Gary LeClair and UnitedLex won’t be able to wriggle free from their dispute with the LeClairRyan bankruptcy estate just yet.
U.S. Bankruptcy Judge Kevin Huennekens last week denied LeClair and UnitedLex’s attempts to dismiss allegations which seek to prove they had a hand in and benefitted from the longtime Richmond law firm’s demise.
In a 28-page opinion, Huennekens ruled that trustee Lynn Tavenner sufficiently alleged more than a dozen counts to allow the case to continue to the next step in the litigation process.
The judge’s opinion does not prove the trustee’s allegations are true; it simply lets the matter continue on, where more of the arguments from both sides can be fleshed out further.
The trustee has cast LeClair and UnitedLex, respectively, as a “deceitful law firm ‘entrepreneur’ conspiring with an opportunistic ‘global enterprise legal services provider’… to manipulate a law firm for their own gain and benefit.”
Co-founded by LeClair in 1988, LCR at one point had dozens of offices and hundreds of lawyers before rapid expansion and alleged financial mismanagement caused it to spiral into insolvency and a drawn-out collapse that ended with bankruptcy in the summer of 2019.
Tavenner first sued UnitedLex in 2020, seeking $128 million in damages by alleging that its ill-fated ULX Partners joint venture with LCR was a conspiracy to siphon millions out of the 30-year-old law firm as it was teetering toward collapse.
ULX was consummated in LCR’s final months to cut costs by outsourcing back-office jobs to the new venture. Billed at the time as an innovative approach, it is now seen as having had a hand in the law firm’s undoing.
From LeClair, who jumped ship to Richmond rival Williams Mullen a month before LCR’s collapse, Tavenner seeks to recoup around $3 million in so-called fraudulent transfers he received from the firm in its final five years.
Both LeClair and UnitedLex argued that Tavenner’s claims don’t hold water, though Huennekens said it’s too soon in the process to prove that out.
As those allegations live on, Tavenner also continues her legal fight with dozens of former LCR shareholding partners.
And later this month, former longtime LeClairRyan attorney Bruce Matson is set to be sentenced in a criminal case related to his embezzling of funds from bankruptcy trustee accounts. That case is technically unrelated to the LCR bankruptcy, although Matson has settled with Tavenner in negotiations that to-date have been kept sealed.