorneys who were assisting Girardi’s firm with the case.

Evidence that Girardi, a power broker in California politics and the law, had misappropriated millions of dollars in settlement money from the Indonesians led to the implosion of his law firm three years ago. It led to allegations that he had stolen money from clients for decades and eluded detection thanks to a cozy relationship with State Bar regulators and the judiciary.

Girardi, 84, was disbarred in 2022 and faces trial in May on federal wire fraud charges related to the alleged misappropriation of settlement money from the Indonesians and other clients.

In allowing Lira to continue practicing while awaiting trial, Wang cited some 99 character letters submitted by “faith leaders, clients, fellow lawyers … former colleagues, retired judges, neighbors, family and friends” as well as “a lack of venality” in lies Lira told clients about when they would be paid.

“Though this record demonstrates deceitful acts by Lira, those largely involved trying to buy more time for the Girardi firm to come up with funds for payments,” the judge wrote, adding that there was not evidence that Lira himself was stealing money.

Lira quit the firm in 2020, about six months before it collapsed, after an argument in which he has said he called Girardi “a thief” and predicted his disbarment. Lira now works at the Century City firm of Engstrom, Lipscomb & Lack.

Much of the misconduct alleged centered on the Indonesian clients and their successful suit against Boeing for defects in the 737 Max that they said contributed to the 2018 crash. Four families whose loved ones died signed settlement agreements in early 2020 that called for Boeing to send the money to Girardi’s client trust account, a type of bank account in which lawyers hold money temporarily before distributing the funds to their clients.

Although Girardi received the settlement money in March 2020, he did not inform the families and drew on the funds to pay other clients. He offered several excuses to the families for the delay, including concocted tax issues and the challenges of the COVID-19 pandemic. Evidence suggests Lira and Griffin knew that he was mishandling the funds.

“Tom is lying to clients,” Lira confided to the firm’s chief financial officer in a March 2020 email.

Griffin pressed Girardi to pay the money, but like Lira, he never alerted the families that Girardi had the money and was keeping it from them.

“Hey Keith — did the Boeing money come in?” one of the other attorneys texted Griffin in June 2020. Griffin knew it had, according to evidence submitted to the court, but responded, “I actually don’t know. I will find out.”

State Bar prosecutors had sought the full revocation of Griffin’s law license. But the judge declined, noting a lack of evidence that he had conspired with Girardi to steal client funds.

“This court has no doubt that Griffin wanted the clients to be fully and timely paid,” the judge wrote.

George Cardona, the chief prosecutor for the State Bar, said in a statement Monday that the agency was “pleased” that the judge found Griffin culpable of serious misconduct.

“We will be looking at the court’s decision and the underlying record in detail to determine whether we will seek review of the level of discipline imposed,” Cardona said.

Jay Edelson, whose Chicago law firm worked with Girardi, Griffin and Lira on the Boeing case and sounded the alarm about mishandled settlement funds, said in a statement Monday that the measures imposed on the two lawyers were insufficient. Edelson pointed to the close relationship Girardi cultivated with the State Bar.

“We’ve said from the start that there needed to be special counsel appointed,” Edelson said. “Nothing about the Bar’s presentation of Griffin or Lira’s cases or its ‘investigation’ more generally has given us an ounce more trust that this system is working.”

A lawyer for Griffin said his client was “grateful” for the “thoughtful and lengthy decision” by the judge overseeing his case.

“While Mr. Griffin disagrees with some of the findings of fact and conclusions, he is relieved that this ordeal is near a conclusion so he can move on with his career,” said the lawyer, Ryan Saba.

Lira and his lawyer did not respond to a message seeking comment.