Lawyer should be disbarred, return $7.5 million in fees from fen-phen case, hearing officer says

Class action lawyer Stanley M. Chesley should lose his law license in Kentucky and return more than $7.5 million in fees he collected in a controversial $200 million fen-phen class action settlement, according to a hearing officer's opinion.

The preliminary opinion, filed Tuesday, now goes to Board of Governors of the Kentucky Bar Association and the Kentucky Supreme Court, which might or might not accept the recommendation of the hearing officer, former Franklin Circuit Judge William L. Graham.

Graham noted in his findings Tuesday that Chesley had never been disciplined by a bar association during his long legal career. But he said Chesley's "character witnesses and his prior unblemished record are insufficient to mitigate Chesley's egregious conduct in this case."

He recommended that Chesley should be disbarred from practicing law in Kentucky.

Prosecutors charged three Lexington-area lawyers, William Gallion, Shirley Allen Cunningham and Melbourne Mills Jr., with illegally pocketing millions of dollars that should have gone to clients in the 2001 fen-phen case.

Gallion and Cunningham have been sentenced to 25 years and 20 years in prison, respectively, on federal criminal charges stemming from the case. They are appealing. Mills, who was acquitted of charges, was permanently disbarred.

Chesley joined the fen-phen case to use his class-action expertise in reaching a settlement. He was never charged.

Graham concluded, however, that Chesley ultimately received more than $20 million in fees, an amount Graham said was "unreasonable" and in violation of court procedural rules.

He said Chesley should "disgorge" $7,555,000 in excess fees "as restitution to his clients."

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