At the Los Angeles offices of Engstrom, Lipscomb & Lack, one of the premier plaintiff litigation shops in the country, visitors are often struck by the decor.
"They got more taxidermy than you could possibly imagine," said one lawyer. "In [Walter] Lack's office, you literally have the whole lion in that setting, with the reeds. And the lion's looking at you."
Since the 1990s, Lack's ferocious litigation style -- paired with the genial Thomas Girardi of Girardi & Keese -- has made millions for both men. Their relationship encompasses some of the biggest toxic tort paydays on record. It also extends beyond the law, from investments in Orange County real estate to the casino business.
Now the lawyers are coming to the end of a disciplinary action before the 9th U.S. Circuit Court of Appeals, where they are accused of deceiving the court in a Nicaraguan pesticides case. Between the two of them, Girardi is much better positioned to escape without serious punishment, largely because of the way their relationship has evolved. The lawyers at Lack's firm are usually the worker bees, and Girardi isn't involved with the day-to-day running of cases.
A 9th Circuit verdict and any future State Bar action will determine whether Lack's roller coaster ride -- from a smaller time aviation defense practice to the pinnacle of the plaintiffs bar -- will resolve by jarring plunge. And the lawyers' partnership in the pesticides case has afforded Girardi something more valuable than money: insulation.
Girardi "recklessly" misled the court, but Lack did it "intentionally," according to findings from 9th Circuit Judge A. Wallace Tashima, who acted as a special master in sanctions proceedings. A three-judge panel is considering what further discipline to impose.
Long before Lack and Girardi would have to plead for the 9th Circuit's mercy, back in the early '90s, the partners at Lack's firm faced a choice: stay on as Lack transitioned it to a full-fledged contingency shop, or take their aviation insurance practices elsewhere.
At that time, Lack was already regarded as a dynamic courtroom lawyer and an expert in insurance coverage matters, said Phillip Kolczynski, a former associate during the 1980s, who along with other former associates described broad opportunities at the firm to learn the craft.
Along with his talents, though, Lack could be tough on associates, according to Philip Johnson, a former partner who said he enjoyed his 14 years practicing at the firm but exited in the early '90s during the business model transition.
"It kind of got to the point where he would give an associate a task, the associate wouldn't know what Walter wanted, so he would come to me to ask what he meant. That got to be a problem," Johnson said, adding that he has seen the dynamic at other firms as well. "The associates were afraid of one partner, so they'd go to another partner and ask what to do."
Lack declined to answer questions for this story. He and Girardi have known each other for more than 30 years, and Lack historically had a small piece of his practice on the plaintiff side. Yet the wholesale change in Lack's business model in the '90s contrasts with Girardi, who gravitated to the plaintiff bar from the outset of his career. The Girardi & Keese Web site discusses a "moral component" to its practice (Girardi also hosts a Los Angeles radio program called "Champions of Justice"), while the Engstrom site attributes its shift to plaintiff work to "opportunities for growth."
By the mid-1990s, Lack and Girardi were running toxic tort cases together. They settled the famous Hinkley groundwater action against Pacific Gas & Electric Co. for $333 million, which was later dramatized in " Erin Brockovich ." Over the years, the firms would join forces on more than 80 matters, from entertainment litigation to consumer class actions over gasoline. According to Lack, by pairing up, plaintiffs can more easily match the resources of corporate defense firms.
"What we can bring to a situation is not necessarily the finest legal talent but essentially unlimited resources and manpower," Lack told the Los Angeles Business Journal in 2002.
The division of labor on the Nicaraguan pesticide case was typical, according to several lawyers on both sides of the bar. Lack -- and more often, his subordinates -- would grind defense lawyers through hard-fought pretrial motions practice, and then Girardi would participate in settlement talks or trial work. The arrangement suited their personalities, lawyers say.
"Tom has this charm and sense of humor about him. He's kind of user friendly in a lot of contexts," said one defense lawyer who has observed them for years. "Walter is a more serious guy, more intense, particularly in the course of a case. They are different personalities."
As the verdicts and settlements rolled in, Girardi and Lack put their winnings to work. They invested in PacTen Partners, a real estate venture made up of former college athletes from Pac Ten schools (Girardi and Lack both attended Loyola Marymount, however). In developing commercial office space in Southern California, PacTen utilized the two lawyers for business advice and "providing entree to many key participants in the Los Angeles business community," according to a now-defunct company Web site.
They didn't stop with real estate. Both invested in SuperGen Inc., a pharmaceutical company that manufactures cancer drugs. At the time Girardi and Lack joined the board in 2000, the stock reached a high of $75 a share, but now it's stalled around $2. According to securities filings, both have also been on the board at Spectrum Laboratories Inc., a bioseparation products manufacturer.
Then there's the gambling. Lack owns a piece of a handful of card rooms in the Los Angeles area, including The Bicycle Casino in Bell Gardens, Calif., which had been in a Justice Department receivership when Lack and his partners bought it in 1999. Although the casino's managing partner, Haig Kelegian, is the public face, Lack currently owns a 26 percent stake, according to state gaming records, and Kelegian about 11 percent.
Girardi was a board member of Coast Casinos when hotel-casino operator Boyd Gaming Corp. bought it out in 2004. Boyd's stock has been punished over the past two years, but Girardi appears to have gotten out at the right time: His stake in Coast was worth just over $29 million when it merged, and securities filings indicate he cashed out $26.5 million before transitioning to Boyd's board.
Girardi did not return phone calls for this story.
In the pesticides case, Girardi and Lack represented hundreds of plaintiffs who claim to have been sickened. But lawyers in Central America filed a complaint against Dole Food Corp. -- which doesn't exist -- instead of Dole Food Co. They then secured a $489 million default judgment against that nonexistent entity.
Lack's firm took the lead in attempting to enforce the judgment in the United States. He and his subordinates relied on a series of documents and representations they knew to be false to mask the error and prosecute the claim against Dole Food Co., according to Tashima's findings.
Tasked with constructing the 9th Circuit arguments against Dole, Sean Topp, an associate at Lack's firm fresh out of law school, wrote a memo to his bosses suggesting that they drop the appeal, Tashima found. But Lack had another subordinate on the case, Paul Traina, persuade Topp to back off. Later, Topp would say he wrote the memo because he felt so "buried" and "unhappy" at the firm.
Girardi's signature is on the toxic appellate briefs. But because Lack's firm did all the work, Girardi argues, he simply didn't read them. Lack's firm affixed Girardi's signature for him, pursuant to an "overall authorization" from Girardi, his lawyer told a 9th Circuit panel last month.
Beyond these facts, which Girardi argues don't demonstrate an intent to deceive the court, Girardi is better positioned than his colleague. Though Lack has served on committees, bar associations and boards, he can't show the 9th Circuit a signed letter from California Chief Justice Ronald George thanking him for his service on the state's Judicial Council, as Girardi can.
And then there's State Bar President Howard Miller. Miller is a partner at Girardi's firm, and happens to be the lawyer who, according to Tashima's opinion, waved a red flag over the case when the appellate briefs reached his desk. At that point, Girardi quickly agreed to drop the appeal.
Miller's status as a Girardi & Keese partner means that the State Bar's Office of Trial Counsel would be recused from any investigation of Girardi. While Bar prosecutors have discretion to open proceedings earlier, lawyers familiar with the process say that in a case such as this, the Bar would likely wait until the 9th Circuit imposes discipline. Bar rules dictate that the investigation would then be farmed out to one of the private attorneys who volunteer their services as conflict counsel.
For the 9th Circuit proceedings, Girardi has retained Thomas Nolan, a former federal prosecutor and West Coast litigation chair at Skadden, Arps, Slate, Meagher & Flom, and Diane Karpman, one of the state's leading ethics gurus. Lack and his attorney, Robert Baker of Baker, Keener & Nahra, have teamed up on contingency work in the past. Baker, whose notable cases include the defense of O.J. Simpson in his civil wrongful death case, has also represented Lack's card rooms in other litigation.
Rory Little, a Hastings College of the Law professor selected by the 9th Circuit to serve as an independent prosecutor, has recommended that Girardi be admonished, while Lack and Traina receive a one-year stayed suspension. In hearings last month, the 9th Circuit judges -- William Fletcher, Marsha Berzon and N. Randy Smith -- seemed to view those outcomes as too lenient.
Little also proposed some reforms at Lack's firm, including an ethics program and a new procedure for handling foreign documents. No such requirements for Girardi or his firm were discussed in open court.
And nothing in the publicly outlined portions of Little's proposal would break Lack's bond with Girardi.
"It is a structure that existed with these two firms that had worked for 28 years, without a hiccup," Nolan told the 9th Circuit last month. "In this one time, unfortunately, in a profound way for us, it didn't work."
