In a large frying pan, melt butter over medium heat and add chicken livers. Add the onion, mushrooms, bacon, garlic, thyme, bay leaf and rosemary.
When chicken livers are tender and no longer pink, remove the bay leaf and process liver mixture in a food processor until smooth. While processing, add egg yolk, milk, cream, sherry and flour. Season with salt and pepper to taste.
Transfer to two shallow glass baking dishes and bake in preheated oven for 1 hour until a knife inserted comes out clean and dry. Serve with toast and a salad garnish.