Photo: Rick Kopstein

LeClairRyan is winding down, saying dissolution of the law firm is ”in the best interests of our clients, colleagues and creditors.”

“The members of LeClairRyan PLLC have voted to commence an orderly wind-down of the firm’s business,” the firm said in a news release Wednesday. “The firm, through its dissolution committee, is working in cooperation with its lender to ensure the continuity of client service until such time as the firm ceases to actively practice law and turns its attention to post-practice activities.”

The decision spells the end for an Am Law 200 firm that was in business for 31 years. LeClairRyan earlier this year had 21 offices, including a two-attorney outpost in West Palm Beach, and 225 attorneys. Prominent clients over the years included Ford Motor Co., United Airlines, FedEx and others.

The firm said it will continue to serve clients for a short period in current matters “to protect the interests” of clients, employees and creditors. “LeClairRyan is committed to ensuring a seamless transition for clients,” the firm said.

The announcement comes about a week after ALM reported the Virginia-headquartered firm was taking steps to dissolve after months of partner defections. The firm’s gross revenue fell to $122 million in 2018 from $142 million the year before, ranking it No. 179 by revenue.

The firm said it expects “remaining attorneys” will move to other law firms. An outside spokesperson for LeClairRyan declined to comment about the possibility of layoffs or a bankruptcy proceeding.

“On behalf of my colleagues, we are deeply saddened to make this announcement,” former CEO C. Erik Gustafson said in a statement. “Through our transition, we will continue to focus first and foremost on the success of our clients, as we have always done. I am thankful to all of the clients who have chosen to work with our team over the last 30 years, and I am grateful for the exceptional lawyers and professionals who continue to work with dedication and determination towards winding down the firm in an orderly fashion.”

What’s Next

As LeClairRyan’s operating days dwindle, the firm is likely pursuing a variety of avenues to preserve as many assets as possible, including getting bills out and negotiating with landlords, according to restructuring experts.

LeClairRyan associates have been told their last day is Aug. 30, while headhunters have been brought in to negotiate deals with remaining groups, Bill Brandt, a corporate restructuring expert said in an interview.

Brandt, who has advised on more than three dozen law firm failures, said he has spoken with the firm’s senior and junior staff but is not consulting for the firm.

The firm wants to do as much as it can and get as many people situated by the end of August in its dissolution, Brandt said, while there will be a number of people who stay on for months afterward to help “tidy up.”

“You have to get the bills out, get collections in, deal with the bank,” said Brandt, chairman of Development Specialists Inc. “There’s a drill you have to do.”

The must-dos in this period, Brandt said, include converting the work in progress into billing and then sending invoices; collecting all outstanding invoices; and giving client records back to clients or to lawyers taking the client matters with them to new firms. On the latter point, Brandt noted it often costs firms “thousands of dollars” to store client records, and law firms can’t just dump them.

LeClairRyan’s joint venture with alternative legal services provider UnitedLex, which created a joint entity called ULX Partners, “adds another wrinkle” to the firm’s final steps, he said, but ultimately lawyers will join other firms and may take as many clients, associates and staff with them as they can.

UnitedLex representatives had no comment by deadline on LeClairRyan’s wind-down announcement.

Feeling Squeezed

 

Groups of lawyers at LeClairRyan are in talks with various firms now, ALM has reported, but whether any of those firms can take on the majority of its remaining lawyers remains to be seen.

A 15-member aviation team agreed last month to join Fox Rothschild in West Palm Beach, Washington, New York, Dallas and San Francisco. Alex Braunstein was a LeClairRyan aviation associate in West Palm Beach, and real estate shareholder Robert Wayne was the other Florida attorney with the firm.

 

Brandt said firms in LeClairRyan’s size bracket — in roughly the 200-partner range — are in a tough position. “Those midrange Am Law firms” don’t have the geographic and practice base to pull in lot of clients, but they can’t manage themselves like a boutique, he said. “They are very vulnerable right now.”

“Law firms are the epitome of folks who assume they will never need help, so the amount of planning they do for a worst-case scenario is zilch,” Brandt said. “I find most lawyers are incredibly ill-prepared for the demise of any law firm.”

LeClairRyan took some unconventional steps in its final years, including its June 2018 partnership with UnitedLex. Under the deal, LeClairRyan outsourced about 300 of its employees to UnitedLex, forming a joint venture to provide services to the firm and eventually other law firms.

But that didn’t appear to stave off financial problems. LeClairRyan considered a number of options, including creating a new law firm. Some lawyers received offers to join the new firm, which would have been called Novellus, a source with knowledge of the plans confirmed.

Lizzy McClellan, Jack Newsham and Dan Packel contributed reporting.

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