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Judge approves $20M HDL-LeClairRyan settlement

Michael Schwartz September 23, 2016 1

LeClairRyan's office in the SunTrust Center. (Katie Demeria)

LeClairRyan’s office in the SunTrust Center. (Katie Demeria)

The pool of creditors waiting to be paid what they’re owed from collapsed local lab firm Health Diagnostic Laboratory are set to get a big boost.

A federal bankruptcy court judge on Thursday gave his blessing to the settlement agreement reached earlier this month between the trustee overseeing HDL’s liquidation and downtown law firm LeClairRyan.

The pact calls for LeClairRyan to pay $20 million into the HDL bankruptcy estate and would bring an end to the months-long dispute over potential malpractice claims that the trustee had pursued against the law firm related to its representation of the lab company in recent years.

The settlement, which was reached through mediation that began late last year, allows LeClairRyan to walk away without admitting guilt and prevents the trustee from further suing the law on matters related to HDL.

The settlement funds are to be wired within 14 days of the judge’s final order – expected to be entered in the next few days – into an account established for the bankruptcy estate.

HDL's headquarters on Fifth Street.

HDL’s headquarters on Fifth Street.

LeClairRyan, which has 50 attorneys in Richmond and hundreds around the country, has said its insurance carriers will cover the settlement tab.

The judge’s approval came over objections filed by several former HDL executives and directors, who were fighting primarily to preserve their ability to potentially pursue legal claims of their own against LeClairRyan related to its past representation of the HDL insiders individually.

Their objections largely were made to make sure the judge interpreted the language of the settlement agreement as leaving open that window for future claims, in light of a lawsuit filed by the trustee last week against 105 defendants, including former HDL executives, directors, shareholders and sales reps.

That lawsuit seeks to place blame for the company’s downfall on their shoulders and aims to recover more than $600 million in damages.

The judge’s interpretation of the settlement agreement could leave open the door for those insiders to try to legally blame LeClairRyan for some of the allegations made in that broader lawsuit.

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One Comment »

  1. Stan Stanfield September 23, 2016 at 9:59 am - Reply

    Any attorney associated with LeClairRyan should be holding their heads in shame. Find a job with a firm that does not have the word “criminals” associated with it. After this if you are a person in charge that uses them you should be fired.

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