LeClairRyan trustee agrees to $21M settlement with company accused of contributing to losses
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The bankruptcy trustee for LeClairRyan has reached a $21 million settlement with the company that she accused of helping to further plunge the law firm into insolvency.
Alternative services provider UnitedLex agreed to contribute to the $21 million settlement without admitting fault or liability, report Richmond BizSense and Reuters.
Bankruptcy trustee Lynn Tavenner alleged in an October 2020 lawsuit that UnitedLex benefited when it entered into a joint venture with LeClairRyan. The joint venture company, ULX Partners, prioritized its financial gain over that of LeClairRyan’s creditors, Tavenner had alleged. ULX Partners was 99% owned by UnitedLex, which gained “unprecedented control” over a wide variety of law firm operations, the suit had claimed.
The settlement, which still requires court approval, led to cancellation of a trial that had been scheduled for Monday.
UnitedLex and its private equity backer will contribute $8.25 million to the settlement, while the company’s insurer, the CNA Financial Corp., will pay $12.25 million, according to the articles. Another $500,000 will be contributed by Travelers Insurance Co. ULX Partners will waive its claims against the bankruptcy estate as part of the settlement.
The settlement was disclosed at an April 19 hearing.
Tavenner had also sued LeClairRyan’s former CEO Gary LeClair, but she dropped remaining claims against him in January, Law.com previously reported. LeClair, in turn, dropped claims against the trustee. Tavenner had alleged that LeClair favored himself and other insiders as the firm’s finances deteriorated; LeClair has said he instead lost $2 million as a result of the bankruptcy.
Tavenner reached a separate $10 million settlement with LeClair and other top LeClairRyan insiders in November 2021, Law.com reported in a separate story. The settlement resolved claims that included conspiracy and breach of fiduciary duty.
See also:
ABAJournal.com: “Former LeClairRyan general counsel pleads guilty to obstructing probe of financial misconduct”
ABAJournal.com: “Too big too soon: How LeClairRyan went under”
ABAJournal.com: “Ex-LeClairRyan general counsel gets prison time, while firm insurer agrees to pay $10M to bankruptcy trustee”
