"Slander" is the spoken word. "Libel" is written, so unless the attorney has been publicly, verbally telling people about the alleged drug dealing, you would be looking at libel.
There are a lot of other considerations, too. For example, the lawyer only represents a person, similar to being an agent. I'm not a lawyer, but it may be possible to charge the ex directly with libel.
OTOH, this is a relatively minor beef & any libel suit would probably not see the light of day in court. My guess is that "malpractice" is closer to the actual fact, but face it, the attorney just sees the ex as a money machine. If she is stupid enough to let the attorney pursue all of this when it is patently untrue she is a victim of her own stupidity.
Probably the best & cheapest advice is to have his attorney tell the opposing attorney the facts and/or make them find a way to prove that he is actually a drug dealer. I bet that a call to the IN State Bar wouldn't hurt & neither would some research into previous cases that this attorney has handled. Maybe this is a pattern for this attorney.