(Courtesy photo) $128M Suit Against UnitedLex Over LeClairRyan Demise Shows Outsourcing No Cure for Dying Firm
LeClairRyan was already on its last legs when it negotiated a joint venture with UnitedLex. In the end, its creditors paid the price, according to a lawsuit filed Tuesday.
October 28, 2020 at 03:37 PM
7 minute read
The original version of this story was published on The American Lawyer
As a growing number of law firms look to contract with third-party vendors to outsource business operations, a $128 million lawsuit filed by LeClairRyan's bankruptcy trustee against UnitedLex makes it clear that the risks to both sides can be high when a firm is already on thin ice.
LeClairRyan's trustee alleged in a suit filed in Virginia bankruptcy court Tuesday that the terms of the deal with UnitedLex, which resulted in the creation of a joint venture to handle support services, served only to push the cash-strapped firm "further into insolvency." Now UnitedLex itself faces substantial liability for allegedly sucking money out of the firm, at the expense of LeClairRyan's other creditors.
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