Edelson PC lawyers decided not to notify the U.S. District Court for the Northern District of Illinois that they suspected Girardi Keese was mishandling client money because, according to founding partner Jay Edelson, the information they had was “jello.”
They prepared a contempt motion to in June 2020 but sat on it while they tried to sort out whether Girardi had received but not delivered their clients’ settlement money.
According to Edelson, he realized the allegations were very serious and didn’t want to make them without adequate proof.
Edelson said he received explanations from Girardi that seemed plausible at the time, including that he had been hospitalized after discovering a cancerous tumor.
The Edelson firm initiated contempt proceedings against Girardi Keese last December, a couple of weeks after Edelson says its lawyers learned definitively that their former clients—surviving family members of people killed in the crash of Lion Air flight 610—hadn’t been fully paid their settlement money, even though Boeing had long since funded it.
When asked about communications over the summer of 2020 from former Girardi Keese lawyers David Lira and Keith Griffin that indicated the clients hadn’t been fully paid, Edelson said that they weren’t putting “100% stock” into what the lawyers told them.
But Judge Thomas R. Durkin was skeptical while Edelson was on the stand Tuesday related to those contempt proceedings.
“The fact a person is giving you really bad news for everybody, that they hadn’t been paid as of September 3 has probably got some indicia of reliability, because who’s going to say that if it’s not true?” Durkin said.
Edelson later testified that he didn’t believe his firm had “acted negligently” but should have “acted better.”
Edelson partner Ari Sharg testified on Tuesday afternoon that he believed Griffin when he allegedly told him that Boeing hadn’t funded the executed settlements within 30 days as required. Griffin, for his part, said he was referring to a different set of clients. But it might not matter.
Questioning by Durkin suggested that Sharg may have had an obligation to notify the court when he believed that Boeing had violated the court-approved settlement agreements.
Sharg said he didn’t believe that Boeing’s supposed violation of the settlement agreement amounted to a violation of the court’s orders.
Because Sharg signed the affidavits submitted to the court for settlement approval, Durkin suggested he had a heightened obligation to the court.
“Everyone said they didn’t think anything nefarious was going on. Everyone.” Durkin said. “But the real questions is, should they have done more than what they did, given the variety of red flags that kept popping up?”
Durkin asked for briefing on the court’s inherent authority to issue sanctions, as well as on whether the court has the power to order the lawyers to compensate the plaintiffs for their lost settlement money, “not because you directly violated a court order, but because by failing to inform me that Girardi was not paying the plaintiffs, you caused the plaintiffs to lose that money.”
Durkin said he wants an accounting of the Girardi Keese trust account in the months leading up to Edelson’s contempt motion.
In his view, that’s money the clients could have recovered, had the court been notified before December.
Lira is represented by Robie & Matthai PC and Swanson, Martin & Bell LLP.
Griffin is represented by Rosen Saba LLP and Cassiday Schade LLP.
Girardi is represented by Monico & Spevack.
The case is In re Lion Air flight JT 610 crash, N.D. Ill., No. 1:18-cv-07686, 12/14/21.
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