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Tuesday, May 30, 2006

Courts - Even more on fall-out from Kentucky fen-phen case

Andrew Wolfson of the Louisville Courier Journal has more stories today on the fall-out from Kentucky's fen-phen case. (See earlier stories via this ILB entry from yesterday.)

"Lawyer defends his fee: Mills says most of case's millions are already gone" is the headline to the lead story, that begins:

Lexington lawyer Melbourne Mills Jr. said he knows his $23.6 million fee from Kentucky's fen-phen case sounds like a lot of money. But he said he has gone through most of it, and couldn't pay it back to former clients even if ordered to do so by a judge.

"If 10 years ago somebody had told me it is easier to make money than to keep it, I wouldn't have believed them," said Mills, a 75-year-old attorney known in Lexington for his TV ads that urge prospective clients to "call the man."

First, there were the "very significant taxes," Mills said, then the $2 million he said he had to pay to a former partner who alleged he had been cheated out of fen-phen fees on his partnership draw.

Next, there were the substantial bonuses he agreed to pay out of his fee -- $800,000 to his office administrator and $100,000 each to six employees, including his office cook.

Mills had to pay $125,000 to a paralegal to settle a sexual harassment suit in which she accused him of walking around his office in his underwear and allegedly trying to grab her and take her to bed with him, according to court records.

Finally, there was the Jan. 12 verdict from a Fayette Circuit Court jury, which found that Mills should pay $900,000 to a former assistant who said she suggested the fen-phen case and that Mills reneged on a promise to reward her with a huge bonus if he ever "obtained a big payday."

A judge has since reversed the judgment on the grounds that oral contracts are not binding for more than a year. That ruling has been appealed.

Here is a second Wolfson story today, this one about Lexington attorney Shirley A. Cunningham Jr., that begins:
When Shirley A. Cunningham Jr. announced in 2001 that he was giving $1 million of his fee from Kentucky's fen-phen case to endow a professor's chair at Florida A & M University's fledgling law school, officials at the historically black school were ecstatic.

But there was a catch. Cunningham, a 51-year-old Lexington lawyer, insisted on himself filling the chair that bore his name, at $125,000 a year in salary and benefits. Then, a school audit last spring found he hadn't done any work.

Cunningham's triumph turned into a major embarrassment, with no less than Gov. Jeb Bush denouncing the deal. "This arrangement stinks," President Bush's brother said after it was exposed last June by the St. Petersburg Times.

And things could get worse for Cunningham.

According to court documents obtained by The Courier-Journal, a federal grand jury is investigating his no-show at the law school in Orlando, and he is under investigation by both the FBI and the Florida Department of Financial Services. (The state had matched Cunningham's gift with $750,000.)

A third Wolfson story today is about Cincinnati lawyer Stan Chelsey, headlined "Wealth mounts for 'prince of torts'". Some quotes:
CINCINNATI — Dubbed the "master of disaster" and "prince of torts," he has represented tens of thousands of victims of airplane crashes, defective products, hotel fires and toxic spills.

By his own count, he has racked up more than $7 billion for his clients.

Forbes magazine once credited him with helping turn the plaintiffs bar "from a rag tag army of ambulance chasers into a force that strikes fear into the hearts of even the biggest, most powerful corporate defendants."

But Stan Chesley, one of the world's leading and most knowledgeable class-action lawyers, says he had no idea that his co-counsels in the $200 million Kentucky fen-phen settlement five years ago were deceiving their clients.

Chesley, of Cincinnati, collected a $20.5 million fee to negotiate the settlement and claims he had no legal duty to the 440 plaintiffs, because he was hired by their lawyers.

"I was not a lawyer for those people," he said in an interview earlier this year. The plaintiffs eventually received only one-third of the settlement.

Chesley, 70, declined to respond to a reporter's questions about the case, or his career.

The fourth and final story by Wolfson today is about Lexington lawyer Willaim J. Gallion. Headed "Fen-phen case fees poured into racehorses," the story begins:
William J. Gallion was a successful lawyer in Lexington long before the 2001 Kentucky fen-phen settlement made him an extremely rich one.

He has defended the University of Kentucky Medical Center in malpractice cases for at least 25 years, according to the university, which has paid his firm more than $1.2million in fees this fiscal year.

"My experience with Bill Gallion is that he is a very good lawyer," said plaintiff's lawyer Joe Savage, a former president of the Kentucky Bar Association who has litigated more than 10 cases against him.

But after money from the fen-phen case began to be disbursed, Gallion's former law firm sued him for allegedly diverting fees from that and other cases from the firm.

"He misrepresented to me the amount of the attorneys' fees and how they were divided," partner Michael Baker claimed in an interview, adding that Gallion, who left the firm to start his own, agreed to settle for a confidential sum and insisted that the case be sealed.

Gallion, who received $21.8million in the fen-phen settlement, declined to respond to any of more than three dozen questions submitted to him by registered mail.

But according to other media reports, Gallion has poured a portion of his settlement fees into thoroughbred racehorses.

Posted by Marcia Oddi on May 30, 2006 10:11 AM
Posted to Courts in general