"Master of Disaster" Faces Possible Disbarment for Role in Kentucky Fen-Phen Settlement

Over the next few posts, I want to follow up on some earlier posts and also talk about Supreme Court of Appeals decisions that, for one reason or another, I have overlooked.

You may remember that a couple of years ago, as a result of criminal charges that a trio of plaintiffs' lawyers took an extra $65 million from the settlements of 440 plaintiffs they represented in Fen-Phen litigation, two of the lawyers, Shirley A. Cunningham, Jr. and William J. Gallion, were found guilty and were sentenced to 25 years and 20 years, respectively, in federal prison. The third lawyer, Melbourne Mills, Jr., was acquitted. (To make matters worse -- if that's possible -- Joseph A. Bamberger, the Kentucky state court judge who approved the settlement, including the outrageous attorney's fees -- and also benefited financially from the settlement in a secret deal -- resigned in 2006 rather than be removed from the bench.)

Now it looks like the Fen-Phen attorney's fee scandal may claim one more, and perhaps its highest-profile, victim: Stanley M. Chesley, the so-called "Master of Disaster" and name partner of Cincinnati law firm Waite, Schneider, Bayless & Chesley.

Chesley, as co-counsel with Cunningham, Gallion, and Mills, received a $20 million fee for his help in settling the case, including an additional $4 million for convincing Judge Bamberger to increase the attorneys' take of the settlement to 49%.

Until now, Chesley's role had not received the scrutiny that the others' had. But today's WSJ.com reports that a Kentucky trial commissioner recommended on Tuesday that Chesley be permanently disbarred because his actions were basically "a cover-up of thievery," and that he be required to disgorge $7.5 million of his fee.

According to this article in today's online National Law Journal, Chesley has retained experienced appellate and criminal defense practitioners to represent him in his appeal of the trial commissioner's recommendation.

Chesley is admitted to practice in Kentucky and Ohio, so any disbarment in Kentucky would likely trigger the same discipline in Ohio, and render him unable to practice in any jurisdiction.

By the way, Chesley is married to Susan J. Dlott, who is a judge for the United States District Court for the Southern District of Ohio, so his possible disbarment must make for interesting dinner conversation.

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