Chesley Faces Scrutiny Over Fees

A Cincinnati attorney who gained national prominence as “the master of disaster” for his expertise representing victims in class action lawsuits could face legal sanctions over his role in a $200 million settlement in a Kentucky case involving fen-phen.

Attorney Stan Chesley’s conduct in the 2001 settlement is being reviewed by a Lexington judge handling a lawsuit filed by more than 400 of the former plaintiffs in the fen-phen case. They allege Chesley is among attorneys in the case who took fees that exceeded their contracts.

Special Judge William Weir already has ruled that three Lexington attorneys — Shirley Cunningham, William Gallion and Melbourne Mills — violated the contract and accepted excessive fees. The action breached the trio’s fiduciary duties to the plaintiffs, Weir said.

Plaintiffs in the lawsuit allege Chesley knew that the other attorneys in the fen-phen case accepted fees that violated their contract. That’s because Chesley received $20.5 million for his role in negotiating the settlement. As Chesley’s deal called for him to get 21 percent of the three attorneys’ fees, that showed the trio received nearly $100 million — half of the settlement — and exceeded what was allowed.

Chesley has argued that he had no direct contact with plaintiffs in the fen-phen case and that his fiduciary duties were to the three attorneys who hired him, not the plaintiffs.

If the judge decides Chesley violated his fiduciary duties, he could make Chesley give away more of the settlement funds or make him pay punitive damages.

Chesley, 70, lives on an Amberley Village estate with his wife, U.S. District Judge Susan Dlott. He is a frequent contributor to the campaigns of Democratic and Republican political candidates.

Fen-phen was a popular prescription weight loss drug in the 1990s until it was shown to cause heart disease in some people.

— Kevin Osborne

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2 Comments on “Chesley Faces Scrutiny Over Fees”

  1. Anonymous Says:

    Alleged lifelong Democrat Chesley has had some strange Republican bedfellows lately. After AG Jim Petro threw him two big state lawsuits in 2003 (Medicaid and Freddie Mac), Chesley hosted a Petro fundraiser that added $50K to Petro’s eventual failed run for Guv. Now Phil Heimlich’s latest campaign finance report shows Chesley donating $9800 to Phil Heimlich. Everybody remembers that Phil threw Stan the Bengels lawsuit.

    Petro’s now under investigation by the FBI for taking state patent-related legal work away from an Akron law firm that had long handled state patent work and throwing the work to an Akron law firm that ponied up big donation bucks that had no expertise in paten law.

    Will they also be taking a look at the Master of Disaster?

  2. Anonymous Says:

    This week in Forbes:

    (Last) week Ohio Attorney General Jim Petro appointed Cincinnati firm Waite, Schneider, Bayless & Chesley to represent the Ohio Tuition Trust Authority in its case against the Putnam American Government Income fund.

    Stan’s certainly gotten cozy with Phil Heimlich and his Republican chums. Pretty pathetic to see a guy as old and rich as Chesley have to crawl with that bunch.

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