A new lawsuit filed in Harris County Thursday evening accuses litigation support services company Lexitas of systematically breaching an agreement with Houston-based legal video and litigation support company SmartDisk by siphoning off work it was entitled to perform to other entities.
The 18-page lawsuit brings claims for breach of contract, fraudulent concealment, fraudulent inducement and conversion.
“This case is about betrayal and corporate greed,” the lawsuit alleges. “Rather than honor the promises made as part of a long-standing business relationship that built a thriving business, Lexitas broke those promises to chase private equity profits.”
Lexitas did not immediately respond to a message seeking comment Friday.
“SmartDisk’s innovation and expertise helped transform Lexitas from a local court reporting shop into a premiere Texas one stop-shop for all court reporting needs, and now to an international legal services powerhouse,” the suit alleges. “But once Lexitas grew to the point that it could continue to profit off SmartDisk’s hard work without paying SmartDisk its fair share, it cut SmartDisk out — slowly at first, then completely, casting aside what had been a long history of mutual trust in the name of money.”
SmartDisk started operations more than 20 years ago in Houston, offering legal video and litigation support services to law firms downtown. It developed a reputation as one of the “premier deposition video companies in Texas,” and secured as clients law firms such as Susman Godfrey, Vinson & Elkins and Baker Botts, according to the lawsuit.
“From the very beginning, SmartDisk was at the forefront of legal media video technology,” the suit states.
It was in 2004 that Mike Clepper, who operated Houston-based court reporting services company Independent Reporting (which would later become Lexitas), approached SmartDisk with a business proposal to combine forces in order to offer clients video services as well as court reporting services.
Under the agreement between the companies, Independent Reporting would receive 50 percent of video production revenue generated by SmartDisk and all of the video recording fees and SmartDisk, in exchange, received a promise from Clepper for “stock shares, buyout options, business expansion opportunities, and participation in any future exit,” according to the lawsuit.
In the years that followed, SmartDisk expanded its video production capabilities and invested thousands to stay on the leading edge of technology and also “turned over almost its entire book of business” to its business partner, then known as Deposition Solutions, growing both businesses, according to the suit.
Eventually, SmartDisk made up between 30 and 40 percent of the revenue for Deposition Solutions and Clepper began seeking venture capital investments around 2015. Then Dallas-based Trinity Hunt Financial acquired the company. THF acquired a 51 percent stake, and Clepper kept 49 percent.
Part of convincing Trinity to purchase the company involved pitches from SmartDisk explaining and presenting its “proprietary video process and production technology,” according to the suit.
After that acquisition, THP began expanding the company into a national business and the name was changed to Lexitas. In April 2016, SmartDisk and Lexitas signed their first written contract after SmartDisk received “assurances” from Clepper that the “promised future opportunities (stock shares, buyout options, business expansion opportunities, and participation in any future exit) were still on the table.” Under the agreement, SmartDisk provided legal videography and production services exclusively to Lexitas.
Clepper died in 2017 and Gary Buckland took over as president of Lexitas. SmartDisk alleges in the lawsuit that Buckland “continued to affirm Mr. Clepper’s oral promises to SmartDisk, including stock shares, buyout options, business expansion opportunities, and participation in any future exit to SmartDisk.”
“From 2004 to 2016, SmartDisk and Deposition Solutions successfully did business on the basis of handshakes and mutual trust,” the suit alleges. “The word of Mr. Clepper, Mr. Redding, and Mr. Keierleber was enough to build a business on. During this time, SmartDisk turned over nearly its entire client book to Deposition Solutions, spent more than a half a million dollars developing an automated video processing system with end-to-end encryption, and exclusively partnered with Deposition Solutions (giving up all opportunities to work with any other court reporting companies — a mandatory stipulation).”
According to the lawsuit, THP guided Lexitas through 10 acquisitions before exiting, and Lexitas recapitalized through a sale to APAX Partners in November 2019.
But starting in 2022, “Lexitas began to freeze SmartDisk out,” the suit alleges, at first by locking the company out of its scheduling system, which SmartDisk said was meant to hide the fact that Lexitas had been assigning work that was supposed to be exclusively SmartDisk’s to other of its acquired companies that “were struggling and not growing the way Lexitas wanted.”
By June 2023, the drop in job numbers from Lexitas and revenue became apparent, SmartDisk alleges, and to assuage concerns it sought assurances from Lexitas executives that it still maintained its status as Lexitas’ exclusive vendor in Texas. While two executives confirmed the relationship, revenues and jobs continued to drop for SmartDisk, the suit alleges.
“On Oct. 29, 2024, SmartDisk sent Lexitas a demand for payment of the diverted business, in the hope that the longstanding relationship between SmartDisk and Lexitas would matter for something and encourage Lexitas to reach an amicable resolution,” the suit alleges. “When Lexitas finally responded, instead of admitting its own wrongdoing, it pointed the finger at SmartDisk and threatened to pursue its own claims in retaliation. Lexitas last assigned SmartDisk a production job in December of 2024. The following month, Lexitas abruptly kicked SmartDisk out of their offices.”
The case has been assigned to Harris County District Judge Lee Kathryn Shuchart.
SmartDisk is represented by John Zavitsanos, Jason McManis, Michael Killingsworth and Tyler K. Adams of Ahmad Zavitsanos & Mensing. The case number is 2025-15583.