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Famed tort lawyer Stan Chesley is disbarred for 'unreasonable' $20M fee in diet-drug case

Mass tort lawyer Stan Chesley has been disbarred for his role in a diet-drug case in which he earned $20 million to help negotiate a $200 million settlement.

The Kentucky Supreme Court released its opinion (PDF) disbarring Chesley on Thursday, report the Lexington Herald-Leader and the Associated Press. The Herald-Leader describes Chesley as a “famed Cincinnati trial attorney” sometimes referred to as “the master of disaster.” AP says he is “considered in legal circles to be the godfather of the modern class-action lawsuit.”

Two of the plaintiffs’ lawyers in the diet-drug case, Shirley Cunningham Jr. and William Gallion, are serving prison sentences for bilking clients out of $94 million in settlement money.

The Kentucky Supreme Court said Chesley’s $20 million fee “was unreasonable, especially in light of his professed ignorance and lack of responsibility for any aspect of the litigation except showing up at the mediation and going through the motions of announcing the agreement.” Even more critical, the court said, was a contingent fee agreement entitling Chesley to no more than $14 million, representing 21 percent of one-third of the $200 million recovery for plaintiffs injured by the diet drug fen-phen.

“An attorney’s fee in a contingency fee case that so grossly exceeds the fee provided for in the fee agreement is unreasonable per se,” the court said.

The court also said the 49 percent contingency fee charged by all of the plaintiffs’ lawyers exceeded the one-third contracted amount, and clients were not properly informed about the distribution. Chesley had maintained he was hired by the plaintiffs’ lawyers and was not responsible to individual case clients, but the court disagreed.

“The vast amount of evidence compiled and presented in this matter demonstrates convincingly that respondent knowingly participated in a scheme to skim millions of dollars in excess attorney’s fees from unknowing clients,” the court said.