It is shown by way of model orientation patterns how conduction in nematic liquid crystals may cause a torque per unit volume that more than offsets the dielectric torque felt in the insulating state. This conduction-induced torque arises from an anisotropy of the conductivity or of the dielectric constant. It is partly dielectric but its more important part is shear-induced, the shear flow being a consequence of space charge which is generated by and interacts with the applied electric field. The stability of a uniform orientation pattern in electric fields parallel or perpendicular to the preferred axis is investigated, with respect to a complete set of sinusoidal perturbations and including distortional and (stabilizing) magnetic torques. The analysis shows that the shear-induced torque cannot be treated like its dielectric counterpart. It depends in a peculiar way on the direction of the perturbational wave vector and may contain a nonconservative contribution. Formulas for the instability threshold, i.e., the electric field strength at which the orientation pattern becomes unstable, are derived. Friction is taken into account, in particular the strong coupling between rotational and translational motion in liquid crystals. The formulas are applied to pazoxyanisole. The threshold field of anomalous alignment (as opposed to dielectric alignment in the insulating state) in voluminous samples and the threshold voltage of domain formation in sandwich cells are calculated. Good agreement with experiment is found.