The Richmond-based legal giant LeClairRyan is shutting down, a casualty of a dramatic collapse in revenue and an exodus of lawyers in recent years.
The national law firm’s demise also is attributed in part to the uncertainty surrounding a multimillion-dollar lawsuit filed by a former client.
LeClairRyan announced late Wednesday afternoon that its partners had voted to start an orderly wind down of its business, saying it “was in the best interest of our clients, colleagues and creditors.”
It is one of the larger law firms to close in recent years in Virginia and nationally.
LeClairRyan, with 21 offices across the country — including six in Virginia — was ranked No. 179 among the nation’s law firms based on revenue in 2018.
The decision to cease operations came as departures continued at LeClairRyan this year, including Gary LeClair, the firm’s co-founder and former longtime CEO who joined crosstown rival Williams Mullen earlier this week.
Besides losing lawyers, LeClairRyan has closed offices and the firm’s gross revenue continued to decline.
C. Erik Gustafson, who was listed in a news release as the former CEO of LeClairRyan, said in the statement that he and his colleagues were “deeply saddened” to make the decision to wind down operations.
“Through our transition we will continue to focus first and foremost on the success of our clients, as we have always done,” said Gustafson, who had been chief executive officer since early 2016.
“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.”
Gustafson, who could not be reached for comment, works in the firm’s Alexandria office. He joined LeClairRyan in 2001.
LeClairRyan acknowledged in its statement that some partners had already moved to new firms and that it anticipated the remaining attorneys will do the same over the coming weeks.
A spokesman hired by LeClairRyan declined to comment beyond the release, including on whether the firm would file for bankruptcy or when the last day will be for the firm’s employees.
LeClairRyan is based at the SunTrust Center at 919 E. Main St. in downtown Richmond, which is the firm’s largest office.
LeClair and Dennis Ryan created a venture capital legal boutique operation in 1988 to help entrepreneurs, startup businesses and venture capitalists.
LeClair, who served as chairman of LeClairRyan from 1988 to 2015 and CEO from 1988 to 2010, declined to comment Wednesday about the shutdown of the firm he co-founded.
“I am incredibly grateful for all of the colleagues and clients who made it a great 30-plus years for me there,” LeClair said. “I am incredibly excited to be at Williams Mullen and continuing to do some good in the Richmond venture capital community.”
Ryan left LeClairRyan in 2012 to join Health Diagnostic Laboratory Inc.
LeClairRyan grew from those two attorneys into a full-service national firm with nearly 400 lawyers working at 25 offices in 13 states and Washington, D.C., representing some of the largest corporations in the world. It had offices from Los Angeles to Boston.
The firm’s website said it had 225 attorneys in 21 offices as of February.
But dozens of lawyers have been leaving LeClairRyan in recent months, including LeClair and five other lawyers who recently joined Williams Mullen; a group of 15 attorneys with a specialty in aviation law who joined a Philadelphia-based firm; and a four-lawyer group in LeClairRyan’s labor and employment practice in the Los Angeles office who joined the Clark Hill firm there on Wednesday.
The firm’s gross revenue also fell from $163 million in 2015 to $122.4 million in 2018, according to the latest Am Law 200 figures.
The firm said its dissolution committee is working in cooperation with its lender to ensure the continuity of client service until LeClairRyan firm “ceases to actively practice law and turns its attention to post-practice activities.”
LeClairRyan has been facing lawsuits, including a $150 million lawsuit brought by Tonya Mallory, the founder and former chief executive officer of the now-defunct Richmond-based clinical laboratory company Health Diagnostic Laboratory.
Mallory sued LeClairRyan for alleged malpractice in Richmond Circuit Court in December 2017, claiming that the law firm gave bad legal advice that contributed to the blood-testing company’s eventual bankruptcy after it settled alleged violations of federal anti-kickback laws.
LeClairRyan in June sought a dismissal of Mallory’s lawsuit.
In 2016, LeClairRyan agreed to pay a $20.37 million settlement to the bankruptcy estate of Health Diagnostic Laboratory.
The downfall of HDL might have been a contributing factor in LeClairRyan’s dissolution, said Carl Tobias, a law professor at the University of Richmond.
Tobias said the dissolution of a major firm such as LeClairRyan “is unusual, but it does happen, for all kinds of reasons, which could range from economics to disputes over anything such as the way the firm is run.”
Tobias said he thinks the legal industry also has become more “fluid” since the economic recession, with more firms seeking mergers and lawyers switching firms more often than before the downturn.
“There is a lot of movement these days,” he said. “People do not always stay at the same firm like they often did traditionally.”
With the breakup of LeClairRyan, “the lawyers will scatter and join other firms,” he said. “In the short term, it may be not great for some of the lawyers, but most of them I expect will land on their feet. And I expect a number of them had already seen this contingency and were making plans.”