Famed California trial attorney Tom Girardi was accused of stealing more than $18 million from clients; I was late to the metaphorical party, not covering the long-running ethics scandal until a month ago. (Sorry.)The State Bar of California had opened 205 disciplinary investigations in 40 years against Girardi, but he ducked accountability until the very end, in part because of pay-offs to bar staff.
One of several new regulations designed to prevent future Girardis is the Client Trust Account Protection Program. That requires the state’s lawyers to report whether they are responsible for client trust accounts, to provide basic account information, to complete an annual self-assessment, and to certify that they comply with ethics rules related to safeguarding client funds. The point, of course, is to stop lawyers from stealing from their clients. There are a lot of unethical practices lawyers get away with, but not taking proper care of client funds is supposed to be the third rail of lawyer misconduct.
The deadline for compliance with Client Trust Account Protection Program was April 3, 2023. Lawyers who failed to comply were fined $75 and had until June 30 to meet the regulations. Suspensions began in July. The results: 1,641 California lawyers have had their licenses suspended.
This is not a good sign.
Ethics Alarms 
Do you have a handle on historic stats of lawyer corruption? Does it seem like there are ‘normal’ levels of corruption or is it increasing or decreasing?
266,000 licensed California attorneys, 190,000 active. Honestly, I’d say 1,641 is close to a rounding error. Probably a number of them are inactives who failed to check the “I do not maintain any client funds in trust accounts” box or didn’t pay their annual dues. They may even be deceased.
When I first skimmed through this, I thought, “every new compliance requirement is going to result in some level of non-compliance.”
So, the number did not phase me.
Then, I looked more closely.
“I think my State already requires all those things. How is this so onerous?”
In all fairness, any change will take time for stragglers. I never have to tell them about my Trust Account because they learned that years ago.
Now, I am moving all trusts accounts to a new bank, so I will have to update the Bar on the accounts and the goal is to close out the old account and get everything into the new one so you don’t have to report on both.
It’s a pain in the ass, especially if you are not stealing client money, because there are only downsides for making mistakes.
Having said that, the trust account rules reinforce obligations to be accountable to clients as much as they prevent theft.
They help reinforce diligence in returning money to clients.
Trust account rules create a hassle for the honest and dishonest alike.
But, if the honest understand the value of the rules, these sorts of compliance rules are not an issue.
-Jut