LeClairRyan falls into bankruptcy; liquidation ongoing

LeClairRyan’s office in the SunTrust Center. (BizSense file photo)

The shell of what’s left of Richmond law firm LeClairRyan was put into Chapter 11 bankruptcy protection on Tuesday, as its handful of remaining employees continue to wind down the remnants of its operations.

The filing, which comes weeks after the 30-year-old firm announced it would shut down in the face of mass defections, lists a range of 200-999 creditors owed between $10 million and $50 million combined. The firm claims assets of $10 million to $50 million.

The firm stated in a consent form included in the filing that it is “in the best interest of the company, its creditors, stakeholders and other interested parties,” to file for Chapter 11 relief.

Court documents filed Tuesday said the firm’s remaining assets consist primarily of “cash, accounts receivable and work-in-progress.”

Its largest secured creditors are lender ABL Alliance, which loaned the firm $15 million in 2017, and ULX Partners, a joint venture LeClairRyan created last year with legal services technology firm UnitedLex.

The ULX partnership, designed to cut costs by outsourcing back-office jobs from LeClairRyan to the joint venture, is seen by some observers as having had a hand in the law firm’s undoing. That’s in addition to several consecutive years of attorneys departing with their books of business.

Filings list an initial 20 unsecured creditors, mostly vendors and landlords for its various offices around the country.

It has largely moved out of its two dozen offices nationwide, filings state, and it was evicted last week from its downtown Richmond headquarters at the SunTrust Center at 919 E. Main St.

Among the unsecured creditors is Parmenter Realty Partners, a Miami-based firm that owns the SunTrust Center. It is owed $414,000 in unpaid rent, according to the filings.

The firm is abandoning leases on its offices in 23 markets around the country, including in Dallas, Chicago, Philadelphia, Houston, San Francisco, New York and elsewhere. In Virginia, the firm’s landlords are left hanging in Charlottesville, Roanoke, Northern Virginia and Norfolk, in addition to Richmond.

It owes more than $3.7 million in unpaid rent to landlords on 10 of those leases, the initial filings show.

LeClairRyan signed a lease for 50,000 square feet across the top three floors of the 26-story SunTrust Center in 2015. The 10.5-year lease ran through Jan. 31, 2026, court documents show.

At least some of that space – 19,900 square feet on the 23rd floor and 15,500 square feet on the 24th floor – is now back on the market, according to a flyer from leasing brokerage Commonwealth Commercial dated Aug. 30.

Dissolution committee’s work continues 

Tuesday’s Chapter 11 filing was signed by Lori Thompson, chair of LeClairRyan’s dissolution committee. Thompson is performing that duty while having recently moved to the Roanoke office of Spilman Thomas & Battle, a West Virginia law firm.

Recently departed CEO Erik Gustafson, who stepped down last week, also signed the form.

Thompson is being paid $450 an hour for those services as an independent contractor, filings show. She also was paid an advance deposit of $15,000 to be held in escrow.

Longtime LeClairRyan attorney Christopher Lange also is working with Thompson on the dissolution committee. Lange was paid $14,000 for his services from Aug. 5 through Aug. 27. He’ll be paid $4,900 per week thereafter.

The firm expects the remainder of its wind-down operations to be housed in an ULX Partners office. That firm keeps a space at 2810 N. Parham Road.

Richmond attorneys Tyler Brown and Jason Harbour of Hunton Andrews Kurth are representing LeClairRyan in the case. Protiviti is its financial adviser for the liquidation.

McGuireWoods attorney Doug Foley is representing ABL Alliance

Initial hearings in the case were held Tuesday afternoon and more are scheduled for later this month.

Founded in 1988, LeClairRyan at its peak had 385 attorneys at 25 offices. Those numbers dwindled steadily along with its financial prospects in the last two years, accelerating in the last 18 months.

The firm said in bankruptcy filings it now employs less than 10 people, while all its attorneys have moved on.

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