Allred denies knowledge of State Bar probe into fee agreements

Celebrity women's rights attorney Gloria R. Allred denied Friday any knowledge of a reported State Bar investigation into her firm's engagement agreements with their contingency fee clients.

"We have not been informed by the State Bar of any investigation," Allred responded to an email from the Daily Journal.

She added, "We have always acted ethically, and in accordance with the Rules of Professional Responsibility. At this time, it is well known that law firms across the country are being attacked. We are proud to defend our record of protecting, asserting, and vindicating the rights of women and minorities, and we will not be deterred by unjustified accusations which seek to discredit us. We will not bow down to kings or The Wall Street Journal."

The last sentence appeared to a nod to the nationwide "no kings" anti-Trump protests planned for Saturday.

The State Bar declined to confirm a Wall Street Journal report Friday that it is investigating Allred Maroko & Goldberg. In March, the paper detailed allegations from former clients who said the firm used restrictive contracts that claimed up to 75% of verdicts and settlements for fees and expenses. Clients who tried to switch lawyers were allegedly charged up to $1,200 per hour for prior work.

Allred founded the Los Angeles-based firm in 1976 with fellow Loyola Law School graduates, Michael Maroko and Nathan Goldberg. In the half century since, Allred has become one of the most famous attorneys in the nation. The list of prominent men she has sued reads like a history of the "Me Too" movement: comedian Bill Cosby, director Roman Polanski, author Neil Gaiman, and musicians including R. Kelly and Sean "Diddy" Combs. On Wednesday, a New York jury convicted movie producer Harvey Weinstein of sexual assault against one of Allred's clients.

The report of a potential case against Allred's firm drew comparisons to the bar's failure to investigate another celebrity attorney, Tom Girardi, who stole millions of dollars from clients while their complaints to the State Bar went unheeded.

"The investigation of Ms. Allred signals that the State Bar has taken the lessons of the Girardi matter to heart," Antonio Rosas Sarabia II, founder of IP Business Law, Inc. in Redondo Beach, said in an email. "Prestigious attorneys are no longer above the Rules of Professional Conduct. This is an important step in the right direction by the State Bar."

"I think the days of the State Bar refraining from investigating powerful or famous attorneys are over," Beverly Hills-based attorney Michael E. Rubinstein also responded by email. "I've heard from attorneys who represent other attorneys in disciplinary matters that the State Bar has gone into overdrive since it came to light that they received hundreds of complaints about Girardi and did nothing." 

Both men have written articles about the Girardi scandal and its aftermath that were published in the Daily Journal. Sarabia noted the claims against Allred's firm are "very different" than those that eventually saw Girardi disbarred and, earlier this month, sentenced to over seven years in prison. Instead, the complaints suggest the firm charged unconscionable fees in violation of the California Rules of Professional Conduct for attorneys.

"This rule has 13 criteria which can be applied to determine if a fee is unconscionable," Sarabia said. "Charging unconscionable fees is a serious ethics problem."

"Sadly, this is not the first time I'm reading about clients who were subjected to punishing financial terms for backing out of a legal services agreement," Rubinstein said, pointing to claims in a civil class action brought by former clients against Los Angeles plaintiffs' attorney Jacob Emrani.

It is important to remember that prominent, high-volume law firms are hit with complaints to the State Bar regularly, said Dmitry G. Gorin, a partner at Eisner Gorin LLP in Los Angeles. The vast majority of these do not result in discipline, he added,

Gorin also said that 75% sounds like a "very, very high number." But plaintiffs' firms regularly fail to collect on most cases they take and may run up huge expenses over years of working on contingency.

"Obviously it's black eye when you have these claims come out," Gorin said.

But he added, "It's hard to imagine a firm that's been so successful for years doesn't comply with ethics and bar rules."