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California State Assembly Passes Legislation to Provide Greater Oversight of Private Judges and Mediators

Legislation Addresses Concerns About Private Judges Enabling Fraud and Misconduct by Renowned Consumer Attorney Tom Girardi

For immediate release:

SACRAMENTO, CA — Yesterday, the California State Assembly advanced legislation to enhance transparency for private judges on a strong bipartisan vote. Authored by Assemblymember Jesse Gabriel (D - Woodland Hills), Chair of the Assembly Privacy & Consumer Protection Committee, Assembly Bill (AB) 924 would establish safeguards to help protect California consumers when legal claims are adjudicated by private mediators or judges.

The role of private judges has come under increased scrutiny following media reports detailing how renowned consumer attorney Tom Girardi had likely stolen millions of dollars from his clients, including children orphaned by a plane crash, victims of a pipeline explosion, and cancer patients. Notably, these reports included questions about the role of private judges and dispute resolution neutrals in enabling the Girardi scandal—oftentimes, Girardi relied on private judges that he selected and paid for, and who appeared to disregard the management of client funds or look the other way at blatant ethical concerns.

It is not clear that all of the private judges knew Girardi was using them as a shield to fend off scrutiny, but there is evidence that some were aware of misconduct allegations and assisted him anyway. For instance, in one settlement case, the private judge assigned to oversee the settlement helped Girardi circumvent certain safeguards to allow Girardi to continue embezzling money from his clients. In another settlement case, the private judge helped Girardi fight subpoenas related to Girardi’s alleged misconduct of withholding settlement money from cancer survivors.

Despite the wide power of private judges in the legal system, no government entity specifically monitors or polices their conduct. Tom Girardi’s reliance on them raises questions about whether there are enough safeguards in this highly confidential and largely unregulated industry to protect the public from predatory attorneys. AB 924 would help to address this concerning issue by mandating that a private judge or dispute resolution neutral who receives a written complaint alleging a violation of conduct to report that information and other related details, including the attorneys involved, to the State Bar of California.

AB 924 is a critical step in addressing the issues highlighted by the Girardi scandal, and the lack of significant oversight of dispute resolution neutrals. The bill is expected to be heard in the State Senate in the coming weeks.