Lawyer’s suit against firm faces bump to arbitration

LeClairRyan recently moved its office into the SunTrust Center. Photo by Katie Demeria.

LeClairRyan recently moved its office into the SunTrust Center. Photo by Katie Demeria.

What started as a gender discrimination case between one of Richmond’s biggest law firms and one of its former attorneys has become a battle over arbitration.

LeClairRyan and former shareholder attorney Michele Burke Craddock are deadlocked in an argument over whether Craddock’s lawsuit, which alleges she was discriminated against during her time at the firm for being a woman, should be tossed out of court and decided by an arbitrator.

The stalemate may lead to a sort of mini-trial within the larger lawsuit, in which a separate jury will be called solely to decide whether arbitration is warranted.

The crux of the argument over arbitration is a shareholder agreement that was issued to Craddock when she became shareholder of LeClairRyan. The agreement included a clause calling for any disputes between Craddock and the firm to be handled through arbitration.

Despite having become a shareholder in 2013, Craddock claims she never actually signed the document. Her court filings against arbitration claim that she disagreed with certain provisions of the agreement, particularly the arbitration clause, and therefore refused to sign it as it was.

Because of that lack of signature, Craddock’s camp argues that the matter should stay out of arbitration. Her attorney filed a motion last week asking for a separate jury trial to decide the arbitration issue.

While LeClairRyan doesn’t dispute that Craddock never signed the document, the firm argues that she nevertheless became a shareholder, enjoyed the benefits of being a shareholder, represented herself publicly as a shareholder and should therefore be subject to the shareholder agreement – signed or not.

LeClairRyan on Friday called for the broader lawsuit to be dismissed and sent to arbitration. The firm calls Craddock’s stance against arbitration a “self-serving, eleventh-hour objection.”

“There should be no dispute Ms. Craddock, through her actions and words, although neglecting to affix her signature to the paper document, clearly and unequivocally expressed her acceptance of the shareholder agreement over a period of years,” the firm argued in court filings.

“Ms. Craddock consistently held herself out as and referred to herself as a shareholder of LeClairRyan, and still refers to herself as a former shareholder.”

The firm argues that the case technically already is in arbitration. It asked the American Arbitration Association, the governing body of such matters, to take the case based on the language in the shareholder agreement. The AAA accepted the case but has since put it on hold while the lawsuit gets ironed out.

Craddock’s case, filed earlier this month, details alleged practices of compensation, promotion and other areas in the firm that she says favor male attorneys. She alleges violations of provisions of the Civil Rights Act of 1964, retaliation and other claims during her 12-year stint at LeClairRyan, which ended last March.

Much of the case centers on so-called origination credits, a method of compensating attorneys who initially take on a case or help the firm win the ability to work a given case, and a notable case that Craddock worked that resulted in a windfall payout for her clients and for LeClairRyan.

There are advantages for both sides, depending on which direction the arbitration issue goes.

An arbitrator will be appointed and essentially plays the role of the judge and jury and minds the ground rules for evidence, witnesses and the like. Arbitrators are typically former attorneys or judges.

For LeClair, going to arbitration will allow the case to play out behind closed doors, as arbitration proceedings are confidential. That would keep any more of the firm’s dirty laundry from being aired through public court documents and in a potential full jury trial.

Arbitration also severely limits either side’s ability to appeal, meaning a case can’t get dragged on in an endless and often expensive appeals process.

For Craddock, her attorney Harris Butler said the advantage of avoiding arbitration is to have the discrimination case heard by a jury.

The next step will depend on the court’s decision. A separate jury for arbitration would decide whether the shareholder agreement should stand. If the jury comes back and says there’s an agreement, it will go to arbitration. If not, the lawsuit will continue.

U.S. District Court Judge Robert Payne will next decide whether such a jury trial is warranted or whether he can decide the arbitration issue on his own.

Bruce Matson, LeClairRyan’s chief legal officer, said the firm had no comment. It previously said the lawsuit is groundless and that it stands behind the opportunities afforded to women within the firm.

Butler, Craddock’s attorney, has his eye on the arbitration jury trial.

“We’re looking forward to having a jury decide the issue,” Butler said. “Our position is there never was (an agreement), and we’re looking forward having a jury bear that out.”

LeClairRyan recently moved its office into the SunTrust Center. Photo by Katie Demeria.

LeClairRyan recently moved its office into the SunTrust Center. Photo by Katie Demeria.

What started as a gender discrimination case between one of Richmond’s biggest law firms and one of its former attorneys has become a battle over arbitration.

LeClairRyan and former shareholder attorney Michele Burke Craddock are deadlocked in an argument over whether Craddock’s lawsuit, which alleges she was discriminated against during her time at the firm for being a woman, should be tossed out of court and decided by an arbitrator.

The stalemate may lead to a sort of mini-trial within the larger lawsuit, in which a separate jury will be called solely to decide whether arbitration is warranted.

The crux of the argument over arbitration is a shareholder agreement that was issued to Craddock when she became shareholder of LeClairRyan. The agreement included a clause calling for any disputes between Craddock and the firm to be handled through arbitration.

Despite having become a shareholder in 2013, Craddock claims she never actually signed the document. Her court filings against arbitration claim that she disagreed with certain provisions of the agreement, particularly the arbitration clause, and therefore refused to sign it as it was.

Because of that lack of signature, Craddock’s camp argues that the matter should stay out of arbitration. Her attorney filed a motion last week asking for a separate jury trial to decide the arbitration issue.

While LeClairRyan doesn’t dispute that Craddock never signed the document, the firm argues that she nevertheless became a shareholder, enjoyed the benefits of being a shareholder, represented herself publicly as a shareholder and should therefore be subject to the shareholder agreement – signed or not.

LeClairRyan on Friday called for the broader lawsuit to be dismissed and sent to arbitration. The firm calls Craddock’s stance against arbitration a “self-serving, eleventh-hour objection.”

“There should be no dispute Ms. Craddock, through her actions and words, although neglecting to affix her signature to the paper document, clearly and unequivocally expressed her acceptance of the shareholder agreement over a period of years,” the firm argued in court filings.

“Ms. Craddock consistently held herself out as and referred to herself as a shareholder of LeClairRyan, and still refers to herself as a former shareholder.”

The firm argues that the case technically already is in arbitration. It asked the American Arbitration Association, the governing body of such matters, to take the case based on the language in the shareholder agreement. The AAA accepted the case but has since put it on hold while the lawsuit gets ironed out.

Craddock’s case, filed earlier this month, details alleged practices of compensation, promotion and other areas in the firm that she says favor male attorneys. She alleges violations of provisions of the Civil Rights Act of 1964, retaliation and other claims during her 12-year stint at LeClairRyan, which ended last March.

Much of the case centers on so-called origination credits, a method of compensating attorneys who initially take on a case or help the firm win the ability to work a given case, and a notable case that Craddock worked that resulted in a windfall payout for her clients and for LeClairRyan.

There are advantages for both sides, depending on which direction the arbitration issue goes.

An arbitrator will be appointed and essentially plays the role of the judge and jury and minds the ground rules for evidence, witnesses and the like. Arbitrators are typically former attorneys or judges.

For LeClair, going to arbitration will allow the case to play out behind closed doors, as arbitration proceedings are confidential. That would keep any more of the firm’s dirty laundry from being aired through public court documents and in a potential full jury trial.

Arbitration also severely limits either side’s ability to appeal, meaning a case can’t get dragged on in an endless and often expensive appeals process.

For Craddock, her attorney Harris Butler said the advantage of avoiding arbitration is to have the discrimination case heard by a jury.

The next step will depend on the court’s decision. A separate jury for arbitration would decide whether the shareholder agreement should stand. If the jury comes back and says there’s an agreement, it will go to arbitration. If not, the lawsuit will continue.

U.S. District Court Judge Robert Payne will next decide whether such a jury trial is warranted or whether he can decide the arbitration issue on his own.

Bruce Matson, LeClairRyan’s chief legal officer, said the firm had no comment. It previously said the lawsuit is groundless and that it stands behind the opportunities afforded to women within the firm.

Butler, Craddock’s attorney, has his eye on the arbitration jury trial.

“We’re looking forward to having a jury decide the issue,” Butler said. “Our position is there never was (an agreement), and we’re looking forward having a jury bear that out.”

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