Trustee LeClairRyan, UnitedLex heads to mediation in bankruptcy dispute

LeClairRyan’s padlocked former office in Richmond. (BizSense File)

With a trial looming in April, an ongoing dispute related to LeClairRyan’s bankruptcy will first have a chance to be resolved outside of the courtroom.

The trustee overseeing the collapsed law firm’s bankruptcy is heading for mediation with legal services giant UnitedLex and other defendants in the bid pursuit for another potential cash inflow for creditors .

The mediation will include trustee Lynn Tavenner, who has handled the LeClairRyan estate since its dissolution in 2019, as well as defendants UnitedLex and ULX Partners. The latter is the ill-fated joint venture formed by UnitedLex and LCR in 2019.

ULX was an effort to outsource back-office tasks touted at the time as an innovative approach to cost reduction, but is now considered to have contributed to the loss of the law firm. Tavenner alleged ULX was a plot to siphon off millions from the 30-year-old law firm as it teetered toward collapse. She sued UnitedLex in 2020, seeking $128 million in damages.

UnitedLex had asked that the case be dismissed, but Bankruptcy Court Judge Kevin Huennekens allowed it to continue with its trial.

Mediation will seek to avoid that trial, which has been set for April 20 at the federal courthouse in Richmond.

Huennekens issued the mediation order on February 4, requiring it to be concluded by March 7. In addition to Tavenner and UnitedLex, the judge ordered UnitedLex CEO Daniel Reed and CFO Nicholas Hinton to participate in the mediation. Travelers Insurance Co. is also scheduled to attend.

Reed and Hinton are parties to a separate lawsuit filed by Tavenner, and Travelers is the holder of insurance coverage that could potentially be a source of payment for creditors in the UnitedLex lawsuit.

Supervising the mediation is Frank Santoro, a seasoned Hampton Roads bankruptcy judge.

UnitedLex is represented in the case by a team of attorneys from Greenberg Traurig: David Barger, Thomas McKee Jr. and Gregory Milmoe. Tavenner is represented by attorneys for Quinn Emanuel, Erika Morabito and Brittany Nelson.

Gary LeClair, LeClairRyan’s namesake and longtime CEO, had also been charged in the UnitedLex case, but was released from the case after reaching a $10 million settlement with the estate in late 2021. Other alumni LCR insiders were also part of the settlement, which was funded by insurance proceeds.

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