What could the Fen Phen jury be arguing about? A theory you may not have heard of could provide an explanation.


 

(This speculative article is posted at 1:43 p.m. on June 27, 2008 before the jury verdict has been announced.)

 

It is risky writing a speculative theory about a jury verdict, minutes (??) (days??) before it is issued.  But we take risks, and sometime get it right. 

 

You may have heard a lot about how much money the Fen Phen lawyers got. There may be a bit of deception there.  This deception has been created by the claims of the victims attorney, Angela Ford.  She argued in court that the attorneys were not entitled to be credited with court costs and attorney fees.

 

Cases in which disgorgement of attorney fees have been ordered have almost universally held that only the ill gotten portion of an attorney’s gains is subject to disgorgement.  That means that they were entitled to $60 million in attorney fees and only the excess over $60 million can be seized under the disgorgement theory.

 

The theory the jury may be arguing about and which has caused them to go into the 4th. day of deliberations may be an analysis of where the money actually went.

 

The settlement was for $200,000,000.  About $70 million was distributed to the clients. 

 

$200 million – minus $74 million leaves $126 million
 

The attorneys had two different fee contracts but we will round those off to being 30% contingent fee contract.  That means that if you take the attorney fees off the top, then the attorneys were entitled to receive $60 million in attorney fees.

 

Subtract the $60 million of the contingent fee contracts  from $130 million and that leaves $66 million,
 

Of the $66 million there is $20 million in the Charitable Trust which the civil court has seized,

 

Subtract the charitable trust funds on hand and that leaves $46 million to be explained.
 

The Angela Ford theory holds that her clients don’t have to pay for any court costs incurred in the original settlement.

 

The following charges can be argued to be credited as court costs and paid by the victims.
One expert was paid $20 million, another $5 million, a consultant $2 million and then there was the master who evaluated each claimants case, and we believe he was paid $1 to $2 million.  The work of the consultants got the original best offer from around $50 million ( we seem to have read that somewhere) and their efforts got the settlement raised to $200 million.  So it is not as if they didn’t add value to the claim.  They added between $100 million and $150 million to the value of the final settlement.

 

So take $46 million and deduct the “costs” paid to others ($29 million), and that leaves $17 million.
 

The civil trial pleadings allege that Attorney Gallion paid his law firm $12 million to settle his firms claim for fees.
 

This is hard to justify as that $12 million would appear to have to come from his 30% contingent fee
 

So it is possible that a jury is trying to make sense of why Cunningham and Mills are being prosecuted largely on the basis of the $12 million Gallion paid his law partners.  Neither Cunningham or Mills benefited from that payment.
 

So out of the remaining $17 million we deduct Gallion’s payment to his firm of $12 million and that leaves  only $5 million remaining to be explained.
 

It is possible that in a $200 million dollar case that out of pocket expenses travel, printing, etc. could have totaled $5 million.
 

                                        CONCLUSION
 

This explains how this case could possible be viewed by the jurors.  It is possible to argue that this criminal case is only about the $12 million dollar payment to Gallion’s firm.  That would raise a strong defense argument for Mills and Cunningham.
 

If that is the case, then it may explain why the jury is taking so long to use that flip chart and calculator that they asked the judge to let them take to the jury room.
 

You and the jury have heard claims that the attorneys overpaid themselves $90 million, or $60 million, or whatever, but there are pleadings filed by Angela Ford which suggest that the attorneys were only paid a 30% contingent fee (except for the $12 million payment to Gallion’s law firm partners).  The rest of the money can be argued to have gone to costs.
 

We don’t defend this expenditure of money, but we can imagine that if a jury started out believing the attorneys had paid themselves excess fees of $90 million and then the facts presented bring that down to only $12 million paid to one of the three….then this might provide some explanation as to why the jury in now deliberating into the fourth day on a case that the media and Angela Ford has lead the public to believe is an open and shut case.
 

In any event, we may  all hear the jury verdict soon, …but  then there is a real possibility that this could be a hung jury.

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