Effective August 1, 2023, all California lawyers are required to report other lawyers they suspect of certain bad acts, or risk being subject to disciplinary charges themselves.[i]  The new Rule 8.3 was enacted in the fallout of charges against disgraced lawyer Tom Girardi (and specifically other lawyers who knew of Mr. Girardi’s fraud but never reported it).[ii]

Mr. Girardi was made famous by his work on the toxic-tort litigation depicted in the movie Erin Brockovich, and then infamous after evidence emerged showing he stole settlement funds to maintain the extravagant lifestyle that he shared with his wife, Erika, a member of “The Real Housewives of Beverly Hills.”[iii]

Now, any time a lawyer knows of “credible evidence” another lawyer has committed a “criminal act or has engaged in conduct involving dishonesty, fraud, deceit, or reckless or intentional misrepresentation or misappropriation of funds or property that raises a substantial question as to that [other] lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects” the lawyer shall, without undue delay, inform the State Bar (or a tribunal, if appropriate).[iv] The comments to Rule 8.3 also give some clues as to how it will be applied.

For instance, undue delay is defined: “as soon as the lawyer reasonably believes the reporting will not cause material prejudice or damage to the interests of a client of the lawyer or a client of the lawyer’s firm.”[v] But could that mean for a year (or more) until the instant litigation the lawyer is involved in is dismissed?  The rule “limits” the reporting obligation to those offenses that a self-regulating profession must vigorously endeavor to prevent. Whatever that includes, not reporting the bad act of another lawyer now subjects every other lawyer in the state to up to a three-year suspension of their own law license.

Takeaway

Knowing a fellow lawyer is stealing settlement money certainly falls within the new reporting requirements of the Rules of Professional Conduct.  However, it remains to be seen what other “bad acts” qualify, as well as (1) when it must be reported and (2) whether it can be reported to a tribunal other than the State Bar. It is also important to note any such report cannot first be raised to the lawyer him or herself as a “threat” to obtain an advantage in a civil dispute, in violation of a different Rule 3.10.[vi]

Of course, an argument could be made that any “criminal act” raises a substantial question as to the honesty, trustworthiness, or fitness of a lawyer (as an officer of the courts) who commits said act.  Should not the self-regulating profession of attorneys “vigorously endeavor” to prevent the violation of any law by its own members? Or, will it end up only being bad acts that directly involve dishonesty, fraud, deceit, or the misrepresentation/misappropriation of funds/property?

Only time will tell; we will all have to watch what happens.

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Sources

[i] Rule 8.3 Reporting Professional Misconduct (Aug. 1, 2023), https://www.calbar.ca.gov/Portals/0/documents/rules/Rule-8.3.pdf

[ii] In major reform, California attorneys must report misconduct by their peers – Los Angeles Times (June 22, 2023), https://www.latimes.com/california/story/2023-06-22/california-attorneys-must-now-report-misconduct-by-their-peers

[iii] Former High-Profile Lawyer Is Charged With Embezzling More Than $18 Million – New York Times (Feb. 2, 2023), https://www.nytimes.com/2023/02/02/us/tom-girardi-indicted.html

[iv] Rule 8.3 Reporting Professional Misconduct (Aug. 1, 2023), https://www.calbar.ca.gov/Portals/0/documents/rules/Rule-8.3.pdf

[v] Id.

[vi] Rule 3.10 Threatening Criminal, Administrative, or Disciplinary Charges (Aug. 1, 2023), https://www.calbar.ca.gov/Portals/0/documents/rules/Rule_3.10-Exec_Summary-Redline.pdf