Legal Newsline

Monday, July 22, 2019

Ky. SC disbars Chesley, calls his $20.5M fee 'unreasonable'

By Jessica M. Karmasek | Mar 25, 2013

FRANKFORT, Ky. (Legal Newsline) -- Prominent plaintiffs lawyer Stanley Chesley has been disbarred from practicing law in Kentucky, according to a state Supreme Court order filed last week.

Chesley has maintained he was not co-counsel for the plaintiffs in a controversial class action lawsuit over the diet drug fen-phen. He also has said he was not aware that other attorneys were deceiving their clients. He contends he was simply brought in to negotiate the 2001 settlement.

The Kentucky Bar Association's Board of Governors recommended his disbarment in June 2011.

The board also recommended that the Cincinnati trial lawyer, known for winning billions of dollars for his clients in other mass torts, should return $7.5 million in fees he received in the settlement.

In its 38-page opinion and order entered Thursday, the Kentucky Supreme Court said his ethical violations warranted permanent disbarment in the state.

Chesley, 76, was admitted to practice law in Kentucky in 1978.

Click here to read the court's full order.

In particular, the court concluded that Chesley's share of fees was "unreasonable."

"He has shown nothing to demonstrate that he expended a great deal of time and labor on the case," Chief Justice John D. Minton Jr. wrote for the court.

"The issues of liability were not particularly difficult or novel, and even if they were, Respondent did not do the heavy-lifting on that aspect of the case."

However, the court declined to order restitution, saying the remedy is "not appropriate" in a case of permanent disbarment. The court also noted that the the claims are being litigated in a separate, civil litigation.

And though Chesley presented evidence "supportive of mitigation," the court said it did not make up for his unethical behavior.

"His most persuasive mitigation evidence is that he has never previously been disciplined by the KBA. He also presented several character witnesses who testified about his prominence in the Cincinnati legal community and his service to various charitable organizations," Minton wrote.

"We are aware of Respondent's reputation and we do not doubt the veracity of the witnesses that attested to his character. While, the good reputation he has enjoyed and his generosity serves to exacerbate the tragedy of his fall, they cannot atone for the serious misconduct he has committed in connection with this matter."

The court already has disbarred four attorneys who worked on the settlement with American Home Products, the manufacturer of the fen-phen drug. The others included Lexington-area lawyers Shirley Cunningham, William Gallion and Melbourne Mills Jr.

The lawyers received roughly 50 percent of the $200 million settlement. Their 431 clients received the rest.

Chesley, himself, collected a $20.5 million fee for negotiating the settlement.

The clients later sued the lawyers for allegedly breaching their duties by diverting most of the settlement money to themselves.

In 2009, Cunningham and Gallion were sentenced to 20 years in federal prison for their roles in stealing the settlement money. Mills was acquitted of all charges. All three have lost their law licenses.

The court also disbarred David Helmers, who was a relatively new associate at the law firm Gallion, Baker & Bray PSC at the time of the settlement.

The court, while it was sympathetic to that fact, determined Helmers committed "serious ethical violations."

In October 2011, the court also permanently disbarred Joseph F. Bamberger, a senior status special judge who approved the settlement, calling his ethical violations "highly egregious."

"Respondent's conduct shocks the Court's conscience," Minton wrote at the time.

It was revealed that Bamberger, who had resigned, was paid $5,000 a month as a director of a phony charitable entity, The Kentucky Fund for Healthy Living, which was funded by the settlement and allegedly directed by the lawyers.

Chesley's disbarment in Kentucky -- which takes effect immediately -- could mean disbarment in his home state of Ohio as well. The two states have a reciprocal agreement.

According to Ohio Supreme Court rules, an attorney disciplined in another state must notify the court's disciplinary counsel within 30 days.

After that, the high court "shall impose the identical or comparable discipline imposed in the other jurisdiction," barring mitigating circumstances.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Want to get notified whenever we write about any of these organizations ?

Sign-up Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Kentucky Supreme Court Ohio Supreme Court

More News