A bankruptcy judge has ruled that UnitedLex must face the bulk of a $128 million lawsuit filed by the trustee for LeClairRyan, concluding that allegations that a joint venture resulted in the unauthorized practice of law were enough to underpin a conspiracy claim.

At the heart of the lawsuit is the 2018 creation of the entity called ULX Partners LLC, which was set up with the alternative legal services provider to allow LeClairRyan, and potentially other law firms in the future, to outsource back-office operations. While the early plans for the deal involved a significant equity stake for LeClairRyan and a multimillion-dollar loan to the law firm, due diligence revealed the dangerous financial position of the firm and the final arrangement gave LeClairRyan just a 1% stake in the new entity.