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While a recent New Zealand estimate puts his wealth at $170 million—up $20 million from the year before—it’s been a tough year for UC Berkeley business professor David Teece. 

The latest blow came last month when he was fired by the Emeryville business and institutional consulting company he co-founded, LECG—short for Law and Economic Consulting Group. 

That move followed the bankruptcy of his New Zealand–based clothing company and a settlement reached earlier this year with the IRS, which leaves him owing $1.825 million in back taxes. 

Teece may be better known to Berkeley residents as the backer of local real-estate developers, including Patrick Kennedy and the apartment buildings they built in downtown Berkeley. The developer and his silent partner sold their seven projects to Chicago developer Sam Zell for $147,397,171 in 2007. 

LECG announced that “on Aug. 12, 2009, LECG Corporation provided notice to Dr. David Teece that his employment with the Company has been terminated.” 

“Dr. Teece remains a member of the Board of Directors of the Company, until his term expires at the next Annual Meeting of Stockholders, or his earlier resignation,” said the announcement, which was filed with the Securities and Exchange Commission (SEC) Aug. 13. 

Eight days later LECG notified the SEC that it had reached a merger agreement with another consulting firm, Smart Business Advisory and Consulting, LLC, through its parent, Smart Holdings. The combined firms will do business under the LECG banner, though headed by Smart CEO Steve Samek, the announcement stated. 

According to their corporate websites, both firms were founded in 1988, with the Devon, Pa.–based Smart founded by James J. Smart and LECG created by a group of UC Berkeley professors with Teece in a leading role. 

Teece’s dismissal followed Smart’s ouster as CEO of his company by almost exactly a year. When Samek was named CEO last December, Smart severed all connections with the company he had founded, according to the Philadelphia Business Journal. 

The business paper reported that Smart’s ouster was forced by private equity firm Great Hill Partners, which had bought a controlling interest in the company in May 2007. 

According to LECG’s announcement of the merger, Great Hill is providing $25 million in capital to bankroll the union of the two firms in exchange for 6.3 million shares of newly issued LECG preferred stock. LECG will also issue 10.9 million shares of common stock in exchange for all of Smart’s outstanding shares. 

In announcing the merger, current LECG CEO Michael Jeffrey said, “We believe this will be a transformational event for LECG and potentially the professional services industry.” 

Weeks before the merger announcement, Jeffrey had announced he would be stepping down from the helm of the Emeryville company.  

In the same announcement, LECG Board Chair Garett Bouton said Great Hill’s investment was the first major cash infusion in the professional consulting services sector in more than a year. 

The Boston-based private equity company “manages over $2.5 billion in capital,” according to the announcement.  

The consolidated firm’s board will feature four directors picked by LECG’s board, two from Great Hill and Samek, the new CEO. 

Both firms have an international reach, though LECG boasts the great number of overseas offices, according to their respective web sites. 

Teece’s dismissal follows by less than two years his signing of a retention agreement that gave him a $10 million payment in exchange for his promise to remain with the company for the next 10 years “in recognition of the substantial practice that Teece has created at LECG” and to keep him with the company. 

According to agreement, Teece can keep the money if he was terminated without cause, but must repay a prorated portion if dismissed for cause. 

In addition to his bonus, Teece received another $4,471,000 for his services in 2008—the same year the company reported an $86.9 million loss, down from an $11.4 million profit the year before.  

The company’s stock has also been hard hit, with prices falling significantly over the past decade. Shares that were selling for as much as $25.75 in January 2004, closed at $3.51 Tuesday on the NASDAQ exchange, up from a low of $1.50 on March 9. 

Teece, who lives in the Berkeley Hills, is a New Zealander by birth and an international capitalist in his own right. The one cloud on his horizon earlier this year was the IRS claim that he and his wife owed $12 million in back taxes. 

The Berkeley professor fought the assessment, settling for the far smaller account, blaming the problem on errors by an accounting firm. Through his San Francisco attorney, Teece informed the Daily Planet that he was a passive participant in the investment that led to his tax troubles. 

But when Forbes Magazine reported on the tax problem, writer Janet Novack wrote, “An adverse outcome in the case could hurt Teece’s credibility as a highly paid witness and provide fodder for hostile cross-examiners.”  

Shortly after that article appeared, LECG CEO Jeffrey announced that the firms’ board had “concluded its review of the actions filed by Dr. David Teece in U.S. Tax Court. The actions are private, civil matters, and in our board’s view they have no bearing on his professional obligations or opportunities with LECG. We look forward to his ongoing commitment to the firm, its clients, and its long-term corporate development.” 

Adding to Teece’s woes is the fate of another of his holdings, Canterbury of New Zealand, which makes sports clothing. While he remains part-owner, according to a May 25 article by Karyn Scherer in the New Zealand Herald, after a series of losses, control was taken by a Kuwaiti private equity fund controlled by a bank in Bahrain. 

Then in July, the European branch of the company was taken into receivership and later sold to a British JD Sports, who paid Kuwait Finance House 6.5 million British pounds for “the worldwide Canterbury brand, goodwill and certain fixed assets,” according to the Aug. 5 edition of Accountancy Age. Australian and New Zealand rights were later sold by the new owner.