Lawyers, as guardians of the law, play a vital role in the
preservation of society. The fulfillment of this role requires an
understanding by lawyers of their relationship with and function
in our legal system. A consequent obligation of lawyers is to
maintain the highest standards of ethical conduct.
There are a few of us out there who have devoted our careers to holding lawyers accountable for their negligence and lack of ethical practice.
Legal Malpractice Disasters Stemming
from the Handling and Litigation of Mass Tort Cases
Presented By:
William F. McMurry
WILLIAM F. MCMURRY & ASSOCIATES
5932 Timber Ridge, Dr., Suite 101
Louisville, Kentucky 40059
phone: 502-326-9000
fax: 502-326-9001
email: bill@courtroomlaw.com
web: www.courtroomlaw.com
2
William F. McMurry
WILLIAM F. MCMURRY & ASSOCIATES
5932 Timber Ridge, Dr., Suite 101
Louisville, Kentucky 40059
phone: 502-326-9000
fax: 502-326-9001
email: bill@courtroomlaw.com
web: www.courtroomlaw.com
WILLIAM F. MCMURRY specializes in medical and legal malpractice matters,
catastrophic personal injury and wrongful death litigation, and insurance bad faith lawsuits. He
recently obtained a $2.9 million verdict on behalf of a small town attorney who suffered a mild
traumatic brain injury as a result of a motor vehicle accident. He also received a recent medical
malpractice jury verdict of $2.1 million arising out of the failure to diagnose and treat a stroke
patient. He is currently pursuing product liability cases against manufacturers of medical
devices, contact lens solutions and ophthalmological surgical devices. Mr. McMurry recently
settled the only nationwide class action ever certified by a Circuit Court in Kentucky for an
estimated value of $16 million. The class action involved 15,000 elderly class members who fell
victim to a life insurance scam.
Mr. McMurry has devoted much of the past five years to victims of the Roman Catholic
Church childhood sexual abuse scandal. He represented 214 victims who filed complaints
against the Archdiocese of Louisville, Kentucky and was named lead counsel for the settlement
class of 243 victims in Louisville who settled their claims in June 2003, for $25.7 million. That
settlement was then the largest payout to victims consisting exclusively of the funds of a diocese
or archdiocese. Mr. McMurry is currently pursuing a nationwide class action against the Holy
See, seeking to hold the Vatican accountable for its role in the sexual abuse suffered by tens of
thousands of Catholic children in this country.
Mr. McMurry is recognized in Martindale-Hubbell’
s BAR REGISTER OF PREEMINENT
LAWYERS in the fields of legal and medical malpractice and has been awarded the “AV”
rating
by that organization. He is the only attorney in Kentucky Board Certified by the American
Board of Professional Liability Attorneys (ABPLA) as a Specialist in Legal Malpractice and
Medical Malpractice. Mr. McMurry is also Board Certified as a Civil Trial Specialist by the
National Board of Trial Advocacy (NBTA) and by the Florida Bar Board of Legal
Specialization.
More information regarding Mr. McMurry, including his verdicts and settlements, can be
viewed at his website, www.courtroomlaw.com.
3
Lawyers, as guardians of the law, play a vital role in the
preservation of society. The fulfillment of this role requires an
understanding by lawyers of their relationship with and function
in our legal system. A consequent obligation of lawyers is to
maintain the highest standards of ethical conduct.1
I. INTRODUCTION
When residents of the United States were asked in a 2002 Gallup poll about the amount
of trust they have for certain professions, only 25% of those polled felt that most attorneys could
be trusted. In comparison, 84% believed that most teachers could be trusted. Lawyers were
almost as untrustworthy as car dealers and managers of HMOs. This trend continued into 2005
where only 18% of those polled believed that lawyers had a high or very high honesty and
ethical rating. No doubt, such low ratings are due to the bad publicity caused by the egregious
conduct of certain attorneys.
Perhaps in no other arena than that of mass tort cases have attorneys fallen so prone to
public scandal. This work will address some of the most notorious scandals arising out of the
handling of mass tort cases. Furthermore, this work will look at the various ethic rules often
violated in handling mass tort cases and the consequences attorneys have faced due to their
mismanagement. Included in these consequences is the stigma these scandals leave on the
reputation of attorneys and the negative effect they bring to our standing in society and our
relationship with our clients. Finally, this work will discuss ways in which the community of
attorneys can help improve the public image of attorneys.
II. MASS TORT SCANDAL KINGS AND QUEENS
A mass tort can be defined as a “
civil action involving numerous plaintiffs suing a few,
common corporate defendants in state or federal court for an action arising from a single
accident or exposure to some product or substance.”
2 Typically, mass torts arise in three areas:
(1) mass disasters, (2) mass toxic exposure, and (3) defective product litigation.3
The following are just a few examples of the many public scandals created by the improper
actions of attorneys in handling mass tort cases. They provide a glimpse into why the public has
such a low view of our legal profession.
A. Shirley Cunningham, Melbourne Mills and William Gallion:
Thou Shall Not Steal Thy Clients Money
On May 12, 2008, three Lexington, Kentucky attorneys, Shirley Cunningham, Jr.,
Melbourne Mills, Jr. and William Gallion, faced their first day in trial as criminal defendants.
These attorneys are accused of taking over $65 million more than they were due in a settlement
1 Colo. R.Prof. Conduct preamble ¶ 13.
2 National Center for State Courts, State Justice Institute, Civil Litigation: Mass Torts FAQs,
http://www.ncsconline.org/wc/CourTopics/FAQs.asp?topic=MaTort, (Last modified April 23, 2007).
3 Id.
4
with the manufacturers of Fen-Phen.4 The three attorneys represented plaintiffs suffering from
heart injuries caused by the former diet drug. A $200 million settlement was reached with Fen-
Phen. $74.8 million was paid to Gallion, Cunningham and Mills, $30.7 million was paid to other
lawyers and consultants, and $20 million was paid to a charitable fund created by the attorneys.
The Government is seeking $45 million in damages and the return of more than $20 million that
the three lawyers placed in a charitable fund that paid them $149,800 each to manage.5 In what
some have called “one of the biggest legal frauds in U.S. history,”
the lawyers who represented
some 440 people, face up to 20 years in jail. They have already served over eight months in jail.6
Their trial started the week of May 12, 2008. Amazingly, an attorney for Defendant Melbourne
Mills in opening statements argued that “
his client was drinking so much during the alleged
conspiracy that he couldn’t have actively participated.”
7
The Kentucky Supreme Court had previously suspended the licenses of the three
Lexington, Kentucky attorneys, shortly after the scandal broke.8 The attorneys argued that their
licenses should not have been suspended, because their actions were approved by the judge
presiding over the case and settlement proceedings. However, after the judge was admonished
by a judicial review commission, he retired rather than face possible removal from office.9 The
three lawyers are facing a civil suit, have been suspended from the practice of law and are being
criminally prosecuted.
B. Louis Robles:
You Get Caught Stealing, You Will Go to Jail
Louis Robles was a renowned plaintiffs’
attorney based in Miami. Specializing in
Asbestos litigation, Robles once had 40 attorneys on his staff and represented 12,000 class action
clients. Beginning in 2002, the Florida Bar received complaints alleging that Robles charged
clients excessive contingency fees, undisclosed expenses and failed to pay adequate Asbestos
settlements. He filed for bankruptcy soon after and was disbarred by the Florida Supreme Court
in May 2003.10
A federal grand jury began investigating the matter which led to a 41 count indictment
including mail fraud and misappropriating $13.5 million in settlements funds. Robles accepted a
plea deal involving a 10 year prison term and full restitution to his victims.11
Richard Sharperstein, a Miami criminal defense attorney and former friend of Robles,
stated, “
He was a good lawyer with a fine reputation. Somewhere he went astray. He took a
4 Andrew Wolfson, Diet-Drug Trial to Begin Today, COURIER J. A1 (Louisville, Ky.), (May 12, 2008).
5 Id.
6 Id. at A4.
7 Andrew Wolfson, Diet-Drug Attorneys on Trial, COURIER J. B1 (Louisville, Ky.), (May 14, 2008).
8 Andrew Wolfson, Fen-Phen Lawyers Suspended by Court, COURIER J. B1 (Louisville, Ky.), (Aug. 25,
2006).
9 Id.
10 Julie Kay, Asbestos Attorney Accepts 10-Year Term in Plea Deal, Daily Business Review, (Apr. 18, 2007),
http://www.law.com/jsp/article.jsp?id =1176887061450.
11 Id.
5
wrong turn down a dead-end street, whether due to greed, divorce, I don’
t know. In an era where
lawyers are already smeared or have a bad rap, this doesn’t help.”
12
C. Barbara Bonar:
Know Your Client
Barbara Bonar, the Kentucky Bar Association’
s president-elect, has been accused of
acting unethically in her representation with priest-abuse litigation against the Roman Catholic
Diocese of Covington. Specifically, Bonar settled certain individual suits while continuing to
serve as co-counsel for a class action suit against the Diocese. Settling cases for individual
clients could reduce the settlement funds available for the class members as a whole, and is
generally prohibited.13 Such acts could constitute a “current client conflict of interest.”
14
Bonar collected $1.3 million in fees from individual clients who were not members of the
class action suit. A Circuit Court Judge ruled that Bonar was not entitled to a share of the class
action settlement due to her ethical violations.15
D. Melvyn Weiss and William Lerach:
Money is the Root of all Evil
Melvyn Weiss and William Lerach were partners at the Millberg Weiss law firm.16 On
March 20, 2008, Weiss pled guilty to conspiring to, “
pay off plaintiffs in lawsuits against
corporations on behalf of shareholders who contended corporate misconduct had occurred.”
17
The scheme was developed in order to place Weiss’
firm in the best position to control any
litigation and collect large fees. Weiss will serve 33 years in prison and will pay back $9.75
million to clients and $250,000 in fines.
William Lerach pled guilty to charges of conspiracy to obstruct justice in October
stemming from the same securities-fraud scheme.18 Lerach was sentenced to two years
probation, 1,000 hours of community service, a $250,000 fine and a forfeiture of $7.75 million.19
Lisa A. Rickard, president of the Institute for Legal Reform at the U.S. Chamber of
Commerce stated, “
Bill Lerach and Melvyn Weiss practically invented the securities class-action
lawsuit and used it throughout their careers to cause major harm to our judicial system…
The
lawsuits they brought resulted in overcompensating some investors and shortchanging others –
all while collecting hundreds of millions of dollars in legal fees for themselves.”
20
12 Id.
13 Andrew Wolfson, Kentucky Bar Association investigates Two Presidents-elect, COURIER J. C1
(Louisville, Ky.), (Mar. 14, 2008).
14 A.B.A. Model R. Prof. Conduct 1.5.
15 Wolfson, Kentucky Bar Association Investigates at C1.
16 Johnathan D. Glater, High-Profile Trial Lawyer Agrees to Guilty Plea, N.Y. Times. C1 (Mar. 21, 2008).
17 Id.
18 Michael Parrish, Leading Class-Action Lawyer is Sentenced to Two Years in Kickback Scheme, New York
Times. (Feb. 12, 2008).
19 Id.
20 Jonathan D. Glater, High-Profile Trial Lawyer Agrees to Guilty Plea, New York Times C1, (Mar. 2008).
6
E. Richard Scruggs: The [Former] King of Torts: The Higher You Are, The Harder You
Fall
Once dubbed the “King of Torts,”
Richard Scruggs, along with four co-defendants were
indicted on November 28, 2008 on bribery charges.21 Scruggs, the well-known Mississippian
who battled the Tobacco industry into a $246 million settlement in 46 different states, will face
up to five years in prison.22
Circuit Judge Henry Lackey received a $40,000 bribe from a Scruggs associate in
exchange for a favorable ruling involving a fee dispute with Hurricane Katrina insurance work.
In January 2007, State Farm agreed to a $26.5 million settlement with the Scruggs Law Firm
representing the unpaid plaintiffs. Jackson attorney John Griffin Jones worked with Scruggs on
the Katrina case, and did not receive his expected percentage of the State Farm settlement.
Jackson sued Scruggs for the unpaid fees in Judge Lackey’
s court. Scruggs associate, a codefendant
in the bribery case, was authorized to write a $40,000 check to Judge Lackey and then
Scruggs personally agreed to pay the associate $10,000 for writing “jury instructions”
and
covering the extra payment for the judge. Scruggs pled guilty on March 14, 2008, and will pay a
$250,000 fine and serve a five year prison term.23
F. Joseph White and Michael O’
Connell:
Do Your Homework
Joseph White and Michael O’
Connell filed 96 lawsuits against Jewish Hospital & St.
Mary’
s Healthcare, Inc. The suits alleged unsanitary conditions caused infections that led to
patient illnesses and deaths. Of the 96 suits filed, 84 were dismissed. Most dismissals were due
to White and O’
Connell being unable to afford continuing the cases. Two other suits were
dismissed on the merits, and no suit ever made it to trial.24
On May 1, 2007, Jewish Hospital & St. Mary’
s Healthcare, Inc. sued White and
O’Connell alleging that the two lawyers “
tarnished its reputation in comments to news
organizations and abused the legal process by trying to force settlements through adverse
publicity.”25 The Hospital further claims that the two attorneys’
suits lacked sufficient basis and
“none of the lawyers’ expert witnesses could prove the hospital caused the infections.”
26
III. CONSEQUENCES OF LEGAL MALPRACTICE DISASTERS
21 Debra Cassens Weiss, Scruggs Plead Guilty; Plus a Profile of the “King of Torts”
ABA Journal, (Mar. 14,
2008), http://www.abajournal.com/news/scruggs_pleads_guilty.
22 Id.
23 Id.
24 Andrew Wolfson, Hospital drops request for gag order in lawsuit, COURIER J. (Louisville, Ky.), May 31,
2007, at 4B.
25 Id.
26 Id.
7
The consequences of these widely covered scandals are far reaching. For the attorney,
consequences have included facing legal malpractice and wrongful use of civil proceedings
claims, sanctions from the Bar and the Court, and increasingly, criminal charges. Such disasters
also negatively impact all attorneys in their every day work in the profession. Facing a jury, an
attorney must be armed to deal with members who have lost trust in a system that the media has
portrayed as wholly corrupt in light of the scandals committed by a few.
A. Legal Malpractice and Wrongful Use of Civil Proceedings Claims
Attorneys face the potential of having legal malpractice claims or wrongful use of civil
proceedings claims brought against them when they mishandle mass torts. The attorneys in the
Fen-Phen settlement, faced a civil suit brought by more than 400 of their former clients suing
them for legal malpractice. We all learn in law school that the necessary elements for an
actionable legal malpractice claim are: (1) the duty of the attorney to use such skill, prudence and
diligence as members of the profession commonly possess; (2) a breach of that duty; (3) a
proximate causal connection between the breach and the resulting injury; and (4) actual loss or
damage.27 Violations of ethical duties alone can give rise to a claim for legal malpractice. The
Kentucky attorneys in the Phen-Fen settlement lost their civil suit alleging legal malpractice for
misappropriating fees. A civil judgment in the amount of $42 million was entered against
them.28
An attorney can also be held liable for claims of wrongful use of civil proceedings. The
Restatements find that an attorney can be liable if he or she “
takes an active part in the initiation,
continuation, or procurement of civil proceeding against another is subject to liability to the other
for wrongful civil proceeding if (a) he [or she] acts without probable cause, and primarily for a
purpose other than that of securing the proper adjudication of the claim in which the proceedings
are based, and (b) … the proceedings have terminated in favor of the person against whom they
are brought.”
29 An interesting case out of Louisville arose when attorneys Joseph White and
Mike O’
Connell for one reason or another dismissed their mass tort claims they had brought
against a local hospital for rampant infection causing injuries to over 96 Plaintiffs. Once the
claims were dismissed, the Hospital retaliated by filing a wrongful use of civil proceedings
claims against the attorneys.
B. Sanctions from the Bar and the Court: Ethics Violations
There are numerous ethical rules implicated in the scandals of the attorneys discussed
above. A careful examination of these rules and how they apply in the setting of a mass tort case
can help attorneys avoid making headline news in the next scandal.
In almost all of the examples referenced above, there lies an issue with fees. Looking at
the Model Rules of Professional Conduct from the American Bar Association, which many states
base their own ethics codes on, Rule 1.5 governs fees. Under the Rule, a lawyer shall “
not make
an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for
27 Schultz v. Harney, 33 Cal.Rptr.2d 276, 281 (Cal. App. 2nd Dist. 1994).
28 Andrew Wolfson, Diet-Drug Attorneys on Trial, COURIER J. B5 (Louisville, Ky.), (May 14, 2008).
29 Restatement (Second) of Torts § 674. See also, Model R. Prof. Conduct 3.1.
8
expenses.”
30 While the complex nature of mass tort cases can be figured into the analysis of
whether a fee is reasonable, an attorney must be prepared to defend the fee they earned if faced
with a bar inquiry.
Another area in mass torts that commonly causes ethical dilemmas for attorneys are the
conflict of interest rules. Model Rule 1.7 generally prohibits a lawyer from representing a client
if there is a “concurrent conflict of interest.”
31 In Model Rule 1.8 the drafters examine specific
dilemmas, including aggregate settlements. Model Rule 1.8 (g) applies to the aggregate
settlement and reads as follows:
A lawyer who represents two or more clients shall not
participate in making an aggregate settlement of the claims
of or against the clients…
unless each client gives informed
consent, in a writing signed by the client. The lawyer’s
disclosure shall include the existence and nature of all the
claims or pleas involved and of the participation of each
person in the settlement.
The ABA has also issued Formal Opinion 06-438 regarding aggregate settlements. The stated
purpose of the rule is to “
deter lawyers from favoring one client over another in settlement
negotiations by requiring that lawyers reveal to all clients information relevant to the proposed
settlement.”
32 Attorneys Weiss and Lerach, if they did not obtain informed consent, would have
run amiss of this problem when there were found to have paid kick-backs to certain plaintiffs,
while other plaintiffs received less. Formal Opinion 06-348 mandates that in order to ensure a
valid and informed consent, a lawyer must disclose at a minimum the following:
