Sure, it’s possible to close a firm and wind down operations sans a bankruptcy filing, but that was simply not in the cards for LeClairRyan. And since we already knew the firm was having issues paying monies owed, well, it isn’t particularly surprising they went this route.
Yesterday, LeClairRyan filed for Chapter 11 bankruptcy in the Eastern District of Virginia. According to the filing, the firm has two secured creditors to which they owe almost $15 million — ULXP, which is the joint venture between the firm and alternative legal services provider UnitedLex as part of the attempt to start a “law firm 2.0” and ABL Alliance LLLP, the firm’s primary lender. In addition, LeClairRyan noted its unsecured creditors — more than 200 but fewer than 1,000 — were owed somewhere between $10 million and $50 million.
As reported by Law.com, former LeClairRyan general counsel Lori Thompson is heading up the firm’s wind down activities and is busy reducing overhead:
Thompson’s declaration in support of the bankruptcy petition revealed that since the firm’s members voted to dissolve July 29, a move it confirmed to the public 10 days later, she and securities attorney Christopher Lange were the only two names left on the committee. Former CEO Erik Gustafson and former New Haven, Connecticut, office leader Richard “Deke” Bowerman have since stepped down.
Thompson said that between the dissolution vote and the Chapter 11 filing, LeClairRyan has taken steps to reduce its overhead, closing down operations at all of the 25 offices it once operated around the country, with the exception of fewer than 10 employees who are overseeing the firm’s wind down.
Though the move was not unexpected, it is not necessarily easy. As Leslie Corwin, partner at the boutique firm Eisner, told Law.com, things are bound to get messy:
“I’ve never seen these things go smoothly,” said Corwin, who has handled the bankruptcies of former legal luminaries Heller Ehrman and Testa, Hurwitz & Thibeault, and also represented now-defunct WolfBlock in its years-long, out-of-court liquidation process. “I think it’s hard on the former partners and staff of LeClairRyan. Their lives are going to be disrupted for a long period of time.”
It’s clear that though LeClairRyan may be gone, their legal (and financial) woes are far from over.
Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).