Results matching “kentucky fen-phen”

The Kentucky Enquirer reports that the judge who approved a $200 million class action settlement in a fen-phen diet drug lawsuit for which plaintiffs' lawyers are accused of looting from the "victim" class has testified he is embarrassed by the way he handled the case.

Retired Circuit Court Judge Joseph "Jay" Bamberger was on the stand in U.S. District Court in Covington, Ky., on Wednesday in the fraud trial of three Lexington attorneys accused of keeping $45 million dollars that should have gone to plaintiffs they represented, and of putting $20 million more into a "charity" that all three, as well as the judge himself, were paid $5000 each month to administer.

Bamberger told the court he had never presided over a class action lawsuit before and depended on the advice of Cincinnati class action attorney Stan Chesley.

Lawyers Shirley Cunningham Jr., William Gallion and Melbourne Mills Jr. are being tried on charges of conspiracy to commit wire fraud.

Jurors at their trial watched a videotape of a May 2001 hearing in which Bamberger approved the multimillion-dollar settlement. In the video, Bamberger seeks advice from Chesley on the proper way to proceed with the case. Chesley is heard on the tape making a self-deprecating joke about his qualifications as a class-action expert. Over the laughs that follow, Bamberger said Chesley was "taking the role" of the expert in the fen-phen litigation.

Bamberger stepped down from the bench in February 2006 to avoid being removed by Kentucky's judicial conduct commission for his actions.

Kentucky fen-phen fraud trial underway - PointOfLaw Forum

We've been covering this story for some time -- April 2007 and much earlier -- and the criminal trial of three of the Kentucky fen-phen attorneys who stole tens of millions from their clients begins today. (Andrew Wolfson, "Fen-phen trial gets under way", Louisville Courier-Journal, May 13). Andrew Wolfson has an overview at the Louisville Courier-Journal. The strategy of Gallion, Cunningham and Mills appears to be to blame their co-counsel Stan Chesley. The question arises why he hasn't also been indicted, as he took millions of dollars more than he was contractually entitled to on his own. Judge Joseph "Jay" F. Bamberger, who received at least tens of thousands of dollars directly from the settlement after approving it, will testify, but has not been indicted. Also not indicted: Bamberger's former law partner, Mark Modlin, who received millions of dollars from the fen-phen lawyers, helped negotiate the judicial approval of the settlement, and then bought a house in Florida with the judge.

Fen-Phen Lawyers Go on Trial in Kentucky - PointOfLaw Forum

A high-profile criminal trial of three class-action attorneys charged with cheating their clients out of some of the $200 million Fen-Phen settlement money begins today in Covington, Ky. The Lexington Herald-Leader looks like it will have continuing coverage:

William Gallion, Shirley Allen Cunningham Jr. and Melbourne Mills Jr. go on trial in Covington on Monday before U.S. District Judge William O. Bertelsman.

Bertelsman perhaps set the tone himself in a comment during a hearing last year: "Not only these three gentlemen are on trial, but the whole legal profession is on trial."

The Herald Leader notes that the case has attracted national attention and has prompted a reconsideration of how class-action lawsuits are conducted in Kentucky. In February, Chief Justice Joseph E. Lambert appointed 12 attorneys to serve on the nearly created Mass Tort and Class Action Litigation Committee. (News release.) The AP had a story that framed the issues in February.

UPDATE (10:30 a.m. Tuesday): Good summary in the WSJ's Law Blog. We'd forgotten that two of the lawyers used the gains to purchase Preakness winner Curlin. Hope that doesn't make the current legal proceedings a win-place-or-show trial.

Magistrate upholds Ky. fen-phen indictments - PointOfLaw Forum

The three lawyers accused of stealing more than $65 million from clients had argued that federal investigators violated confidentiality rules when they sent law firm employee Rebecca Phipps into private meetings to gather evidence of the scheme. "U.S. Magistrate Judge Gregory Wehrman declined to dismiss the indictment but agreed to hear more information about evidence gathered during the course of the investigation," per the Lexington paper. Judge Bertelsman imposed unusually heavy bond requirements: $52 million for William Gallion; $45 million for Shirley Cunningham, Jr.; and $5 million for Melbourne Mills, Jr. (earlier).

Cincinnati Enquirer on fen-phen scandal - PointOfLaw Forum

Last month the Cincinnati Enquirer published a special section laying out what's known about the Kentucky fen-phen scandal in which lawyers covertly pocketed $125 million of a $200 million settlement over the diet drug, leaving $75 million for their clients. We've covered the scandal extensively at this site and at Overlawyered. Somewhat relatedly, it appears that attorney Angela Ford, who has been representing victimized clients in the affair, is going after at least some other lawyers in other parts of the country who worked with the Kentucky lawyers. Forty-nine plaintiffs represented by Ford "allege J. Brent Austin of Lexington, the defunct Mississippi law firm of Langston, Sweet and Freese, and the Alabama firm of Beasley, Allen, Crow, Methvin, Portis & Miles bilked them of the money." Beasley Allen says it did not take any improper fees and suggests that if there were any shortfalls in what its clients received, the problem was at the Kentucky lawyers' end.

Around the web, October 10 - PointOfLaw Forum

  • Generic charges of statistical disparities, unconscious bias and too-wide managerial discretion fuel current wave of employment-bias class actions -- and rare is the big employer not vulnerable on one or more of those fronts [Parloff, Fortune]
  • Kentucky officials sue maker of Oxycontin seeking recoupment of money spent on drug abuse programs, policing [AP]
  • One perspective on the tainted-hamburger scare [Szwarc]
  • Underplayed angle in Stoneridge hubbub: law firms themselves are a prime target for suits alleging aiding and abetting [NLJ]
  • Three members of San Antonio family are indicted on charges of submitting fraudulent fen-phen charges [USDoJ]
  • Washington state's unique sovereign un-immunity rules keep generating big suits over crimes committed by ex-cons [Seattle Times (Algona hit/run, $1.8 million settlement), KOMO (murder in Tacoma, family seeks $45 million)]
  • More attention for Ohio AG Marc Dann, scourge of subprime lending and much else [WSJ law blog, Columbus Dispatch via Chamber]

WSJ on Kentucky fen-phen scandal - PointOfLaw Forum

The Journal's lead editorial today (sub-only) is on the dramatic developments in the Kentucky fen-phen scandal, in which a federal judge has ordered three trial lawyers (Shirley Cunningham Jr., William Gallion, and Melbourne Mills Jr.) held in jail as flight risks pending trial on charges of doing clients out of $62 million in settlement funds. Ted covered the story at Overlawyered a week ago, and our extensive coverage of the issue is here and here.

Around the web, July 16 - PointOfLaw Forum

  • Where a case settles quickly, is a big contingency fee reasonable? [Nebraska Supreme Court, Hauptman, O'Brien v. Turco (PDF) via Sipple]

  • Kentucky is one of only four states whose lawyers aren't obliged to report misconduct by other attorneys or judges, and fen-phen scandal isn't going to change that [Courier-Journal]

  • Critique of Manhattan attorney's would-be class action seeking to ban "Ladies' Nights" at bars [Adler & Somin @ Volokh; Coleman & more at Overlawyered]

  • Lawyers want $58 billion-plus from ExxonMobil, other defendants over Greenpoint, Brooklyn underground spill [New York mag]

  • Los Angeles archdiocese in record $660 million deal to settle sex abuse claims [Bainbridge]

  • In the time it takes to get dressed, you could have filed a wage-hour suit against your employer over the time it takes to get dressed [NLJ]

Andrew Wolfson reports:

"The three Lexington lawyers already found in a civil suit to have defrauded clients in Kentucky�s $200 million fen-phen settlement were indicted today on charges of conspiracy to commit wire fraud.

"A federal grand jury in Covington accused Melbourne Mills Jr., Shirley Cunningham Jr., and William Gallion each of one count of fraud and demanded that they forfeit $46 million in misappropriated funds and more than $21 million in fees that had parked in a charitable fund."

The fourth attorney involved, Ohio powerhouse Stan Chesley, was not indicted. Earlier: May 15, Apr. 5, Apr. 4, etc.

Curlin and the fen-phen scandal - PointOfLaw Forum

For some time now Overlawyered has been covering the story of the Preakness-winning thoroughbred whose lawyer-owners happen to be deeply implicated in the still-unfolding Kentucky fen-phen scandal. Was the horse purchased with the proceeds of litigation fraud? The New York Times has a front-page story in today's edition.

Earlier: May 11, May 8, Apr. 5, Apr. 4, etc.

  • Barbara Bonar gets supporting testimony in her claims against Stan Chesley, but loses bench trial in case she brought over questionable settlement over Catholic church sex abuse. Bonar, the next president of the Kentucky Bar, will appeal. In the meantime, she faces trumped up ethics charges for representing class member opt-out settlements. (Andrew Wolfson, "Covington lawyer loses fee dispute case", Louisville Courier-Journal, May 12).
  • Angela Ford, who is bringing the lawsuit on behalf of Kentucky fen-phen victims ripped off by their attorneys against their co-counsel, Stan Chesley, is now also facing what seems to me retaliatory political pressure; a Hamilton County, Ohio, judge, apparently unaware of deposition commissions, is complaining that she subpoenaed an Ohio witness without being licensed to practice law in that state. For some reason, a Kentucky judge, Stanley Billingsley, is testifying on behalf of Chesley. An American Home Products witness contradicted defendants' claims that they "set aside" some settlement money for future Kentucky claimants (who, under the U.S. Supreme Court Amchem precedent, could not be bound by the settlement). And the parties are in mediation tomorrow and Thursday, which, judging by Chesley's attorney's complaints about press coverage, implies a confidential settlement is near. Next court hearing is May 31. (Shelly Whitehead, "Fen-phen suit heads to mediation", Cincinnati Post, Apr. 24; Beth Musgrave and Jim Warren, "Lawyers meet Wednesday to try to reach deal on fen-phen millions", Lexington Herald-Leader, May 14).
  • Angela Ford herself has a website, which is not surprising, but it does include a remarkable resource of publicly-available court documents related to the Abbott v. Chesley case.

New at Overlawyered - PointOfLaw Forum

Stories you might have missed if you're not reading my (and Ted's, and David Nieporent's) other site:

Ross Billing Ethics Survey - PointOfLaw Forum

WSJ Law Blog reports on Professor William Ross's recent survey of 251 attorneys, which indicates that most attorneys are aware of other attorneys who pad hours. I don't disagree with this conclusion, but I think the problems of bill-padding and double-billing likely pales in comparison to (1) the expense incurred by parties because of lawyers making overconfident recommendations to embark on misguided litigation where those recommendations happen to coincide with the interest of the attorney to bill more hours; and (2) the excessive billing caused by law-firm technological and human-resources inefficiencies that regularly result in the wheel being reinvented at client expense. A disturbing number of the hours I billed as an attorney came about because my firm got involved in a case where a lawyer with a creative theory of business-competition-through-litigation initiated a suit that ultimately cost his or her client more money in the long run.

Stephanie Mencimer (whose blog post headline seems to misunderstand the fact that the study did not involve self-reporting) sneers that this result should be trumpeted as loudly as well-publicized problems of plaintiffs' attorneys stealing from their clients (e.g., Kentucky fen-phen or the Milberg Weiss indictment). But there is a critical difference. Plaintiffs' attorneys are dealing with one-time players; attorneys for corporate defendants (and plaintiffs) are usually repeat players. Thus, the latter faces a certain degree of market discipline that a plaintiffs' attorney does not: sophisticated clients can compare and contrast bills and results from the different law firms they hire, as well as hire third-party analysts to scrutinize bills. A law firm whose bills are out of line with results will lose business in the long run. Plaintiffs' attorneys face no such disincentive, and their ability to capture rents present a much greater public-policy problem, not least because (unlike the case of defense counsel) it also creates the incentive to engage in litigation with negative externalities.

I especially like one easy customer-service-based solution to the potential problem of hourly bill padding. Seattle law firm Summit Law Group has an innovative policy of a "value adjustment line" on all of their bills: "We empower each of our customers with the right to adjust our billing, upward or downward, based on our customer�s perception of the value received, not ours." Summit claims that, over the years, clients have been more likely to adjust bills upward than downward. This obviously is much more likely to work in the repeat-player context where the law firm can fire the client as well as vice versa.

So wrote Boone Circuit Court Senior Judge William Wehr in a motion denying both Stan Chesley's motion to dismiss a suit against him in the Kentucky fen-phen fee scandal. But, with plaintiffs' summary judgment motion also denied, a jury will ultimately decide how much that "more" should be, and whether a fiduciary duty was broken. The same order denied a request by Melbourne Mills to reconsider the finding that a fiduciary duty was broken. Chesley's attorneys state that he will pay back $7 million of his $20 million fee. (Jim Hannah, "Chesley made too much", Cincinnati Enquirer, Apr. 5). Earlier: OL Mar. 26 and links therein. (Cross-posted at Overlawyered.)

"Fen-Phen Zen" - PointOfLaw Forum

Hey, I just write the column about the Kentucky fen-phen fraud, not the headlines. Earlier on Overlawyered: Mar. 26 and links therein. (Cross-posted at Overlawyered.)

The trouble with cy pres - PointOfLaw Forum

Class action settlements often require donations to public-interest groups. Defendants are amenable to this, because it means that the punishment is a meaningless shift of money that would have been spent on charity anyway; plaintiffs' attorneys like this, because it increases the size of the apparent "relief" that justifies high attorneys' fees; judges go along, sometimes because they like the causes their money is supporting. (And those causes are often allies of the trial bar, thus encouraging more litigation down the line.) Little wonder that trial lawyer Michael Hausfeld spoke of the importance of cy pres at yesterday's Federalist Society Panel.

Another problem that may well be more common if investigated more fully: kickbacks. In the now infamous Kentucky fen-phen settlement, millions were diverted to a new charity that then paid the judge as a board member (OL Mar. 6). And now it is revealed that another $1 million of the settlement (negotiated by plaintiffs' bar star and top Democratic Party donor Stanley Chesley, who received $20 million for his troubles) went to Florida A&M Law School—which agreed to pay one of the lawyers, Shirley Cunningham, $100,000/year for a no-show professorship. A Florida state investigation calls evidence of criminal activity "inconclusive," but suggests the school seek its money back. (Andrew Wolfson, "Ky. lawyer's Florida A&M pay 'not earned'", Louisville Courier-Journal, Feb. 8). (Similarly: Peter Lattman on Richard Epstein on a donation to Seton Hall; for a general overview relatively sympathetic to trial lawyers, see Geoffrey P. Miller & Lori S. Singer, Nonpecuniary Class Action Settlements, 60 Law & Contemp. Probs. 97 (1997).)

More on Kentucky fen-phen scandal: OL Feb. 14 and links therein.

Kentucky fen-phen scandal - PointOfLaw Forum

One of the lawyers accused of plundering the $200 million settlement says he thinks he and colleagues burned or otherwise destroyed any paperwork documenting the rationale for the divvying up of the proceeds. Moving forward in court: a demand that famed tortster Stanley Chesley and others disgorge tens of millions in ill-gotten fees. I've got the story at Overlawyered this morning.

Kentucky fen-phen lawyers suspended - PointOfLaw Forum

Melbourne Mills, Shirley Cunningham Jr. and William Gallion were "temporarily suspended" from the practice of law by the Kentucky Supreme Court this week. The three had taken well over half of a $200 million settlement Wyeth had given them on behalf of 440 fen-phen users they had represented. (Brandon Ortiz, "3 Fen-phen case lawyers are suspended", Lexington Herald-Leader, Aug. 25; Andrew Wolfson, "Fen-phen case fees poured into racehorses", Louisville Courier-Journal, May 30; Andrew Wolfson, "Judge: Fen-phen lawyers breached duty", Louisville Courier-Journal, Mar. 10; Beth Musgrave and Jim Warren, "Fen-phen settlement is back in the courtroom", Lexington Herald-Leader, Jan. 29, 2005 (reprint)). More: May 10, 2005 (civil lawsuit); Mar. 6 (judge who profited from approval of settlement resigns).

Mills was recently in the news because he won a suit against a secretary who claimed (with the help of a recording) that he promised her an "Erin-Brockovich"-style payment for her help in the settlement. (Brandon Ortiz, "Ruling benefits Melbourne Mills Jr.", Lexington Herald-Leader, Apr. 4). (cross-posted at Overlawyered)

Judge resigns in Ky. fen-phen scandal - PointOfLaw Forum

Last May 10 we reported on the questions that were being asked about a sealed settlement of Kentucky fen-phen claims which had included (along with vast sums in legal fees) the quiet diversion of $20 million into a mysterious new charitable entity called the Kentucky Fund for Healthy Living. Now the mystery has turned to scandal: the judge who approved the settlement, Joseph F. ("Jay") Bamberger has resigned after allegations surfaced that he was serving as a director of the fund, receiving $5,000 a month (three of the plaintiff's lawyers were also paid directors). The state's Judicial Conduct Commission said Bamberger's actions "shock the conscience" and he faced possible removal had he not resigned. Particular attention is being focused on Bamberger's close ties to Mark Modlin, a trial consultant in the fen-phen case who has had co-investments with the judge. The alleged closeness between Bamberger and Modlin had led to protests from litigants in a number of earlier cases, including a high-profile priest-abuse case against the Catholic Diocese of Covington.

The commission's reprimand (PDF) revealed a startling fact. "The attorney fees approved were at least $86 million and perhaps as much as $104 million" -- well exceeding the $74 million that was split among the 431 claimants in settlement. A lawsuit continues on behalf of some allegedly victimized clients against four plaintiff's lawyers involved in the settlement, including big-league Cincinnati operator Stanley Chesley. (Beth Musgrave, "Fen-phen lawsuit judge resigns", Lexington Herald-Leader, Feb. 28; Jim Hannah, "Judge quits amid allegations", Cincinnati Enquirer, Feb. 28; "Investigation of Bamberger warranted" (editorial), Cincinnati Enquirer, Mar. 1; "A blistering rebuke" (editorial), Cincinnati Post, Mar. 1; Peter Bronson, "Hold this judge in contempt", Cincinnati Enquirer, Mar. 2)(cross-posted at Overlawyered).

Kentucky fen-phen settlement - PointOfLaw Forum

The Cincinnati Enquirer reports on a pending lawsuit that may focus attention on mass-tort settlement practices:

Thirty-four Kentuckians who shared in a multimillion-dollar, class-action settlement against the maker of the diet drug fen-phen say their former lawyers deceived them.

The group alleges that the lawyers who handled the settlement in May 2001 didn't tell them that at least $18 million was given to The Kentucky Fund for Healthy Living, a nonprofit corporation chartered and controlled by the lawyers.

Prominent Cincinnati mass-tort lawyer Stanley Chesley, who is named as a defendant in the suit but is not among the lawyers said to control the nonprofit group, called the action a "spite suit" with "no merit". More coverage: Lexington Herald-Leader, Louisville Courier-Journal. Update Mar. 6, 2006: judge resigns amid scandal.

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