Legal News

Disbarment Recommended for Heavyweight Lawyer Stan Chesley

By Ashby Jones

The Kentucky fen-phen case, which has already produced prison sentences for two plaintiffs’ lawyers, has landed yet another — superlawyer Stan Chesley — in a bit of hot water.

The WSJ’s Dionne Searcey has the story today. The long-and-the-short: On Tuesday, a Kentucky judicial official said Cincinnati mass-tort lawyer Chesley, who made a killing in breast-implant litigation, should be disbarred for bilking clients out of millions in the settlement of a 1998 fen-phen lawsuit.

Click here for the order, from Trial Commissioner William L. Graham; click here, here, here and here for earlier LB posts on the Kentucky fen-phen situation.

Graham’s recommendation marks the latest legal twist following the suit filed by people who had taken fen-phen over the drug’s alleged health risks. The suit ended in a $200 million settlement paid by drug maker American Home Products.

Fee fights among plaintiffs’ lawyers involved in the case began early on, and the Kentucky Bar Association was called to investigate alleged misrepresentations about the settlement. Two plaintiffs’ attorneys eventually received prison sentences for defrauding clients, and the judge who handled the case stepped down from the bench.

Judge Graham accused Chesley of defrauding plaintiffs out of about $7.5 million in fees. The report accused Chesley of muscling into fen-phen litigation under way in Kentucky’s Boone Circuit Court and strong-arming attorneys into sharing fees with him in exchange for his “expertise” in handling class actions.

The more than 400 plaintiffs weren’t notified, at least initially, of Chesley’s involvement nor were they ever told he had reached an agreement with their attorneys to share in 21% of attorneys’ fees in the settlement, according to the report.

Chesley’s actions were essentially “a cover-up of thievery,” Judge Graham said in a report that demanded the return of the money. “His callous subordination of the interests of his clients to his own greed is both shocking and reprehensible,” Judge Graham wrote.

Chesley’s attorneys said they planned to appeal to the Kentucky Supreme Court, which will make a final determination on the commissioner’s recommendation. The attorneys cited a federal probe of the case, which didn’t result in charges against Chesley. “His findings are directly contrary to the findings of federal authorities, who fully investigated this case and never considered Mr. Chesley a target of their investigation,” they said in a statement.

Full post as published by Law Blog - WSJ.com on February 24, 2011 (boomark / email).