Kentucky Bar Association v. Helmers

353 S.W.3d 599 (2011)

Facts

D worked for the law firm of Gallion, Baker, and Bray as a clerk during law school and as an associate after being admitted to the Bar in 1997. D worked on injuries arising from the use of the diet drug Fen-Phen. A class action was filed in the Boone Circuit Court against American Home Products (AHP). The plaintiffs signed contingent fee contracts with William Gallion, Shirley Cunningham, Melbourne Mills, Jr., and Richard Lawrence for representation. The attorneys were entitled to fees equaling 30% to 33.3% of any recovery in addition to expenses. D worked under Gallion's supervision and spent countless hours on the case. D served as a contact person for the plaintiffs and opposing counsel. The Court ordered the parties to mediate. D attended the mediation, along with Gallion, and took notes. D also signed the final settlement agreement, which gave an award of $200,000,000. The settlement was contingent on the decertification of the class action claims. It also required that unless 95% of the plaintiffs sign a release by a certain date, the settlement could be terminated by AHP. The settlement would be allocated among the various plaintiffs by the Gallion firm. D appeared with other attorneys and decertified the class action, and the court granted their request. D was ordered to prepare a schedule setting the monetary amount that each of the settling plaintiffs would receive. D created the schedule and presented it to AHP for approval. D met with thirty-nine clients and obtained their releases. D led the client to believe that the settlement award offer came straight from AHP. They were not inform them that their attorneys had decided how much their individual monetary award would be. They were not told that the class action had been decertified and dismissed nor that $7,500,000 of the settlement fund was being held to indemnify AHP against certain other claims. D was instructed to offer each client an amount substantially below the amount assigned to that client in the predetermined allocations that AHP had approved. Any plaintiffs who refused were presented with a larger offer at a later date. D made it appear that there was an actual settlement negotiation with AHP. None were told they could refuse the offer and none were provided copies of the documents they signed. Additionally, D told many of the clients that if they spoke to others about their settlement award, they could face a penalty assessment of $100,000. The truth leaked about the settlement being $200,000,0000 and not $150,000,000 like everyone had been told. Gallion instructed D to make a second distribution of settlement money. D then sent a letter stating that the trial court had authorized a second distribution. This letter revealed that an unspecified amount was being held in escrow to indemnify certain third parties. D also asked if the plaintiffs would object if some of the undistributed award money was given to charity. A donation to the 'Kentucky Fund for Healthy Living, Inc.' in the amount of $20,000,000 was made, but no one was told that the Fund was controlled by one of the attorneys. The disbarments started, and D was eventually investigated.  The Trial Commissioner found D guilty of six of the eight. The recommendation was that D be disbarred for 5 years. The Board of Governors of the Kentucky Bar Association found D guilty in a trial de novo and recommended that D be permanently disbarred from the practice of law in Kentucky and that he pay all costs associated with this action.