LeClairRyan founder blasts claims he helped tank law firm

3 minute read

Signage is seen at the United States Bankruptcy Court for the Southern District of New York in Manhattan, New York City, U.S., August 24, 2020. REUTERS/Andrew Kelly

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  • Chapter 7 trustee sued firm co-founder Gary LeClair last month
  • LeClair say allegations "defy human nature and logic"

(Reuters) - A founder of LeClairRyan is pushing back against allegations by the Chapter 7 trustee overseeing the law firm's dissolution that he enriched himself prior to its 2019 bankruptcy.

Gary LeClair's 42-page response, filed Monday in Richmond, Virginia federal court, is his first formal response to an amended complaint Chapter 7 trustee Lynn Tavenner filed last month against him, alternative legal services provider UnitedLex and related entities.

The complaint contains "dozens of false and misleading statements attempting to manufacture a conspiracy" to destroy the law firm he "founded, put his name to, and invested in personally, professionally, and financially for more than 30 years," he asserted.

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"These allegations defy human nature and logic, and are simply untrue," LeClair argued.

Given the early stage of the proceedings, LeClair noted he and the court are required to treat Tavenner's assertions as true "however specious they may be." He argued that Tavenner failed to state many of her claims.

LeClair in his motion said LeClairRyan slashed his salary by $1.8 million in December 2016. He also claimed that he generated more than $1.4 million in fees for the firm in its last year of existence.

Tavenner, who did not respond to a request for comment, has asserted that LeClair shepherded the firm's 2018 agreement to form a joint venture with UnitedLex. LeClair said he left the firm leadership in January 2016.

The UnitedLex deal added more debt to the struggling firm and gave the company control over the law firm's operations and its intellectual property, Tavenner has alleged. LeClair noted in his filing that, per the agreement the firm signed with UnitedLex, it was required to give its IP to the provider.

"There was no unlawful taking of the intellectual property — it was conveyed via contract," LeClair wrote.

UnitedLex and its affiliated entities, ULX Partners LLC and ULX Manager LLC, represented by attorneys from Greenberg Traurig, have also rejected Tavenner's claims, accusing her of trying to "strong-arm money" from the company and ignoring that UnitedLex is LeClairRyan's largest creditor.

LeClair's attorney, J. Scott Sexton, a senior litigation partner at Gentry Locke, declined to comment.

A bankruptcy judge gave Tavenner the go-ahead to add LeClair as a defendant last month, pushing back a scheduled trial in the case from October to April. The trustee had already been seeking at least $128 million in damages from UnitedLex and related entities.

The case is Lynn Tavenner, as Chapter 7 Trustee v. ULX Partners LLC, U.S. Bankruptcy Court for the Eastern District of Virginia, Adversary Proceeding No. 20-03124.

For Lynn Tavenner: Erika Morabito and Brittany Nelson of Quinn Emanuel Urquhart & Sullivan

For Gary LeClair: Andrew Bowman and J. Scott Sexton of Gentry Locke; and William Broscious

Read more:

LeClairRyan trustee targets firm co-founder in UnitedLex lawsuit

LeClairRyan trustee gets green light to expand lawsuit over UnitedLex deal

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David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at d.thomas@thomsonreuters.com and on Twitter @DaveThomas5150.