California State Bar Suspends 1,600 Attorneys Over Client Trust Account Violations

(CTN News) – More than 1,600 attorneys in California have faced suspension from the State Bar due to violations of rules governing client trust accounts.

These rules were established in response to the infamous case of Thomas Girardi, a disgraced attorney who allegedly embezzled millions of dollars from his clients.

The Client Trust Account Protection Program, introduced last year, requires attorneys to register their trust accounts annually, undergo self-assessment, and certify their compliance with safekeeping funds.

While the suspension is administrative rather than disciplinary, it serves as a measure to ensure accountability and prevent potential financial misconduct. This article delves into the details of the program, its connection to the Girardi case, and the implications for the legal profession.

The Client Trust Account Protection Program, initiated last year, imposes specific obligations on attorneys handling client trust accounts.

Attorneys are required to annually register these accounts with the state bar and conduct a self-assessment of their practices concerning client funds. The purpose of this program is to ensure attorneys understand and comply with the requirements for safeguarding their clients’ funds.

The program’s inception was significantly influenced by the high-profile case of Thomas Girardi, an L.A. attorney accused of embezzling more than $18 million from his clients.

Girardi’s actions exposed a need for enhanced accountability in managing client trust accounts, prompting the state bar to take proactive measures to prevent similar abuses in the future.

The Suspension of Attorneys and Its Reasons

Initially, over 1,700 attorneys were found to be in violation of the new program’s requirements and were enrolled as “inactive” by the state bar, effectively suspending their legal practice.

However, this number has decreased to 1,641 after some attorneys fulfilled their obligations. It’s crucial to note that none of the suspended attorneys were found guilty of embezzlement; rather, their suspension is a result of noncompliance with the reporting aspect of the program.

The state bar faces challenges in accurately tracking attorney status, particularly when it comes to deaths. With no comprehensive database to monitor this information, the bar relies on family members’ voluntary communication to update such statuses. This limitation underscores the need for a more efficient and centralized tracking system.

Consequences of Noncompliance

Attorneys who failed to comply with the program’s reporting requirements faced a noncompliance fee of $75 and were given an extension until June 30 to rectify their reporting.

Those who still hadn’t complied by July had their status moved to “inactive,” effectively suspending their legal practice.

Conclusion:

The Client Trust Account Protection Program represents a vital step towards enhancing transparency and accountability in managing client trust accounts among attorneys in California. Prompted by the Girardi case, this program aims to prevent potential financial misconduct and protect the interests of clients.

By enforcing stringent reporting requirements and conducting regular compliance reviews, the state bar seeks to foster greater trust between attorneys and their clients. However, as challenges persist in accurately tracking attorney status, further improvements to monitoring systems may be necessary to strengthen the program’s effectiveness.