The embattled law firm Girardi Keese allegedly owes $25 million in unpaid referral fees on several mass tort cases to Los Angeles plaintiffs firm Owen Patterson & Owen, but payment will depend on the specific details of the referral-fee agreement it signed with Girardi Keese, according to a lawyer watching the legal dispute.
“Contracts typically entail a four-year statute of limitations, however, if the attorneys involved never received informed consent from their clients to a referral fee arrangement, then there is no contractual claim to begin with,” said Nicole Clark, CEO of legal analytics firm Trellis Law. “In that case, the claim could become a quantum meruit claim, which generally only has a two-year statute of limitations.”
The State of California is unique in that it is one of only a few nationwide that permit pure referral fees, which are governed by Rule 7.2(b) and Rule 1.5.1 of the California Rules of Professional Conduct.
Thomas Girardi of Girardi Keese
| file photo
“An attorney may be compensated for referring a matter to another attorney even without the referring attorney’s continued involvement in the proceedings,” Clark told the Southern California Record. “This practice serves as an economic incentive to ensure clients receive the best possible representation because it rewards less capable lawyers for seeking out more experienced specialists to handle particular matters.”
Girardi Keese, founded by Thomas Girardi, was forced into Chapter 7 bankruptcy proceedings in December 2020 by Jill O’Callahan, Robert Keese, and John Abassian who are seeking to collect some $6.5 million. O'Callahan is the widow of deceased Girardi Keese partner James O'Callahan. Abassian worked as co-counsel with Girardi Keese lawyers and Keese is Girardi's partner at Girardi Keese.
Before his ex-wife Erika Jayne filed for divorce last year, Girardi appeared on the Real Housewives of Beverly Hills TV show, according to media reports.
“It is unclear whether or not the bankruptcy trustee will be able to recover enough money to pay back his creditors,” Clark said.
After Girardi was enrolled involuntarily as an inactive member of the State Bar of California for allegedly violating the rules of professional conduct and the State Bar Act, Central District of California Chief Judge Phillip Guitierrez ordered Girardi to show cause by June 28 as to why he should not be disbarred from the practice of law.
“I don’t expect Girardi’s status with the California State Bar to affect the financial liabilities he has incurred over the course of his career,” Clark said. “It can, however, affect the manner in which those financial obligations will or will not be fulfilled as the State Bar investigation may uncover information that can be passed along to other authorities.”
Girardi’s conservatorship will act as more of an obstacle for Owen Patterson & Owen and other creditors to collect, according to Clark.
As previously reported, in February, Girardi's brother, Robert Girardi, 77, was appointed temporary guardian over his older brother's conservatorship, which includes the person and the estate.
Los Angeles County Superior Court Judge Daniel Juarez extended Girardi's temporary conservatorship through June 30 despite state bar objections.
“The situation gets more complicated in terms of the conservatorship status, as any claims about his mental or physical competency reframe acts of 'moral turpitude' into honest mistakes,” Clark added.
“This shapes the nature of intent in a criminal case but has little relevance in a civil case. Either way, the law firm, Girardi Keese, would still be held liable for unfulfilled payments; unlike individuals, an entity cannot be incompetent. This positions other Girardi Keese attorneys as responsible actors who may potentially face civil or criminal contempt for failing to ensure settlement proceeds were paid in full.”