Law

Stanley Chesley, Titan of the Plaintiffs' Bar, Crashes and Burns


Stan Chesley listens to arguments, during a hearing by the Kentucky Bar
Association board in 2011.

Photograph by David Perry/Lexington Herald-Leader/AP Photo

Stan Chesley listens to arguments, during a hearing by the Kentucky Bar Association board in 2011.

The big-time plaintiffs’ bar justifies its multimillion-dollar fees by claiming to vindicate the “little guy.” Justice ain’t free, according to free-wheeling trial lawyers, and taking on (alleged) corporate villains requires heavy pecuniary incentives.

Sadly, the titans of this elite segment of the bar have a tendency to flame out in spectacular bursts of greed and deceit, undercutting their claims of righteous dedication. The latest example is famed class-action attorney Stanley Chesley of Cincinnati, for decades one of the leading scourges of industries that range from pharmaceuticals, to chemicals, to firearms.

The Kentucky Supreme Court on March 22 upheld Chesley’s disbarment in that state for “unreasonable” fees received in the settlement of a class action originally filed in 1999 against Wyeth, now part of Pfizer. The allegation stemmed from $20 million in fees Chesley received for his involvement in an action concerning the diet drug known as fen-phen (fenfluramine/phentermine), which was shown to cause harmful side effects. The case was settled in 2001 for $200 million.

Under Ohio’s Rules of Professional Responsibility for lawyers, the disbarment in Kentucky may provide grounds for Chesley to get drummed out of the legal trade in his home state, as well.

Here’s a helpful description of Chesley’s troubles from Bloomberg News:

In 2009, two Kentucky lawyers involved in the case were sentenced to 20 years and 25 years in prison for stealing from the [diet drug] settlement fund. The lawyers had contracts entitling them to fees of as much as one-third of the $200 million awarded to a statewide group of Kentucky citizens who said they were harmed by diet drug. The lawyers tried to keep more than twice that amount, prosecutors said.

In its 38-page decision, the Kentucky Supreme Court noted that Chesley didn’t meet directly with any of the clients to effectuate the settlement, and it wasn’t shown that he had specific knowledge of the deception practiced on each client to secure the signed release.

The court did find that his “$20,497,121.87 share of the 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.”

Chesley’s lawyer, Sheryl Snyder, offered this non-denial and non-apology: “Stan Chesley has been a distinguished lawyer and continues to be a philanthropic supporter of his community. He has a previously unblemished record of legal service, and we are therefore disappointed with the court’s decision to impose such a severe sanction, especially in light of its finding that ‘it is not shown that he had specific knowledge of the deception practiced on each client’ by the other lawyers.”

Chesley joins a rogues’ gallery of such disgraced plaintiffs-bar giants as Mel Weiss, who pleaded guilty in 2008 to racketeering conspiracy in connection with his New York firm’s alleged improper payments of kickbacks to class-action clients, and Dickie Scruggs, the legendary Mississippi anti-tobacco attorney who pleaded guilty, also in 2008, to crimes related a judicial-bribery scheme.

And let’s not forget Bill Lerach, described by Ann Woolner of Bloomberg News as “the convicted felon once labeled the lawyer who brought corporate America to its knees.” In October 2011, Woolner caught up with Lerach in post-incarceration retirement:

These days, most things are good for the 65-year-old Lerach, who pleaded guilty in 2007 to a $251 million client-kickback scheme.

Having left prison 19 months ago, he’s in a retirement many might envy. On most days, he spends hours tending the boysenberry bushes, blueberries, fruit trees, and vegetable garden spread among the lush greenery surrounding his $24 million Italianate home. The house is perched 250 feet above the Pacific Ocean.

Allegations of plaintiffs’ lawyer chicanery are also playing out right now in a monster oil-pollution case in Ecuador. In February 2011, a group of attorneys led by Steven Donziger, a New York sole practitioner, won an historic $18.2 billion verdict against Chevron. Donziger and his colleagues claimed to be working on behalf of rainforest residents harmed by decades of contamination. Chevron, however, has counterattacked, arguing in a pending civil racketeering suit in New York that Donziger’s apparent victory actually reflects an elaborate fraud in the Ecuadorian courts involving fabricated evidence and ghostwritten court documents—accusations that Donziger denies.

Donziger has not been found responsible for wrongdoing by a court. He has not been charged by a prosecutor. The allegations against him, however, are deadly serious. Once again, questionable conduct by a celebrated plaintiffs’ attorney has cast doubt on the justness of the cause he purports to represent. The Chevron case deserves continued attention.

Barrett_190
Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, tells the story of the Chevron oil pollution case in Ecuador.

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