Justice Ramos of Supreme Court, New York County is handling a strange case.  Plaintiff sued American Home Products in a Phen-Fen case with Napoli Bern being lead counsel.  A conflict exists between their direct clients and the rest of the group. 

"A New York state judge has ordered a trial to determine whether the law firm that negotiated a massive settlement with the maker of banned diet drug fen-phen violated ethical rules by apportioning the settlement in a manner designed to inflate the firm’s share of the funds.

In 2001, the firm now known as Napoli Bern Ripka sued American Home Products (AHP), now known as Wyeth, on behalf of around 5,000 former users of fen-phen (dexfenfluramine), a diet drug recalled by the Food and Drug Administration after studies linked it to heart valve damage. American Home settled the suit under confidential terms, though the settlement has been estimated to be over $1 billion.

But in a decision issued Tuesday, Manhattan Supreme Court Justice Charles E. Ramos said there were serious questions about Napoli Bern’s conduct in dividing and distributing the settlement that needed to be addressed in a trial. He cited in particular an affidavit submitted by a former attorney at Napoli Bern who said the firm had misled clients about the process.

The lawyer, Stephen David Murakami, worked on fen-phen litigation at Napoli Bern before being terminated in 2001 and then unsuccessfully sued the firm for allegedly unpaid bonuses. In his affidavit, Murakami said the firm had told clients their portions of the settlement had been individually negotiated with American Home, when in fact they had been solely determined by Napoli Bern.

"The representation to a client that a specific dollar amount was offered in a negotiation with the defendant to settle the client’s case, when in fact the settlement offer was by the client’s own attorney made upon the attorney’s evaluation, if true, represents a serious breach of duty to the client," Ramos wrote in New York Diet Drug Litigation, 700000/98.

According to Murakami, a major determinant in the size of a client’s share was whether he or she had retained Napoli Bern directly or been referred by another firm. Napoli Bern allegedly inflated the settlement payments of its direct clients because its fees from those clients would not be reduced by referral fees.

A hearing raises the possibility that the prior settlement could be modified or even vacated. The judge said the allocation of settlement