Three attorneys have been temporarily suspended from practicing law in Kentucky because of questions about the way they divided a $200 million settlement from a fen-phen lawsuit.
The Kentucky Supreme Court took the action in written rulings released last Thursday.
In an order signed by Deputy Chief Justice Will T. Scott, justices said they found probable cause to believe that the attorneys had diverted funds to their own use.
Linda Gosnell, chief counsel for the Kentucky Bar Association, had argued before the Supreme Court last week that the attorneys — William Gallion, Shirley Cunningham Jr. and Melbourne Mills — improperly took more than their share of the settlement. The lawyers, all from Lexington, represented hundreds of clients in a lawsuit over the diet drug.
“Their conduct was drastic,” Gosnell told the court. “This is a case of absolute, unbridled greed.”
The Kentucky Bar Association’s Inquiry Commission had recommended the temporary suspensions.
Supreme Court Justice Joseph Lambert recused himself from hearing the case.
A lower court judge had previously found that the attorneys in the diet-drug case breached their duty to the more than 400 clients they represented. The clients have sued the lawyers in Boone County Circuit Court in northern Kentucky.
Out of a slightly more than $200 million settlement, about $45.5 million went to about 440 clients and the rest was split among attorneys and consultants, Gosnell told the court.
Mills said last week that he received about $23 million for his work, a number he said was within the 30 percent of his agreed share of the settlement.
Defense attorney William E. Johnson was out of his office Thursday and unavailable for comment, a receptionist said.
Johnson acknowledged last week that his clients should have done a better job of accounting their expenses in the case. However, Johnson said suspension of his clients’ law licenses was a “severe imposition of punishment.”
Lawyers and consultants involved in the lawsuit received $106 million collectively of a $200 million settlement and also set aside $20 million of the settlement to create the nonprofit fund. The lawyers received roughly $20 million each.
Several clients raised questions about the settlement, and the clients sued the lawyers in 2004, demanding an accounting.
The lawyers sued American Home Products in 2001 and settled the case on behalf of their clients, who said fen-phen damaged their hearts.
After the plaintiffs’ claims were settled, additional money was retained in case other people turned up with a claim.
Former Judge Joseph Bamberger, who presided over the lawsuit, resigned in February after he was publicly reprimanded by the state’s Judicial Conduct Commission for profiting from the settlement and increasing fees and expenses for lawyers and for a friend involved in the case.
Bamberger was accused of giving attorneys, including one of his personal friends, somewhere between $86 million and $104 million from the 2001 fen-phen settlement.
In addition, Bamberger allowed more than $20 million from the settlement to be put into a charitable fund, and then he allegedly became a paid director of the fund, receiving $5,000 a month plus a $350 monthly expense allowance, the commission said.
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