US LEGAL SUPPORT INC, S-1/A, 1998-07-22

US LEGAL SUPPORT INC
S-1/A, 1998-07-22
LEGAL SERVICES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1998

REGISTRATION NO. 333-36575
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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U.S. LEGAL SUPPORT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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TEXAS 7338 76-0523238
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION NO.)
OF INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

RICHARD O. LOONEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1001 FANNIN ST., SUITE 650
HOUSTON, TEXAS 77002
1001 FANNIN ST., SUITE 650 (713) 653-7100
HOUSTON, TEXAS 77002 (NAME, ADDRESS, INCLUDING ZIP CODE, AND
(713) 653-7100 TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE
OFFICES)

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Copies to:

W. CLELAND DADE DAN BUSBEE
BRACEWELL & PATTERSON, L.L.P. LOCKE PURNELL RAIN HARRELL (A PROFESSIONAL
711 LOUISIANA STREET, SUITE 2900 CORPORATION)
HOUSTON, TEXAS 77002-2781 2200 ROSS AVENUE, SUITE 2200
(713) 221-1314 DALLAS, TEXAS 75201
(214) 740-8000

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JULY , 1998

PROSPECTUS

3,100,000 SHARES

[LOGO OF U.S. LEGAL SUPPORT, INC. APPEARS HERE]

COMMON STOCK

All of the 3,100,000 shares of Common Stock offered hereby are being offered
by U.S. Legal Support, Inc. (the "Company"). The Company and a shareholder have
granted to the Underwriters a 30-day option to purchase up to 465,000
additional shares of Common Stock solely to cover over-allotments, if any. If
the over-allotment option is exercised, up to 62,500 shares of Common Stock
will be offered by the shareholder.

Prior to this offering (the "Offering"), there has been no public market for
the Common Stock of the Company. It is currently estimated that the initial
public offering price of the Common Stock will be between $10.00 and $12.00 per
share. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price. The Company has applied to have
the Common Stock approved for quotation on the Nasdaq National Market under the
symbol LEGL.

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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discount (1) Company (2)
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<S> <C> <C> <C>
Per Share.............................. $ $ $
Total (3).............................. $ $ $
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</TABLE>
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(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.

(2) Before deducting expenses payable by the Company estimated at $393,000.

(3) The Company and a shareholder, Mr. Richard O. Looney, President and Chief
Executive Officer of the Company, have granted to the Underwriters a 30-day
option to purchase up to 465,000 additional shares of Common Stock solely
to cover over-allotments, if any. If all such shares are purchased, the
total Price to Public, Underwriting Discount, Proceeds to Company and the
proceeds to the selling shareholder will be $ , $ , $ , and $ ,
respectively.

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The shares of Common Stock are offered by the several Underwriters subject to
prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1998, at the office of the agent of Hambrecht &
Quist LLC in New York, New York.

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HAMBRECHT & QUIST ING BARING FURMAN SELZ LLC

, 1998
<PAGE>

[LOGO OF U.S. LEGAL SUPPORT, INC. APPEARS HERE]

[COLOR MAP OF UNITED STATES WITH COMPANY OFFICE AND NETWORK AFFILIATE
LOCATIONS IDENTIFIED.]

A LEADING PROVIDER OF LEGAL SUPPORT AND STAFFING SERVICES

The Company intends to distribute to its shareholders annual reports
containing financial statements audited by its independent auditors and will
make available copies of quarterly reports for the first three quarters of
each fiscal year containing unaudited financial information.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and the
financial statements, including the related notes thereto, appearing elsewhere
in this Prospectus. Unless the context otherwise requires, the "Company" refers
to U.S. Legal Support, Inc. and its subsidiaries. All share and per share data
give effect to a 5-for-8 reverse stock split to be effected prior to completion
of the Offering. Disclosures herein relating to the number of shares of Common
Stock to be outstanding after the Offering are estimated, based upon an assumed
initial public offering price of $11.00 per share (the mid-point of the
estimated initial public offering price range) and give effect to the
conversion of certain outstanding securities that are convertible into Common
Stock as described herein. See "--The Offering." Pro forma information gives
effect to: (i) acquisitions made by the Company; (ii) an adjustment to
compensation expense for the difference between actual compensation paid to
certain officers of businesses acquired and employment contract compensation
negotiated in connection with such acquisitions; (iii) amortization expense
relating to intangible assets recorded in connection with acquisitions made by
the Company; (iv) the sale of the shares offered hereby and the application of
the net proceeds therefrom; and (v) the incurrence of indebtedness under the
Company's New Credit Agreement (as defined herein), as if such events had
occurred on January 1, 1997. See "Selected Financial Data." Unless otherwise
indicated, the information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option.

THE COMPANY

The Company is one of the largest providers of legal support and staffing
services in the United States, providing court reporting, certified record
retrieval, legal placement and staffing and related services to law firms and
corporations, including insurance companies, through 36 offices in five states
and the District of Columbia. The Company seeks to become a national, full-
service provider of legal support and staffing services through a combination
of selective acquisitions and internal growth. Since succeeding to the
operations of Looney & Company, a Texas corporation ("Looney"), in January
1997, the Company has acquired 13 businesses. During 1997, the Company provided
legal support services to (i) Fortune 500 businesses such as The Boeing Company
and Ford Motor Company; (ii) insurance companies such as ITT Hartford, St. Paul
Fire & Marine and Kemper Insurance; and (iii) law firms throughout the country.
For the year ended December 31, 1997, the Company had pro forma revenues of
$39.1 million and pro forma operating income of $3.4 million, excluding a
special charge of $3.3 million relating to expenses associated with a delayed
public offering and costs associated with acquisitions terminated as a result
of such delay.

Based on available industry data, the Company estimates that the market for
legal support and staffing services in the United States exceeds $5.0 billion
annually. The industry is highly fragmented, with more than 1,000 court
reporting and record retrieval firms and over 400 legal placement and staffing
firms. The Company believes that the legal support and staffing services market
is growing due to several trends, including an increase in the: (i) efforts by
law firms and corporations, especially insurance providers, to control legal
support expenses; (ii) outsourcing of legal support services by law firms,
corporations and insurance providers to companies that specialize in providing
such services at a lower cost; (iii) use of attorneys on a temporary basis by
law firms and corporations; (iv) volume and complexity of litigation; and (v)
national scope of litigation, particularly in class action and product
liability lawsuits.

Legal support and staffing services traditionally have been marketed to law
firms. Increasingly, corporations, especially insurance providers, who
ultimately pay the costs of legal support and staffing services, are seeking to
control and reduce the costs associated with lawsuits, centralize their
purchasing decisions and ensure consistent service quality. As a result, the
Company believes that these companies are more frequently selecting the
providers of legal support services, rather than delegating that selection to
the law firms engaged to represent them. Currently, the industry is highly
fragmented and consists primarily of local and regional firms that typically
provide a single or limited number of legal support and staffing services. The
Company believes that many legal

3
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support businesses lack: (i) a full range of legal support services; (ii)
regional or national coverage; and (iii) access to capital and effective
marketing programs. As a result, the Company believes that many legal support
and staffing companies are unable to effectively service large, geographically
dispersed clients.

The Company is implementing a focused business strategy that includes
establishing full service operations in multiple metropolitan areas; adopting
best practices, policies and procedures; achieving operating efficiencies; and
managing its business on a decentralized basis, with local management retaining
primary responsibility for day-to-day operations and local marketing. The
Company believes that allowing local management to retain appropriate autonomy
will preserve existing client relationships, provide opportunities for internal
growth and enhance the Company's competitiveness in attracting acquisition
candidates.

The Company has implemented a strategy designed to continue its growth in
existing and new markets based on the following key elements: (i) actively
pursue strategic acquisitions; (ii) expand its national sales program; (iii)
capitalize on cross-selling opportunities; and (iv) develop and expand new and
existing client relationships. The Company's acquisition strategy is to
identify, acquire and integrate independent companies with strong management,
profitable operating results and recognized local or regional market presence.
The Company typically pursues acquisitions that will allow it to accomplish one
or more of the following: (i) expand the geographic markets served by the
Company; (ii) increase the Company's penetration of existing markets; (iii)
establish or enhance customer relationships; and (iv) offer services
complementary to those offered by the Company. The Company believes there are
numerous attractive acquisition candidates due to the large size and
fragmentation of the legal support and staffing services industry, including
participants in the Company's referral network of over 200 court reporting
affiliates, through which the Company supplies court reporting services to its
clients in locations not served directly by the Company.

The Company is a Texas corporation. Its principal executive offices are
located at 1001 Fannin Street, Suite 650, Houston, Texas 77002, and its
telephone number at that location is (713) 653-7100.

THE OFFERING

Common Stock offered by the 3,100,000 shares
Company.............................
Common Stock to be outstanding
after the Offering.................

Use of proceeds..................... 5,796,845 shares (1) (2)
To repay indebtedness. See "Use of
Proceeds."

Nasdaq National Market symbol....... LEGL
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(1) Includes: (i) conversion of 1,272,762 shares of Series A Convertible
Preferred Stock into 1,240,934 shares of Common Stock; (ii) conversion of
2,046,667 shares of Series B Convertible Preferred Stock into 200,065
shares of Common Stock; and (iii) conversion of $2.2 million principal
amount of Convertible Subordinated Promissory Notes into 171,748 shares of
Common Stock, in each case to be effected concurrently with the Offering.
See "Capitalization," "Certain Transactions" and Notes 7 and 8 of Notes to
Consolidated Financial Statements of U.S. Legal Support, Inc.

(2) Excludes (i) 562,500 shares of Common Stock reserved for issuance under the
Company's 1997 Stock Incentive Plan and the Company's Stock Option Plan for
Non-Employee Directors, which include outstanding options to purchase
352,181 shares at a weighted average exercise price of $10.58 per share;
(ii) 37,153 shares of Common Stock issuable upon the exercise of options
granted to employees and consultants; and (iii) 82,410 shares of Common
Stock issuable upon exercise of options granted in connection with certain
of the acquisitions. See "Management," "Capitalization" and "Principal
Shareholders."

4
<PAGE>

SUMMARY FINANCIAL DATA (1)

(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA(2)(3)
----------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
--------------------- ---------------- ------------ ---------------
1995 1996 1997(4) 1997(4) 1998 1997 1997 1998
------ ------ ------- ------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Revenues............... $9,104 $7,667 $24,291 $8,402 $20,698 $39,092 $18,878 $20,698
Cost of services....... 5,763 4,839 15,382 5,489 12,554 23,581 11,193 12,554
------ ------ ------- ------ ------- ------- ------- -------
Gross profit........... 3,341 2,828 8,909 2,913 8,144 15,511 7,685 8,144
Selling, general and
administrative
expenses (5).......... 1,970 2,352 6,859 2,167 6,468 10,868 5,128 6,468
Depreciation and
amortization (3)...... 231 212 681 177 537 1,214 607 537
Special charge (6)..... -- -- 3,266 -- -- 3,266 -- --
------ ------ ------- ------ ------- ------- ------- -------
Operating income
(loss)................ 1,140 264 (1,897) 569 1,139 163 1,950 1,139
Interest expense....... 230 238 1,971 650 2,858 474 234 238
------ ------ ------- ------ ------- ------- ------- -------
Income (loss) before
taxes................. 910 26 (3,868) (81) (1,719) (311) 1,716 901
Provision (benefit) for
income taxes.......... 327 10 (156) -- -- 1,313 721 378
------ ------ ------- ------ ------- ------- ------- -------
Net income (loss)...... 583 16 (3,712) (81) (1,719) (1,624) 995 523
Accretion of preferred
stock................. -- -- (1,093) -- (1,265) -- -- --
------ ------ ------- ------ ------- ------- ------- -------
Net income (loss)
attributable to common
shareholders.......... $ 583 $ 16 $(4,805) $ (81) $(2,984) $(1,624) $ 995 $ 523
====== ====== ======= ====== ======= ======= ======= =======
Basic income (loss) per
common share.......... $ (4.43) $(0.10) $ (2.75) $ (0.28) $ 0.17 $ 0.09
======= ====== ======= ======= ======= =======
Basic weighted average
shares outstanding
(7)................... 1,084 852 1,084 5,797 5,797 5,797
======= ====== ======= ======= ======= =======
Diluted income (loss)
per common share...... $ (4.43) $(0.10) $ (2.75) $ (0.28) $ 0.17 $ 0.09
======= ====== ======= ======= ======= =======
Diluted weighted
average shares
outstanding(7)........ 1,084 852 1,084 5,797 5,879 5,879
======= ====== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1998
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ACTUAL PRO FORMA (2)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash.................................................. $ 1,234 $ 1,234
Total assets.......................................... 42,572 42,052
Short-term debt....................................... 6,289 134
Long-term debt (net of current maturities)............ 26,542 6,241
Redeemable preferred stock............................ 8,973 --
Total shareholders' equity (deficit).................. (9,548) 28,061
</TABLE>
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(1) Prior to January 1997, the Company had no business operations. Therefore,
the business of Looney & Company, for financial statement purposes,
represents the predecessor business.

(2) Pro forma information gives effect to: (i) the acquisitions; (ii) an
adjustment to compensation expense for the difference between actual
compensation paid to certain officers of businesses acquired and employment
contract compensation negotiated in connection with the completed
acquisitions; (iii) amortization expense relating to intangible assets
recorded in conjunction with acquisitions; and (iv) the sale of the shares
offered hereby and the application of the net proceeds therefrom, as if
such events had occurred on January 1, 1997 (for statement of income data)
and as of June 30, 1998 (for balance sheet data). The conversion of certain
outstanding preferred stock and Convertible Subordinated Promissory Notes
described in Note 7 below are contingent upon, and will close concurrently
with, completion of the Offering. The pro forma results of operations are
not necessarily indicative of the results that would have occurred had
these transactions been completed as of such date or the results that may
be attained in the future.

(3) Pro forma depreciation and amortization amounts consist primarily of
amortization of goodwill totaling $696,000, $364,000 and $364,000 for the
year ended December 31, 1997 and the six months ended June 30, 1997 and
1998, respectively, recorded as a result of acquisitions by the Company.
Goodwill is amortized over periods ranging from ten to 40 years and
computed on the basis described in Note 2 of Notes to Consolidated
Financial Statements of U.S. Legal Support, Inc.
(4) The acquisitions by the Company have been accounted for as purchases, and
therefore, the operations of the acquired businesses are included in the
statement of income data from the respective dates of acquisition. See the
Consolidated Financial Statements of U.S. Legal Support, Inc. included
herein.
(5) Includes a non-recurring charge of $360,000 in the fourth quarter of 1996
representing the estimated fair value of ownership interests granted to
certain employees by the sole shareholder of Looney.
(6) The fourth quarter of 1997 includes a special charge of $3.3 million for
costs, which pertained to a delayed public offering and acquisitions
terminated as a result of such delay. Excluding the effect of such special
charge, pro forma operating income, income before taxes, net income and
basic and diluted net income per common share for the year ended December
31, 1997 would have been $3.4 million, $3.0 million, $1.7 million and
$0.30, respectively.

(7) Gives effect to: (i) 1,084,098 shares of Common Stock outstanding prior to
the Offering; (ii) 3,100,000 shares issued in the Offering; (iii) 1,612,747
shares of Common Stock issuable upon conversion of preferred stock and
Convertible Subordinated Promissory Notes; and (iv) 81,719 dilutive Common
Stock equivalents. See "Capitalization."

5
<PAGE>

RISK FACTORS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. The following risk factors
should be considered carefully in addition to the other information in this
Prospectus before purchasing the shares of Common Stock offered hereby.

Limited Combined Operating History. The Company was founded in October 1996
and has acquired 13 businesses between January and September 1997.
Consequently, the Company and the acquired businesses have operated as a
combined enterprise only for a limited period. The pro forma combined
historical financial results included herein cover periods during which the
businesses acquired were not under common control and may not be indicative of
the Company's future financial or operating results. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Risks of Integrating Acquired Companies. The Company emphasizes
decentralized management of operations and marketing, and its success will
depend, to a large extent, upon its ability to integrate effectively the
operations of acquired businesses. There can be no assurance that the recently
assembled management group will be able to implement successfully the
Company's business and growth strategies or manage successfully the combined
operations of the Company and the businesses acquired. Most of the businesses
acquired, or that the Company will seek to acquire, have operated with limited
financial and other reporting systems. Although the Company believes that its
existing financial reporting and accounting control systems are satisfactory
for the operation of the combined businesses, these systems may not be capable
of efficiently addressing the future needs of the Company if the Company
successfully implements its acquisition strategy. Integration of financial
reporting and accounting control systems of acquired businesses could require
the Company to enhance its existing systems and provide additional training to
existing personnel or hire additional personnel. The Company could be required
to rely on the financial reporting and accounting control systems of any
businesses acquired, which could adversely affect the Company's ability to
integrate successfully and manage effectively the combined enterprise in the
near term. In connection with the integration of acquired companies, the
Company will be integrating the personnel associated with such acquisitions,
including court reporting and certified record retrieval personnel, legal
placement and staffing recruiters and administrative personnel. There can be
no assurance that the Company will be able to maintain relationships with such
personnel or retain such persons in their current roles. Failure of the
Company to retain such persons, particularly legal placement and staffing
recruiters, could have a material adverse effect on the Company's business,
results of operations and financial condition. See "Business--Acquisition and
Integration Strategy" and "Management."

Risks Associated with Future Acquisitions. The Company's growth strategy is
dependent upon a program of continuing acquisitions, and the Company expects
that it will encounter intense competition for acquisition candidates. The
legal support and staffing industry is experiencing consolidation which could
limit the number of acquisition opportunities and lead to higher acquisition
prices. There can be no assurance the Company will be able to identify
attractive acquisition candidates or negotiate acceptable acquisition terms,
and the failure to do so would have a material adverse effect on the Company's
results of operations and its ability to sustain growth. The Company's
acquisition strategy involves a number of risks, each of which could affect
adversely the Company's operating results, including the diversion of
management attention from operation of the business and the failure of an
acquired business to achieve targeted financial results. Also, the loss of key
personnel from acquired businesses, including experienced recruiters in legal
staffing companies, could have a material adverse effect on the Company's
operating results. In addition, the Company could encounter unanticipated
business risks or unanticipated liabilities with respect to the acquired
businesses, and significant amortization of acquired intangible assets is
likely to be required in most acquisitions. Further, there can be no assurance
that the Company's strategy to become a national, full service provider of
legal support services will be successful. See "Business--Growth Strategy."

6
<PAGE>

The Company will require additional financing for future acquisitions, which
may not be available on terms acceptable to the Company. The Company currently
intends to finance future acquisitions using shares of its Common Stock for a
significant portion of the purchase price. In the event the Company's Common
Stock does not maintain sufficient value or potential acquisition candidates
are unwilling to accept Common Stock as consideration for the sale of their
businesses, the Company may be required to utilize more of its cash resources,
if available, in order to continue to pursue its acquisition strategy. The net
proceeds of the Offering will be used to repay indebtedness, and none of such
proceeds will be available for future acquisitions. If the Company does not
have sufficient cash resources, is unable to borrow the funds required to make
acquisitions or is not able to use its Common Stock as consideration for
acquisitions, its growth through acquisitions will be limited, which would
have a material adverse effect on the Company's business, results of
operations, and financial condition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

Fluctuations in Quarterly Operating Results. The Company has experienced in
the past and expects to experience in the future significant fluctuations in
quarterly operating results. Such fluctuations may be caused by the departure
of key personnel from acquired businesses or legal placement and staffing
recruiters. Revenues in the Company's legal staffing division declined to
approximately $1.6 million for each of the three-month periods ended December
31, 1997 and March 31, 1998, compared with $2.4 million, $2.2 million and $2.9
million for the three month periods ended March 31, 1997, June 30, 1997 and
September 30, 1997, respectively, primarily as a result of the departure in
December 1997 of three legal recruiters in the Company's New York office.
Staffing revenues increased to $2.4 million in the three months ended June 30,
1998. Additional factors that could cause operating results to be below the
expectations of public market analysts and investors include, among others,
failure to adequately integrate acquired companies, fluctuations in the
general economy, changes in demand for the Company's services (including
changes resulting from a decline in the number or complexity of lawsuits
filed) changes in the regulatory environment, increased competition, changes
in operating expenses, expenses related to acquisitions, and the potential
adverse effect of acquisitions. Due to the foregoing factors, many of which
are beyond the Company's control, the Company believes that period-to-period
comparisons of its operating results will not necessarily be meaningful and
should not be relied upon as any indication of future performance. The
Company's future quarterly operating results from time to time may not meet
the expectations of securities analysts or investors, which could have a
material adverse effect on the market price of the Company's Common Stock.

Risks Associated with Rapid Growth. The Company has experienced rapid growth
through acquisitions since it commenced operations in January 1997, which has
placed demands on its management, operational capacity and financial resources
and systems. The Company's growth strategy provides for a continuing
acquisition program, which will place further demands on its management,
operational capacity and financial resources and systems. The increased
management requirements will necessitate the recruitment and retention of
additional qualified management personnel and the purchase and implementation
of new management information systems. There can be no assurance that the
Company will be able to recruit and retain qualified personnel or expand and
manage its operations effectively and profitably. The failure to manage growth
effectively could have a material adverse effect on the Company's business,
results of operations and financial condition. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."

Regulatory Initiatives. The Company derives most of its revenues from
operations in California, Florida, New York and Texas. Legislation or
regulations enacted in any of these states, states into which the Company
expands or at the federal level relating to lawsuits or other dispute
resolution proceedings, or to the provision of court reporting or other legal
support and staffing services provided by the Company, could have a material
adverse effect on the Company's business, results of operations and financial
condition. A key component of the Company's business strategy is the pursuit
of arrangements with insurance providers and major corporations under which
the Company is designated as the exclusive or preferred provider of court
reporting and certified record retrieval services. Legislation recently was
proposed in the State of Texas that could have prohibited such arrangements by
making illegal the provision of services by a court reporter under any
agreement other than on

7
<PAGE>

a case-by-case basis. The proposed legislation also would have prohibited a
court reporter from being employed by, or serving as an independent contractor
for, a court reporting firm unless a majority of the firm is owned by
certified shorthand reporters. While the foregoing provisions were not
included in the Texas legislation as enacted, the Company expects that there
will continue to be efforts to sponsor the adoption of similar prohibitions in
legislative or regulatory action or through the ethics codes governing the
conduct of court reporters or attorneys. If enacted, these prohibitions would
represent a significant impediment to the implementation of the Company's
current business strategy and could have a material adverse effect on the
Company's business, results of operations and financial condition. Other
states have enacted or considered such legislation and may do so in the
future. West Virginia recently enacted legislation that prohibits a court
reporter from entering into a contract for the provision of court reporting
services directly with a party to a lawsuit.

Tort reform and other similar legislation has been enacted or proposed at
both state and federal levels. Such laws typically limit the monetary damages
recoverable by plaintiffs in class action, personal injury or other lawsuits
and may limit a claimant's ability to file suit in a particular jurisdiction.
Such legislation could therefore result in a decline in the number of lawsuits
initiated as well as the demand for court reporting and document retrieval or
other legal support services. In addition, recent federal and certain state
legislative proposals have included limitations on the number and length of
depositions or proposed the substitution of videotaped reporting for
stenographic transcription of certain legal proceedings. Such laws, if
enacted, could adversely affect the business, results of operations and
financial condition of the Company.

State and national bar associations and committees on legal ethics and
professional responsibility have from time to time issued opinions regarding
the ethical implications of arrangements involving temporary attorneys. These
opinions have suggested that the payment of fees to agencies that place
temporary attorneys may constitute, in certain circumstances, the improper
splitting of legal fees with a non-lawyer. The applicability of these opinions
to the Company's business is uncertain, and there can be no assurance that a
state will not determine that the business as conducted by the Company
violates ethical or professional responsibility regulations for attorneys. In
addition, the practice of placing temporary lawyers with a number of firms may
raise conflict of interest issues under applicable ethics codes, particularly
when attorneys from a placement firm are placed with opposing parties, or law
firms representing such parties, in a lawsuit or business transaction.

The Company cannot determine whether legislative or regulatory proposals
affecting the Company's operations will be initiated, reproposed or enacted;
however, if adopted, certain of such proposals could require the Company to
alter the manner in which it conducts its business, and could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Business--Regulation."

Alternative Dispute Resolution. The high cost of litigation in the United
States has resulted in the more frequent use of alternative dispute resolution
practices, such as arbitration and mediation. The increasing use of such
alternative dispute resolution practices could affect the demand for the
Company's legal support and staffing services; however, the Company is unable
to assess the ultimate effect, if any, that such practices may have on its
services.

Competition. The legal support and staffing services industry is highly
competitive and fragmented, and limited barriers to entry exist with respect
to each component of the Company's business. Although the industry is
undergoing consolidation, the principal competition for the Company's court
reporting and certified record retrieval businesses currently consists of
numerous local and regional firms. In its legal staffing business, the Company
competes with national, regional and local firms, some of which have
substantially greater resources, offer more diversified services and operate
in broader geographic areas than the Company. As the Company seeks to expand
into new geographic markets, its growth in those markets will depend upon its
ability to gain market share from competitors, and there can be no assurance
that additional market share will be obtained. Prices for legal support
services generally have remained stable or have declined in many markets over
the past several years as law firms, insurance providers and corporations have
increased their efforts to reduce expenses by centralizing their purchasing
decisions and negotiating lower rates with vendors. As this trend and the
related consolidation among legal support service companies continue, the
Company anticipates that it will encounter

8
<PAGE>

more intense price-based competition, which could have a material adverse
effect on the Company's business, results of operations and financial
condition. See "Business--Competition."

Status of Independent Contractors. The Company typically provides court
reporting services through independent contractors and, therefore, does not
pay federal or state employment taxes or withhold income taxes for such
persons. Further, the Company does not include these independent contractors
in its employee benefit plans. From time to time persons engaged as
independent contractors are determined to be employees as a result of
challenges by the federal Internal Revenue Service ("IRS") and state
authorities asserted in administrative proceedings or court action. In certain
instances, persons engaged to be independent contractors could also initiate
court proceedings asserting that they are employees under state law and should
therefore be included in employee benefit plans. Such determinations of
employee status under these challenges are made on a case-by-case basis and
are based upon the particular facts of each case. In the event persons engaged
by the Company as independent contractors are determined to be employees by
the IRS or any state taxation department, the Company would be required to pay
applicable federal and state employment taxes and withhold income taxes with
respect to such persons and could become liable for amounts required to be
paid or withheld in prior periods. In addition, the Company could be required
to include such persons in its employee benefit plans on a retroactive as well
as a current basis. Approximately 500 court reporters are engaged by the
Company as independent contractors, and any challenge by the IRS, state
authorities or private litigants resulting in a determination that such
persons are employees would have a material adverse effect on the Company's
business, results of operations and financial condition. In October 1997, a
bill was introduced in the U.S. House of Representatives that would amend the
Internal Revenue Code to establish more stringent requirements for the
determination of independent contractor status. The Company is unable to
assess the likelihood that this bill or similar legislation will be enacted.
See "Business--Legal Support and Staffing Services" and "--Independent
Contractors."

Dependence Upon Key Personnel. The Company is dependent on the continuing
services of Richard O. Looney, other executive officers and the senior
management of the acquired businesses, and the Company likely will depend on
the senior management of any significant business it acquires in the future.
The business or prospects of the Company could be affected adversely if any of
these persons do not continue in their management roles and the Company is
unable to attract and retain qualified replacements. The loss of the services
of any of these members of senior management of the Company or the acquired
businesses could have a material adverse effect on the Company's business,
results of operations and financial condition. The Company does not currently
maintain key-man life insurance on any executive officer. See "Management."

Ability to Attract and Retain Qualified Personnel. The Company is dependent
upon the services of experienced recruiters in its legal staffing business and
the availability of a sufficient number of licensed court reporters. From time
to time, there are shortages of qualified court reporters, and there can be no
assurance that the Company will be able to maintain an adequate force of
licensed court reporters or that the Company's expenses will not increase as a
result of such a shortage. The Company competes with other legal staffing
companies, as well as its clients, for qualified attorneys. The Company
expects that a substantial number of the Company's temporary legal staffing
personnel will terminate their temporary assignments to accept full-time
employment with Company clients. The Company also may encounter difficulty in
recruiting a sufficient number of qualified attorneys. In addition, during
periods of high demand for the Company's services, the Company may incur
increased expense associated with recruiting qualified temporary attorneys.
The Company's inability to attract and retain a sufficient number of qualified
temporary attorneys, or the loss of a significant number of qualified
temporary attorneys to clients, could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Business--Business Strategy."

Potential Liability to Clients. The provision of personnel in the legal
support and staffing business entails an inherent risk of professional
malpractice and similar claims, and the Company could be named as a defendant
in litigation in connection with services rendered. Although the Company
maintains errors and omissions insurance for court reporting, record retrieval
and temporary and permanent legal placement and staffing

9
<PAGE>

businesses, there can be no assurance that, if named, the Company would be
able to defend such claims within policy limits. The Company's business also
involves the handling of clients' documents containing confidential and other
sensitive information. There can be no assurance that unauthorized disclosures
will not occur, or that clients' documents will not be mishandled or lost,
which could have a material adverse effect on the Company's business, results
of operations and financial condition. The Company also may be subject to
discrimination and harassment claims for the acts of legal staffing personnel
who are placed with the Company's clients. See "Business--Regulation."

Technological Advances. The Company's business is subject to changes in
technology, which may result in the introduction of new products or services
that are competitive with, superior to, or render obsolete the services
provided by the Company. For example, voice recognition technology is designed
to eliminate the need for manual transcription of oral testimony and has been
under development for several years. There can be no assurance that
substantial advances will not be made in the area of voice recognition
technology or that other technology will not be developed that renders the
Company's services obsolete or impractical. These changes in technology also
could include conducting certified document retrieval electronically, with
deposition notices and subpoenas being transmitted electronically to document
custodians and witnesses who similarly would return responses electronically.
The Company's ability to compete effectively will depend upon its ability to
adapt to such changes and to develop services to satisfy evolving client
requirements. There can be no assurance that current technologies, or
technologies developed in the future, will not compete with or replace
services provided by the Company, or that any technological advances made by
the Company will be responsive to client requirements or represent the best
available technology to meet client needs. See "Business--Legal Support and
Staffing Services."

Year 2000 Compliance. Many currently installed computer systems are not
capable of distinguishing 21st century dates from 20th century dates. As a
result, in less than two years, the computer systems and software used by many
companies may need to be updated to comply with such "Year 2000" requirements.
Although the Company is currently implementing a new centralized accounting
and management information system that is Year 2000 compliant, it intends to
implement a Year 2000 program with respect to other computer systems to ensure
that all of its systems and applications will function properly beyond 1999.
The Company expects that implementation of its new systems and the upgrade of
existing systems to address Year 2000 issues will be successfully completed on
a timely basis. However, there can be no assurance that such completion will
occur as planned. The Company does not expect to incur significant
expenditures to address Year 2000 compliance. The ability of third parties
with whom the Company transacts business to address adequately their Year 2000
compliance is beyond the Company's control. The failure of the Company or such
third parties to address adequately Year 2000 compliance could have a material
adverse effect on the Company's business, results of operations and financial
condition.

Control by Officers, Directors and Shareholders. Upon completion of the
Offering, the Company's officers, directors and current principal shareholders
will beneficially own approximately 42% of the outstanding Common Stock. These
persons, if acting together, will have substantial control over matters
requiring approval of the shareholders of the Company, including the election
of directors. See "--Anti-Takeover Effect of Certain Charter Provisions,"
"Management" and "Principal Shareholders."

Dilution. Purchasers of Common Stock in the Offering will experience
immediate dilution of $11.98 from the assumed initial public offering price
per share of $11.00 and may experience further dilution from issuances of
Common Stock in connection with future acquisitions and the exercise of
certain outstanding options to purchase Common Stock. See "Dilution."

Absence of Public Market; Possible Volatility of Stock Price. Prior to the
Offering, there has been no public market for the Common Stock. There can be
no assurance that an active trading market for the Common Stock will develop
or be sustained after the Offering or that purchasers of the Common Stock will
be able to resell their shares at prices equal to or greater than the initial
public offering price. The initial public offering

10
<PAGE>

price will be determined through negotiations between the Company and the
Underwriters and may not be indicative of the prices that will prevail in the
public market after the Offering. Numerous factors, including fluctuations in
the operating results of the Company or its competitors, fluctuations in the
demand for the Company's services or business services in general, and the
timing and announcement of acquisitions by the Company or its competitors,
could have a significant impact on the price of the Common Stock. In addition,
the stock markets have experienced significant price and volume fluctuations
in recent years that often have been unrelated or disproportionate to the
operating performance of companies. These fluctuations may adversely affect
the market price of the Common Stock. See "Underwriting."

Shares Eligible for Future Sale. Upon completion of the Offering, the
Company will have 5,796,845 shares of Common Stock outstanding. Of these
shares, 3,100,000 shares will be freely transferable without restriction or
limitation under the Securities Act of 1933, as amended (the "Securities
Act"), except for any shares purchased by "affiliates" of the Company, as such
term is defined in Rule 144 under the Securities Act. All remaining shares
(approximately 2.69 million) constitute "restricted securities" within the
meaning of Rule 144 and the resale of such shares is restricted for one year
from the date they were acquired. The holders of such shares have certain
rights to have shares registered in the future under the Securities Act
pursuant to the terms of agreements between such holders and the Company. The
Company, its executive officers, directors and principal shareholders, who own
in the aggregate approximately 2.4 million shares of Common Stock, have agreed
not to offer or sell any shares of Common Stock for a period of 180 days
following the date of this Prospectus without the prior written consent of
Hambrecht & Quist LLC, except that the Company may issue shares of Common
Stock in connection with acquisitions and pursuant to the exercise of stock
options described in this Prospectus. On the date of this Prospectus, the
Company had outstanding options to purchase 471,744 shares of Common Stock,
including outstanding options granted to employees and consultants, options
granted pursuant to the 1997 Stock Incentive Plan and options granted in
connection with certain acquisitions. In addition, the Company intends to
grant options to purchase 46,875 shares of Common Stock pursuant to the
Company's Stock Option Plan for Non-Employee Directors upon completion of the
Offering. The Company intends to register all of the shares of Common Stock
reserved for issuance pursuant to the Company's 1997 Stock Incentive Plan and
pursuant to the Company's Stock Option Plan for Non-Employee Directors under
the Securities Act for public resale. Sales of substantial amounts of shares
of Common Stock in the public market after this Offering or the perception
that such sales could occur may adversely affect the market price of the
Common Stock. See "Shares Eligible for Future Sale."

Anti-Takeover Effect of Certain Charter Provisions. The Board of Directors
of the Company is authorized to issue preferred stock in one or more series
without shareholder action, which could render more difficult or discourage an
attempt to obtain control of the Company by means of a tender offer, business
combination, proxy contest or otherwise. In addition, certain provisions of
the Texas Business Corporation Act also may discourage takeover attempts that
have not been approved by the Board of Directors. See "Description of Capital
Stock."

11
<PAGE>

THE COMPANY

OVERVIEW

The Company was founded in October 1996 as the successor to Looney to create
a leading provider of legal support and staffing services to law firms,
insurance providers and major corporations. Prior to the combination with
Looney in January 1997, the Company did not conduct any operations. Looney now
conducts its operations as a subsidiary of the Company and provides court
reporting and certified record retrieval services through operations in
Houston, Dallas, San Antonio, Austin, Corpus Christi and Harlingen, Texas. Mr.
Richard O. Looney, the founder of Looney, serves as Chairman, President and
Chief Executive Officer of the Company. The Company also provides court
reporting services to customers in locations not directly served by the
Company through a referral network owned by the Company with over 200
affiliated court reporting firms located throughout the United States.

Since combining with Looney in January 1997, the Company and its subsidiary
Looney have acquired 13 businesses. The following is a brief description of
these acquisitions:

ACQUISITIONS

Klein, Bury & Associates. Klein, Bury & Associates ("Klein Bury") provides
court reporting services through operations in Miami, Fort Lauderdale, West
Palm Beach, Orlando, Jacksonville and Tampa, Florida and was previously a
network affiliate. Michael Klein, President of Klein Bury, serves on the Board
of Directors of the Company. Klein Bury, acquired in January 1997, is
headquartered in Miami, Florida.

G&G Court Reporters. G&G Court Reporters ("G&G") provides court reporting
services in southern California. G&G, acquired in May 1997, is headquartered
in Los Angeles, California.

San Francisco Reporting Service. San Francisco Reporting Service ("San
Francisco Reporting") provides court reporting services in northern California
and was previously a network affiliate. Acquired in May 1997, San Francisco
Reporting is headquartered in San Francisco, California.

Johnson Court Reporting Group. The Johnson Court Reporting Group ("Johnson
Group"), through Johnson Court Reporting, Rapidtext, Inc. and Medtext, Inc.,
provides court reporting services, closed-captioning services for the hearing
impaired, remote classroom captioning services, medical transcription
services, and scanning and imaging services primarily in southern California.
Acquired in August 1997, the Johnson Group is headquartered in Newport Beach,
California.

Legal Enterprise, Inc. Legal Enterprise, Inc. ("Legal Enterprise") provides
certified record retrieval services as well as digital scanning, reproduction
services and automated subpoena preparation services through seven offices in
California. Tony Maddocks, President of Legal Enterprise, serves as Vice
President of Sales and Marketing for the Company. Acquired in August 1997,
Legal Enterprise is headquartered in Los Angeles, California.

Amicus One Legal Support Services, Inc. Amicus One Legal Support Services,
Inc. ("Amicus One") provides court reporting, computer and still board
animation exhibit preparation and image scanning services with operations in
Manhattan, White Plains and Brooklyn, New York. Acquired in September 1997,
Amicus One is headquartered in New York, New York.

Block Court Reporting, Inc. Block Court Reporting, Inc. and its subsidiary
("Block") provide court reporting services to the Washington, D.C., Baltimore,
Maryland and northern Virginia markets. Block was previously a network
affiliate. Acquired in September 1997, Block is headquartered in Washington,
D.C.

Ziskind Greene Watanabe & Nason. Ziskind Greene Watanabe & Nason ("Ziskind
Greene") provides permanent legal search services to national and California
law firms and legal departments of major corporations through offices in Los
Angeles, Orange County, San Diego and San Francisco, California. Acquired in
September 1997, Ziskind Greene is headquartered in Los Angeles, California.

12
<PAGE>

Elaine P. Dine, Inc. Elaine P. Dine, Inc. ("Elaine Dine") provides permanent
legal search services to national and New York law firms and legal departments
of major corporations nationwide. In addition, Elaine Dine, through Elaine
Dine Temporary Attorneys, L.L.C., provides temporary lawyer services to its
clients. Acquired in September 1997, Elaine Dine is headquartered in New York,
New York.

Other Acquisitions Made by the Company. In April 1997, the Company acquired
Cindi Rogers & Associates, a Houston-based court reporting company. In
addition, in July 1997, Looney acquired Preferred Records, Inc., a Dallas-
based court reporting and certified record retrieval company. In August 1997,
Looney acquired Encore Reporting, a Harlingen-based court reporting and record
retrieval company and the Company acquired Rocca Reporting Service ("Rocca"),
a Chicago-based court reporting company.

SUMMARY OF INDIVIDUAL COMPANY REVENUES

The following table sets forth a summary of the revenues attributable to
Looney and the acquired businesses for the fiscal years ended December 31,
1996 and 1997.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Looney (1)...................................................... $ 7,667 $ 7,956
Klein Bury...................................................... 8,525 8,632
Elaine Dine (2)................................................. 4,658 6,950
Legal Enterprise................................................ 3,707 4,697
Johnson Group................................................... 2,155 2,335
Ziskind Greene.................................................. 1,841 2,127
Amicus One...................................................... 1,882 2,117
G&G............................................................. 1,517 2,001
San Francisco Reporting......................................... 1,140 1,225
Block........................................................... 1,317 1,052
------- -------
Total......................................................... $34,409 $39,092
======= =======
</TABLE>
- --------
(1) The revenues of Looney include from their respective dates of acquisition,
the revenues of: (i) Cindi Rogers & Associates (acquired April 3, 1997);
(ii) Preferred Records, Inc. (acquired July 31, 1997); (iii) Rocca
Reporting Service (acquired August 15, 1997); and (iv) Encore Reporting
(acquired August 28, 1997). The table does not include revenues for these
entities prior to their acquisition because these amounts are not
material.
(2) The revenues of Elaine Dine for the year ended December 31, 1997 include
the revenues of Elaine Dine Temporary Attorneys, L.L.C.

The consideration paid by the Company for the acquired businesses and its
combination with Looney, after giving effect to post-closing adjustments to
date, consisted of: (i) $21.8 million in cash; (ii) 2,046,667 shares of Series
B Convertible Preferred Stock; (iii) 231,250 shares of Series C Convertible
Preferred Stock; (iv) $5.1 million aggregate principal amount of Subordinated
Promissory Notes; (v) $1.8 million aggregate principal amount of Convertible
Subordinated Promissory Notes; and (vi) 439,528 shares of Common Stock. In
addition, with respect to certain of the businesses acquired, the Company may
be obligated to pay contingent consideration based on improvements in the
financial performance of the businesses during specified periods after their
acquisition. See "Certain Transactions." The Company also granted options to
purchase a total of 90,210 shares of Common Stock to the owners or employees
of the businesses acquired. These options fully vest one year following the
respective dates of grant, may be exercised for nominal consideration and
expire ten years following the dates of grant. See "Use of Proceeds" and Notes
7 and 8 of Notes to Consolidated Financial Statements of U.S. Legal Support,
Inc.

13
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,100,000 shares of
Common Stock offered hereby at an assumed initial public offering price of
$11.00 per share are estimated to be $31.3 million ($35.4 million if the
Underwriters' over-allotment option is exercised in full).

The net proceeds of the Offering will be utilized by the Company as follows:
(i) approximately $17.1 million will be used to repay the outstanding
principal under the Company's existing credit agreement with a commercial bank
(the "Bank Credit Agreement"), which was used to finance certain of the
acquisitions completed by the Company and for working capital purposes; (ii)
approximately $12.2 million will be used to repay the outstanding principal
of, and accrued interest on, the Company's 12% Senior Subordinated Notes due
2005 (the "Senior Subordinated Notes"), which were issued in January 1997 and
March 1998 to finance the acquisitions completed during 1997 and for working
capital purposes; and (iii) approximately $2.0 million will be used to repay a
portion of the outstanding principal balance of, and interest on, the
Company's Subordinated Promissory Notes issued in connection with certain of
the Company's acquisitions. If the Underwriters' over-allotment option is
exercised in full, such net proceeds will be used (i) to repay the remaining
balance of $3.4 million outstanding on the Company's Subordinated Promissory
Notes; (ii) to redeem the Company's Series C Convertible Preferred Stock at
$231,250; and (iii) for general corporate purposes. If the over-allotment
option is not exercised, the Company will repay the remaining indebtedness
under the Subordinated Promissory Notes and redeem the Series C Convertible
Preferred Stock with borrowings under the New Credit Agreement (as defined
herein). See "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."

Indebtedness under the Bank Credit Agreement currently bears interest at the
rate of approximately 8.25% per annum and is required to be paid in full upon
completion of the Offering. The Subordinated Promissory Notes become due and
payable upon completion of the Offering and bear interest at rates ranging
from 6.0% to 10.0% per annum. Approximately $2.0 million of the principal
amount of the Subordinated Promissory Notes is held by two executive officers
of the Company. See "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Certain Transactions" and Notes 3 and 7 of Notes to Consolidated
Financial Statements of U.S. Legal Support, Inc.

DIVIDEND POLICY

To date, the Company has neither declared nor paid any dividends on shares
of its Common Stock and does not anticipate paying any dividends in the
foreseeable future. The Company intends to retain future earnings, if any, to
finance its operations and to fund the growth of its business, to repay
indebtedness and for general corporate purposes. Any payment of dividends will
be at the discretion of the Board of Directors and will depend upon, among
other things, the Company's earnings, financial condition, capital
requirements, level of indebtedness, contractual restrictions with respect to
the payment of dividends and other relevant factors. The Company has entered
into a new Senior Secured Credit Facility (the "New Credit Agreement") with
Heller Financial, Inc. ("Heller"), which will become effective concurrently
with completion of the Offering, and such agreement prohibits the payment of
dividends. See "Description of Capital Stock."

14
<PAGE>

CAPITALIZATION

The following table sets forth, as of June 30, 1998: (i) the historical
consolidated short-term indebtedness and capitalization of the Company and
(ii) the historical consolidated short-term indebtedness and capitalization of
the Company as adjusted to give effect to: (a) the sale of the 3,100,000
shares of Common Stock offered hereby at an assumed offering price of $11.00
per share; (b) the application of the estimated proceeds therefrom; and (c)
the borrowings expected to be incurred upon completion of the Offering under
the Company's New Credit Agreement with Heller. This table should be read in
conjunction with the historical and pro forma consolidated financial
statements and related notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF
JUNE 30, 1998
------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt (including current portion of long-term
debt)..................................................... $ 6,289 $ 134
-------- --------
Long-term debt, excluding current portion:
Bank indebtedness (1).................................... 11,462 6,241
Senior Subordinated Notes................................ 12,210 --
Subordinated Promissory Notes............................ 4,803 --
Subordinated Convertible Promissory Notes (2)............ 2,174 --
Debt discount (3)........................................ (4,107) --
-------- --------
Total long-term debt................................... 26,542 6,241
-------- --------
Redeemable Preferred Stock:
Series A Convertible Preferred Stock, 1,272,762 shares
outstanding (4)......................................... 6,695 --
Series B Convertible Preferred Stock, 2,046,667 shares
outstanding (4)......................................... 2,047 --
Series C Convertible Preferred Stock, 231,250 shares
outstanding (5)......................................... 231 --
-------- --------
Total redeemable preferred stock....................... 8,973 --
-------- --------
Shareholders' equity (deficit):
Preferred Stock, $1.00 par value, 10,000,000 shares
authorized.............................................. -- --
Common Stock, $.01 par value, 100,000,000 shares
authorized: 1,084,098 shares outstanding, actual; and
5,796,845 shares, as adjusted (6)....................... 11 58
Additional paid-in capital............................... 1,967 44,156
Accumulated deficit...................................... (11,526) (16,153)
-------- --------
Total shareholders' equity (deficit)................... (9,548) 28,061
-------- --------
Total capitalization....................................... $ 32,256 $ 34,436
======== ========
</TABLE>
- --------

(1) As adjusted long-term debt includes borrowings to be made under the
Company's New Credit Agreement to (i) repay approximately $3.4 million of
the Company's Subordinated Promissory Notes; (ii) redeem 231,250 shares of
the Company's Series C Convertible Preferred Stock; and (iii) pay expenses
of approximately $2.7 million, relating to the costs of a delayed public
offering and costs associated with acquisitions terminated as a result of
such delay.

(2) The Convertible Subordinated Promissory Notes were issued in connection
with certain of the acquisitions made by the Company and will be converted
into an aggregate of 171,748 shares of Common Stock.

(3) Includes approximately $2.4 million attributable to Senior Subordinated
Notes, $1.2 million attributable to the Subordinated Promissory Notes and
$500,000 attributable to the Convertible Subordinated Promissory Notes.
See Note 7 of Notes to Consolidated Financial Statements of U.S. Legal
Support, Inc.

(4) The Series A Convertible Preferred Stock will be converted into 1,240,934
shares of Common Stock and the Series B Convertible Preferred Stock will
be converted into an aggregate of 200,065 shares of Common Stock, in each
case, upon completion of the Offering.

(5) Borrowings under the New Credit Agreement will be used to redeem the
shares of the Series C Convertible Preferred Stock for $231,250.

(6) Excludes: (i) 562,500 shares of Common Stock reserved for issuance under
the Company's 1997 Stock Incentive Plan and the Company's Stock Option
Plan for Non-Employee Directors; (ii) 37,153 shares of Common Stock
issuable upon exercise of options granted to employees and consultants;
and (iii) 82,410 shares of Common Stock issuable upon exercise of options
granted in connection with certain acquisitions. See "Management,"
"Certain Transactions" and "Principal Shareholders."

15
<PAGE>

DILUTION

As of June 30, 1998, the Company had a net tangible book deficit of
approximately $(39.2) million, or $(36.14) per share of Common Stock. Net
tangible book deficit per share represents the Company's total tangible assets
less its total liabilities, divided by the number of shares of Common Stock
outstanding. After giving effect to the sale of the 3,100,000 shares of Common
Stock offered hereby at an assumed offering price of $11.00 per share, the pro
forma net tangible book deficit of the Company at June 30, 1998 would have
been approximately $(5.7) million, or $(0.98) per share. This represents an
immediate increase in such net tangible book value of $35.16 per share to
existing shareholders at June 30, 1998, consisting of $24.14 per share
attributable to the conversion of convertible subordinated debt and preferred
stock, and $11.02 per share attributable to the Offering. This results in
immediate dilution of $(11.98) per share to new investors. The following table
illustrates this per share pro forma dilution to new investors:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........... $11.00
Net tangible book deficit as of June 30, 1998 [$39.2
million]............................................... $(36.14)
Increase in pro forma net tangible book deficit
attributable to the conversion of convertible
subordinated debt and preferred stock [$6.8 million]... 24.14
Increase in pro forma net tangible book deficit attrib-
utable to the Offering, net of the extraordinary loss
on debt [$26.7 million]................................ 11.02
-------
Pro forma net tangible book deficit per share after the
Offering [$5.7 million].................................. (.98)
-------
Dilution per share to new investors....................... $(11.98)
=======
</TABLE>

The following table summarizes, after giving effect to the Offering, the
differences between existing shareholders and the new investors with respect
to the number of shares of Common Stock purchased from the Company, the total
consideration and the average price per share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing common shareholders... 1,084,098 18.7% $ 4,246,000 8.6% $3.92
Common shareholders upon
conversion of:
Series A Convertible
Preferred Stock............. 1,240,934 21.4 6,695,427 13.6 5.40
Series B Convertible
Preferred Stock............. 200,065 3.4 2,046,667 4.2 10.23
Convertible Subordinated
Promissory Notes............ 171,748 3.0 2,173,783 4.4 12.66
New investors.................. 3,100,000 53.5 34,100,000 69.2 11.00
--------- ----- ----------- -----
Total........................ 5,796,845 100.0% $49,261,877 100.0%
========= ===== =========== =====
</TABLE>

The foregoing computations assume no exercise of stock options after May 15,
1998. As of June 30, 1998, options to purchase 351,888 shares of Common Stock
were outstanding, with a weighted average exercise price of $10.58. To the
extent these options are exercised, there will be further dilution to new
investors. See "Management" and Note 10 of Notes to Consolidated Financial
Statements of U.S. Legal Support, Inc.

16
<PAGE>

SELECTED FINANCIAL DATA

The financial data set forth below as of and for each of the years in the
three-year period ended December 31, 1996 were derived from audited financial
statements of Looney. The financial data as of and for the year ended December
31, 1997 was derived from the audited financial statements of the Company. The
financial data for the year ended December 31, 1993 and as of and for the six
months ended June 30, 1997 and June 30, 1998 were derived from the unaudited
financial statements of Looney and the Company, respectively, which include
all adjustments (consisting only of normal recurring adjustments) that, in the
opinion of management, are necessary to present fairly the information set
forth therein.

The pro forma financial data as of and for the six months ended June 30,
1998 and the year ended December 31, 1997, were derived from the pro forma
combined financial statements of the Company appearing elsewhere in this
Prospectus. The pro forma financial data for the six months ended June 30,
1997 were derived from the unaudited pro forma combined financial statements
of the Company which are not included in this Prospectus. Such pro forma
combined financial statements give effect to the acquisitions, the Offering
and the application of the proceeds therefrom, and the related conversion of
outstanding securities as if each of these events had occurred on January 1,
1997. The pro forma financial information of the Company does not purport to
represent what the Company's results of operations or financial position
actually would have been had such events occurred on such date, nor is it a
projection of the Company's results of operations or financial position for
any future period or date. The data presented below should be read in
conjunction with the Management's Discussion and Analysis of Financial
Condition and Results of Operations of the Company, the financial statements
and pro forma combined financial statements and the notes thereto included
elsewhere herein.

17
<PAGE>

SELECTED FINANCIAL DATA (1)

(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA(2)(3)
----------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
------------------------------------- ---------------- ------------ ---------------
1993 1994 1995 1996 1997(4) 1997(4) 1998 1997 1997 1998
------ ------ ------ ------ ------- ------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Revenues............... $7,722 $8,363 $9,104 $7,667 $24,291 $8,402 $20,698 $39,092 $18,878 $20,698
Cost of services....... 4,595 5,589 5,763 4,839 15,382 5,489 12,554 23,581 11,193 12,554
------ ------ ------ ------ ------- ------ ------- ------- ------- -------
Gross profit........... 3,127 2,774 3,341 2,828 8,909 2,913 8,144 15,511 7,685 8,144
Selling, general and
administrative
expenses (5).......... 2,824 3,043 1,970 2,352 6,859 2,167 6,468 10,868 5,128 6,468
Depreciation and
amortization (3)...... 110 224 231 212 681 177 537 1,214 607 537
Special charge (6)..... -- -- -- -- 3,266 -- -- 3,266 -- --
------ ------ ------ ------ ------- ------ ------- ------- ------- -------
Operating income
(loss)................ 193 (493) 1,140 264 (1,897) 569 1,139 163 1,950 1,139
Interest expense....... 181 185 230 238 1,971 650 2,858 474 234 238
------ ------ ------ ------ ------- ------ ------- ------- ------- -------
Income (loss) before
taxes................. 12 (678) 910 26 (3,868) (81) (1,719) (311) 1,716 901
Provisions (benefit)
for income taxes...... 35 (183) 327 10 (156) -- -- 1,313 721 378
------ ------ ------ ------ ------- ------ ------- ------- ------- -------
Net income (loss)...... (23) (495) 583 16 (3,712) (81) (1,719) (1,624) 995 523
Accretion of preferred
stock................. -- -- -- -- (1,093) -- (1,265) -- -- --
------ ------ ------ ------ ------- ------ ------- ------- ------- -------
Net income (loss)
attributable to common
shareholders.......... $ (23) $ (495) $ 583 $ 16 $(4,805) $ (81) $(2,984) $(1,624) $ 995 $ 523
====== ====== ====== ====== ======= ====== ======= ======= ======= =======
Basic income (loss) per
common share.......... $ (4.43) $(0.10) $ (2.75) $ (0.28) $ 0.17 $ 0.09
======= ====== ======= ======= ======= =======
Basic weighted average
shares
outstanding (7)....... 1,084 852 1,084 5,797 5,797 5,797
======= ====== ======= ======= ======= =======
Diluted income (loss)
per common share...... $ (4.43) $(0.10) $ (2.75) $ (0.28) $ 0.17 $ 0.09
======= ====== ======= ======= ======= =======
Diluted weighted
average shares
outstanding (7)....... 1,084 852 1,084 5,797 5,879 5,879
======= ====== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------
ACTUAL PRO FORMA (2)
-------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash.................................................. $ 1,234 $ 1,234
Total assets.......................................... 42,572 42,052
Short-term debt....................................... 6,289 134
Long-term debt (net of current maturities)............ 26,542 6,241
Redeemable preferred stock............................ 8,973 --
Total shareholders' equity (deficit).................. (9,548) 28,061
</TABLE>
- -------
(1) Prior to January 1997, the Company had no business operations. Therefore,
the business of Looney & Company, for financial statement purposes,
represents the predecessor business.

(2) Pro forma information gives effect to: (i) acquisitions by the Company;
(ii) an adjustment to compensation expense for the difference between
actual compensation paid to certain officers of businesses acquired and
employment contract compensation negotiated in connection with such
acquisitions; (iii) amortization expense relating to intangible assets
recorded in conjunction with acquisitions by the Company; and (iv) the
sale of the shares offered hereby and the application of the net proceeds
thereof, as if such events had occurred on January 1, 1997 (for statement
of income data) and as of June 30, 1998 (for balance sheet data). The
conversion of certain outstanding preferred stock and Convertible
Subordinated Promissory Notes described in Note 7 below are contingent
upon, and will close concurrently with, completion of the Offering. The
pro forma results of operations are not necessarily indicative of the
results that would have occurred had these transactions been completed as
of such date or the results that may be attained in the future.

(7) Gives effect to: (i) 1,084,098 shares outstanding prior to the Offering;
(ii) 3,100,000 shares issued in the Offering; (iii) 1,612,747 shares
issuable upon conversion of preferred stock and Convertible Subordinated
Promissory Notes; and (iv) 81,719 dilutive Common Stock equivalents. See
"Capitalization."

18
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
historical financial statements and related notes and the pro forma financial
statements and related notes included elsewhere in this Prospectus. Except for
the historical information contained herein, the discussion in this Prospectus
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors," as
well as those discussed elsewhere herein.

OVERVIEW

The Company is one of the largest providers of legal support and staffing
services in the United States providing court reporting, certified record
retrieval, legal placement and staffing, and other related services to law
firms and corporations, including insurance companies, through 36 offices in
five states and the District of Columbia. The Company seeks to become a
national, full-service provider of legal support and staffing services in the
United States through a combination of selective acquisitions and internal
growth. Since succeeding to the operations of Looney in January 1997, the
Company has acquired 13 businesses. For the year ended December 31, 1997, the
Company incurred a net loss of approximately $3.7 million, primarily as a
result of a special charge of approximately $3.3 million related to the write-
off of expenses associated with a delayed public offering, and costs
associated with acquisitions terminated as a result of such delay. For the
year ended December 31, 1997, the Company had pro forma revenues of $39.1
million and after excluding the special charge discussed above, pro forma
operating income of $3.4 million.

The Company's operations to date have been financed through the issuance of
redeemable convertible preferred stock, convertible debt, subordinated debt
and borrowings under the Company's Bank Credit Agreement. The proceeds of the
Offering will be utilized to repay indebtedness under the Bank Credit
Agreement, the Senior Subordinated Notes and a portion of the Subordinated
Promissory Notes. The outstanding balance of $3.1 million under the
Subordinated Promissory Notes will be repaid with borrowings incurred under
the New Credit Agreement. In addition, all of the Convertible Subordinated
Promissory Notes will be converted into an aggregate of 171,748 shares of
Common Stock in connection with the Offering. The Company anticipates that
bank borrowings and cash from operations will be sufficient to meet the
Company's capital requirements through at least the next eighteen months. See
"Use of Proceeds," "Capitalization" and "--Liquidity and Capital Resources."

The Company generated revenue of $20.7 million for the six months ended June
30, 1998, as compared with pro forma revenue of $18.9 million for the six
months ended June 30, 1997, an increase of $1.8 million, or 9.5%. Excluding
the legal placement and staffing operations, the Company has experienced
growth in revenue on a pro forma basis of $1.4 million, or approximately
15.0%, for the six months ended June 30, 1998 as compared with the six months
ended June 30, 1997. This growth is primarily attributable to general growth
in the legal support and staffing industry together with the positive effects
of the Company's national sales program. The actual financial results for the
six months of 1998 reflect an $800,000 decrease in legal placement and
staffing revenue as compared to pro forma results for the six months of 1997,
as a result of the departure of three legal placement and staffing recruiters
at the Company's New York operations during December 1997. See "--Selected
Quarterly Results of Operations."

In 1997, the Company derived approximately 51.6% of its revenues on a pro
forma basis from court reporting services, 21.4% from certified record
retrieval services, 23.2% from permanent placement and temporary legal
staffing and 3.8% from other services. For the six months ended June 30, 1998,
the Company derived approximately 55.0% of its revenues from court reporting,
21.4% from certified record retrieval, 19.3% from permanent placement and
temporary legal staffing and 4.3% from other services. The Company believes

19
<PAGE>

that over the past several years prices for court reporting and certified
record retrieval services have remained stable or have declined in many
markets, while rates for permanent placement and temporary legal staffing have
remained relatively constant. The Company also believes that law firms and
corporations have increased their efforts to reduce legal expenses by
centralizing their purchasing decisions and negotiating lower rates with
vendors. As these trends and the consolidation among legal support companies
continue, the Company believes that the industry will experience more price-
based competition. The Company's strategy, however, is to capitalize on the
centralization of purchasing decisions by increasing its share of the market
represented by larger accounts and expanding the geographic markets in which
it operates.

Charges for court reporting services typically are based upon the number of
pages transcribed, with a significant portion of revenues being derived from
the production of additional copies. Substantially all of the Company's court
reporting services are performed by independent contractors. Under its
standard arrangements with independent court reporters, the Company retains a
portion, typically averaging 35% to 40%, of the total court reporting fee and
the independent court reporter receives the balance. The Company also derives
court reporting revenues from its network of over 200 affiliated court
reporting firms in locations not directly served by the Company. Under these
arrangements, the Company refers court reporting assignments to network
participants and, upon completion of the assignment, bills the client directly
and typically retains a referral fee of approximately 5% of the total court
reporting fee. The Company anticipates that its reliance on the network of
court reporting affiliates will diminish as the Company acquires additional
court reporting businesses, including certain of the network affiliates
located in market areas not currently served by the Company.

Charges for certified record retrieval services are based upon the number of
subpoenas or other notices initiated and the volume of documents generated in
response to these subpoenas and notices. Certified record retrieval services
generally are used in personal injury and medical malpractice litigation.
Because the number of transcript copies requested by the parties and the
volume of certified records retrieved generally increase as the number of
parties in a lawsuit increases, revenues derived from court reporting and
certified record retrieval services are significantly higher in litigation
involving more than two parties.

The Company's legal staffing recruiters are compensated on a commission
basis. Fees for successful placement of an attorney typically are based upon a
percentage, approximately 25% to 30% of the attorney's compensation earned
during the year following the placement, of which 40% to 60% is customarily
paid to the individual recruiter. This fee is subject to a partial refund if
the new employment arrangement is terminated prior to the expiration of a
negotiated period, usually three to six months. The Company charges its
clients an hourly fee for the number of hours worked by attorneys placed with
clients on a temporary basis.

Cost of services consists primarily of amounts due to the Company's
independent contractors, payroll for field agents, commissions for recruiters,
production equipment rental and costs associated with delivery of documents.
Selling, general and administrative expenses include payroll for management
and administrative employees, office occupancy costs, sales and marketing
expenses and other general and administrative costs. Depreciation and
amortization relates primarily to depreciation of office furniture and
equipment and amortization of intangible assets. The Company pays fees to its
independent contractors based on a percentage of the fees billed to clients.
Similarly, the Company compensates its temporary staffing attorneys only for
the hours actually worked. Consequently, the compensation for such personnel
is a variable cost that fluctuates in proportion to revenues.

The Company's acquisitions have been accounted for under the purchase method
of accounting, with the results of operations of businesses acquired being
included in the Company's results of operations beginning on the date of
acquisition. The Company has recorded approximately $29.5 million as goodwill,
net of accumulated amortization, as of June 30, 1998, representing the excess
of the fair value of the consideration paid over the fair value of the net
assets acquired. Approximately 60% of the goodwill is deductible for federal
income tax purposes over 15 years. For financial reporting purposes goodwill
is amortized over periods ranging from ten to 40 years. The effect of this
amortization expense is approximately $700,000 annually.

20
<PAGE>

PRO FORMA AND ACTUAL OPERATING DATA

The pro forma operating data for the years ended December 31, 1996 and 1997
and the six months ended June 30, 1997 assumes that the Company's acquisitions
were consummated at the beginning of each period presented. Pro forma
adjustments include a reduction in compensation expense to reflect amounts to
be paid under the terms of employment agreements entered into in connection
with certain of the acquisitions. Pro forma adjustments also have been made to
reflect the amortization of the goodwill recorded in connection with each
acquisition.

The following table sets forth certain pro forma and actual operating data
for the indicated periods:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- ---------------------------
1996 1997 1997 1998
------------- ------------- ------------ -------------
PRO FORMA PRO FORMA PRO FORMA ACTUAL
------------- ------------- ------------ -------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Court reporting....... $18,160 52.8% $20,184 51.6% $9,552 50.6% $11,389 55.0%
Records retrieval..... 6,946 20.2 8,347 21.4 4,064 21.5 4,417 21.4
Legal staffing........ 6,499 18.9 9,077 23.2 4,586 24.3 3,999 19.3
Other................. 2,804 8.1 1,484 3.8 676 3.6 893 4.3
------- ----- ------- ----- ------ ----- ------- -----
Total revenues....... 34,409 100.0 39,092 100.0 18,878 100.0 20,698 100.0
------- ----- ------- ----- ------ ----- ------- -----
Costs of services:
Court reporting....... 10,901 12,445 5,729 7,118
Records retrieval..... 4,025 5,610 2,789 2,685
Legal staffing........ 3,765 4,895 2,352 2,428
Other................. 1,966 631 323 323
------- ----- ------- ----- ------ ----- ------- -----
Total costs of
services............ 20,657 60.0 23,581 60.3 11,193 59.3 12,554 60.7
------- ----- ------- ----- ------ ----- ------- -----
Gross profit............ 13,752 40.0 15,511 39.7 7,685 40.7 8,144 39.3
Selling, general and
administrative
expenses............... 9,389 27.3 10,868 27.8 5,128 27.2 6,468 31.2
Depreciation and
amortization........... 1,214 3.5 1,214 3.1 607 3.2 537 2.6
Special charge.......... -- -- 3,266 8.4 -- -- -- --
------- ----- ------- ----- ------ ----- ------- -----
Operating income........ $ 3,149 9.2% $ 163 0.4% $1,950 10.3% $ 1,139 5.5%
======= ===== ======= ===== ====== ===== ======= =====
</TABLE>

Six Months Ended June 30, 1998--Actual Compared to Six Months Ended June 30,
1997--Pro Forma

Revenue. Revenue increased $1.8 million, or 9.5% to $20.7 million for the
six months ended June 30, 1998, from $18.9 million for the six months ended
June 30, 1997. The increase in revenue was a result of the following: (i)
revenue from court reporting services which increased by approximately $1.8
million, primarily due to higher demand in the California, Florida, Texas and
New York operations; and (ii) revenue from certified record retrieval
services, predominantly in California, which increased by $353,000. These
increases were partially offset by a decrease in the Company's permanent legal
search placement and staffing revenue of approximately $587,000 due to the
loss of three recruiters in the fourth quarter of 1997.

Gross Profit. Gross profit increased $459,000, or 6.0%, to $8.1 million for
the six months ended June 30, 1998 from $7.7 million for the six months ended
June 30, 1997. The gross margin percentage declined to 39.3% during the six
months ended June 30, 1998 from 40.7% during the six months ended June 30,
1997. The decline in the gross margin percentage was primarily the result of
increased fees paid to court reporters and higher commissions paid to
permanent legal search and temporary staffing recruiters. These decreases were
partially offset by higher margin work performed by the certified record
retrieval operation in California.

21
<PAGE>

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.3 million, or 25.5%, to $6.5 million for
the six months ended June 30, 1998 from $5.1 million for the six months ended
June 30, 1997. The increase in the level of selling, general and
administrative expenses was attributable to the increased revenue activity in
the court reporting and record retrieval businesses together with additional
corporate costs necessary to support the growth strategy of the Company.

Operating Income. Operating income decreased $811,000, or 41.6%, to $1.1
million for the six months ended June 30, 1998 from $2.0 million for the six
months ended June 30, 1997. The decrease in operating income was due primarily
to the increase in selling, general and administrative expenses discussed
above.

Six Months Ended June 30, 1998--Actual, Compared to Six Months Ended June 30,
1997--Actual

During the period from July 1, 1997 to September 30, 1997, the Company
acquired nine businesses and therefore the results of operations for the six
months ended June 30, 1997 do not reflect the results of operations
attributable to such businesses. Consequently, certain aspects of the
Company's results of operations during the six months ended June 30, 1998 are
not comparable to the results of the Company for the six months ended June 30,
1997.

Revenue. Revenue increased $12.3 million, or 146.4%, to $20.7 million for
the six months ended June 30, 1998 from $8.4 million for the six months ended
June 30, 1997. The increase in revenue was a result of the following: (i)
acquisition of nine companies during the last six months of 1997 which
increased revenue approximately $9.9 million; and (ii) revenue from court
reporting services which increased by approximately $2.4 million, primarily
due to higher demand in the California, Florida, and Texas operations.

Gross Profit. Gross profit increased $5.2 million, or 179.3%, to $8.1
million for the six months ended June 30, 1998 from $2.9 million for the six
months ended June 30, 1997. The increase in gross margin was a result of the
following: (i) acquisition of nine companies during the last six months of
1997, which increased gross margin approximately $4.2 million; and (ii)
increased revenue from court reporting services due to higher demand in the
California, Florida and Texas operations which increased gross margin by
approximately $900,000. The gross margin percentage increased to 39.3% during
the six months ended June 30, 1998 from 34.7% during the six months ended June
30, 1997. The increase in the gross margin percentage was primarily the result
of the acquired staffing companies, which generate higher gross margins than
those of the court reporting and record retrieval businesses.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $4.3 million, or 195.5%, to $6.5 million for
the six months ended June 30, 1998 from $2.2 million for the six months ended
June 30, 1997. The increase in the level of selling, general and
administrative expenses was attributable to the acquisition of nine companies
during the last six months of 1997, increased revenue activity in the court
reporting businesses and additional corporate costs necessary to support the
growth strategy of the Company.

Operating Income. Operating income increased $600,000, or 100.0%, to $1.2
million for the six months ended June 30, 1998 from $600,000 for the six
months ended June 30, 1997. The increase in operating income was due primarily
to the contribution of operating income from the acquired companies, which was
partially offset by additional corporate costs necessary to support the growth
strategy of the Company.

Year Ended December 31, 1997--Pro Forma, Compared to Year Ended December 31,
1996--Pro Forma

Revenue. Revenue increased $4.7 million, or 13.6%, to $39.1 million in 1997
from $34.4 million in 1996. The increase in revenue was a result of the
following: (i) revenue from court reporting services increased by
approximately $2.0 million primarily as the result of higher demand in the
California and New York operations; (ii) revenue from the Company's legal
placement and staffing operations increased by approximately $2.6 million as
the result of several significant retained searches and a $1.2 million
increase in temporary staffing services; and (iii) revenue from certified
record retrieval services in California increased by $1.4 million as the
result of several new insurance clients.

Gross Profit. Gross profit increased $1.8 million, or 12.8%, to $15.5
million in 1997 from $13.8 million in 1996. The gross margin percentage
decreased to 39.7% in 1997 from 40.0% in 1996. The decrease in the gross
margin percentage was primarily the result of an increase in the fees paid to
court reporters at two of the Company's locations.

22
<PAGE>

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.5 million, or 16.0%, to $10.9 million for
the year ended December 31, 1997 from $9.4 million for the year ended December
31, 1996. The increase in selling, general and administrative expenses was
attributable to the increased revenue activity in all company operations
together with additional corporate costs necessary to support the growth
strategy of the Company.

Operating Income. Operating income decreased $3.0 million, from $3.1 million
for the year ended December 31, 1996 to $163,000 for the year ended December
31, 1997. The decrease in operating income was primarily due to a special
charge of $3.3 million attributable to costs incurred in connection with a
delayed offering and acquisitions terminated as a result of such delay.

RESULTS OF OPERATIONS--THE COMPANY AND LOONEY

The Company provides court reporting, certified record retrieval, legal
placement and staffing and related services and derives its revenues from fees
associated with these services. Looney provides court reporting and certified
records retrieval services. The Company acquired Looney in January 1997.

Year Ended December 31, 1997, Compared to Year Ended December 31, 1996

The Company acquired 13 businesses during the year ended December 31, 1997.
Consequently, certain aspects of the Company's results of operations in that
period are not comparable to the results of Looney for the year ended December
31, 1996.

Revenue. Revenue increased $16.6 million to $24.3 million for the year ended
December 31, 1997 from $7.7 million for the year ended December 31, 1996. The
increase in revenue was primarily the result of the acquisitions made by the
Company during the year ended December 31, 1997.

Gross Profit. Gross profit increased $6.1 million to $8.9 million for the
year ended December 31, 1997 from $2.8 million for the year ended December 31,
1996. The increase in gross profit was primarily due to the acquisitions made
by the Company in 1997. The gross margin percentage decreased by 0.2% to 36.7%
for the year ended December 31, 1997 from 36.9% for the year ended December
31, 1996. The slight decrease in the gross margin percentage was primarily the
result of higher fees paid to court reporters at the Company's Florida
subsidiary.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $4.5 million to $6.9 million for the year
ended December 31, 1997 from $2.4 million for the year ended December 31,
1996. Approximately $3.6 million was attributable to acquisitions and $900,000
was the result of higher expenses related to the addition of corporate
personnel to facilitate anticipated future growth.

Depreciation and Amortization. Depreciation and amortization increased by
$469,000 to $681,000 for the year ended December 31, 1997 from $212,000 for
the year ended December 31, 1996. The increase was due to the amortization of
goodwill incurred in connection with the acquisitions made during the year
ended December 31, 1997.

Special Charge. During the fourth quarter 1997, the Company recorded a
special charge of $3.3 million for costs incurred which pertained to an
initial public offering delayed more than 90 days and acquisitions initiated
in September 1997 that were not completed as a result of such delay.

Operating Income. As the result of the foregoing, operating income,
excluding the special charge of $3.3 million, increased by $1.1 million to
$1.4 million for the year ended December 31, 1997 from $264,000 for the
comparable period in 1996. The operating margin percentage, excluding the
impact of the special charge, increased to 5.6% for the year ended December
31, 1997 from 3.4% for the year ended December 31, 1996.

23
<PAGE>

Year Ended December 31, 1996 Compared To Year Ended December 31, 1995

Revenue. Revenue decreased $1.4 million, or 15.8%, to $7.7 million in 1996
from $9.1 million in 1995. The decrease in revenue was primarily a result of
the bankruptcy of a major client and the settlement of a number of significant
lawsuits in late 1995 and early 1996.

Gross Profit. Gross profit decreased $513,000, or 15.3%, to $2.8 million in
1996 from $3.3 million in 1995. The gross margin percentage remained
relatively constant at 36.9% in 1996 compared with 36.7% in 1995.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $382,000, or 19.4%, to $2.4 million in 1996
from $2.0 million in 1995. The increase was due to a non-recurring charge of
$360,000 related to equity interests in the Company that was granted to
certain employees. Excluding this non-recurring charge, selling, general and
administrative costs remained relatively constant from 1995 to 1996. Selling,
general and administrative expenses as a percentage of revenue increased 9.1%
to 30.7% at December 31, 1996 from 21.6% for December 31, 1995.

Depreciation and Amortization. Depreciation and amortization decreased
$19,000, or 8.2%, to $212,000 in 1996 from $231,000 in 1995 due to certain
assets becoming fully depreciated.

Operating Income. As a result of the foregoing, operating income decreased
by $876,000, or 76.8%, to $264,000 in 1996 from $1.1 million in 1995. The
operating margin percentage decreased 9.0% to 3.5% in 1996 as compared to
12.5% in 1995.

RESULTS OF OPERATIONS--KLEIN BURY

Klein Bury provides court reporting services and derives its revenue from
court reporting fees. The Company acquired Klein Bury in January 1997.

Year Ended December 31, 1996 Compared To the Year Ended September 30, 1995

Revenue. Revenue increased $1.2 million, or 16.7%, to $8.5 million in 1996
from $7.3 million, for the fiscal year ended September 30, 1995. The increase
in revenue was a result of higher demand for Klein Bury's court reporting
services attributable to Klein Bury obtaining additional clients in the
insurance and health care industry, the expansion of services statewide for
certain existing clients and the addition of court reporting services for
municipal courts in Dade County, Florida which were previously performed by
municipal employees. In addition, Klein Bury derived additional revenue from a
new office which opened in 1995.

Gross Profit. Gross profit increased $475,000, or 19.3%, to $2.9 million in
1996 from $2.5 million in 1995. The gross margin percentage increased slightly
to 34.5% in 1996 from 33.7% at September 30, 1995. The improvement in gross
margin percentage was the result of slightly lower independent contractor
costs in 1996.

Operating Expenses. Operating expenses increased $515,000, or 22.6%, to $2.8
million in 1996 from $2.3 million for the fiscal year ended September 30,
1995. The increase in operating expenses was the result of increased revenue
and increased compensation to executive officers. Operating expenses as a
percentage of revenue increased to 32.7% in 1996 from 31.2% in fiscal year
ended September 30, 1995.

Operating Income. As a result of the foregoing, operating income decreased
$41,000, or 22.1%, to $144,000 in 1996 from $185,000 for the fiscal year ended
September 30, 1995. Operating margin percentage decreased to 1.7% in 1996 from
2.5% in 1995.

RESULTS OF OPERATIONS--ELAINE DINE

Elaine Dine provides permanent placement and temporary legal staffing and
derives its revenue from legal placement and staffing fees which are based
upon a percentage of the attorney's compensation earned during the year
following the placement.

24
<PAGE>

Historically, the operations of Elaine Dine have been focused on the
permanent placement of attorneys. In April 1996, Elaine Dine created Elaine
Dine Temporaries LLC which provides temporary legal staffing services. Revenue
from temporary staffing services are derived from hourly fees charged to
clients for the number of hours worked by temporary staffing attorneys.

The Company acquired Elaine Dine in September 1997.

Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Revenue. Revenue for the three months ended June 30, 1997 increased
$488,000, or 70.2%, to $1.2 million from $695,000 for the three months ended
June 30, 1996. The increase was the result of the addition of several new
corporate clients and a higher number of searches for corporate in-house
attorneys.

Gross Profit. Gross profit for the three months ended June 30, 1997
increased $210,000, or 62.3%, to $546,000 from $337,000 for the three months
ended June 30, 1996. During the three months ended June 30, 1997, the gross
margin percentage declined 2.3% to 46.2% at June 30, 1997 from 48.5% at June
30, 1996. The decrease in gross margin percentage was the result of an
increase in the commission percentages paid to staff recruiters.

Operating Expenses. Operating expenses increased $58,000, or 35.2%, to
$222,000 for the three months ended June 30, 1997 from $164,000 for the three
months ended June 30, 1996. Operating expenses as a percentage of revenue
decreased 4.8% to 18.8% for the three months ended June 30, 1997 from 23.6%
for the three months ended June 30, 1996.

Operating Income. As a result of the foregoing, operating income increased
$152,000, or 88.0%, to $325,000 for the three months ended June 30, 1997 from
$173,000 for the three months ended June 30, 1996. During the three months
ended June 30, 1997, the operating margin percentage improved 2.6% to 27.5%
for the three months ended June 30, 1997 from 24.9% for the three months ended
June 30, 1996.

Year Ended March 31, 1997 Compared to Year Ended March 31, 1996

Revenue. Revenue increased $1.2 million, or 32.9%, to $4.7 million for the
year ended March 31, 1997 from $3.5 million for the year ended March 31, 1996.
The increase in revenue was due to favorable economic conditions in the
financial services industry which created a need for additional attorneys for
both law firms and large corporations. In 1996, Elaine Dine added new clients
and was awarded several large retained searches, including searches for in-
house attorneys.

Gross Profit. Gross profit increased $544,000, or 36.9%, to $2.0 million in
1997 from $1.5 million in 1996. Gross margin percentage increased slightly to
43.3% in 1997 from 42.1% in 1996.

Operating Expenses. Operating expenses decreased $116,000, or 9.2%, to $1.1
million in 1997 from $1.3 million in 1996. The reduction in operating expenses
in 1997 was primarily due to lower health insurance costs and outside
professional fees as compared with 1996. Operating expenses as a percentage of
revenue decreased 11.4% to 24.6% in 1997 from 36.0% in 1996.

Operating Income. As a result of the foregoing, operating income increased
$660,000, or 313.1%, to $870,000 in 1997 from $211,000 in 1996. Operating
margin percentage improved 12.7% to 18.7% in 1997 from 6.0% in 1996.

RESULTS OF OPERATIONS--LEGAL ENTERPRISE

Legal Enterprise provides certified record retrieval services and derives
its revenue from fees generated from such services, which typically are based
upon the number of subpoenas or other notices initiated and the volume of
documents generated in response to these subpoenas. The Company acquired Legal
Enterprise in August 1997.

25
<PAGE>

Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Revenue. Revenue increased $512,000, or 29.8%, to $2.2 million for the six
months ended June 30, 1997 from $1.7 million for the six months ended June 30,
1996. The increase in revenue was attributable to several new clients during
1996 and early 1997, including several large insurance companies. In addition,
Legal Enterprise opened a new office in northern California.

Gross Profit. Gross profit increased $80,000, or 12.5%, to $722,000 for the
six months ended June 30, 1997 from $642,000 for the six months ended June 30,
1996. Gross margin percentage declined 5.0% to 32.4% from 37.4% for the six
months ended June 30, 1996. The decline in gross margin percentage was the
result of increased costs attributable to hiring additional personnel and
training costs incurred in connection with the initiation of record retrieval
services to be provided to new clients. In addition, Legal Enterprise was
negatively impacted by servicing clients outside its core geographic area in
the six months ended June 30, 1997.

Operating Expenses. Operating expenses increased $13,000, or 2.4%, to
$584,000 for the six months ended June 30, 1997 from $571,000 for the six
months ended June 30, 1996. Operating expenses as a percentage of revenue
decreased 7.0% to 26.2% for the six months ended June 30, 1997 from 33.2% for
the six months ended June 30, 1996 as a result of achieving operating
leverage.

Operating Income. As a result of the foregoing, operating income increased
$67,000, or 93.5%, to $138,000 for the six months ended June 30, 1997 from
$71,000 for the six months ended June 30, 1996. Operating margin percentage
improved 2.1% to 6.2% for the six months ended June 30, 1997 from 4.1% for the
six months ended June 30, 1996.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenue. Revenue increased $950,000, or 34.5%, to $3.7 million in 1996 from
$2.8 million in 1995. During 1996, Legal Enterprise obtained several new
insurance company clients and expanded its business into northern California.

Gross Profit. Gross profit increased $444,000, or 45.8%, to $1.4 million in
1996 from $971,000 in 1995. Gross margin percentage increased 3.0% to 38.2% in
1996 from 35.2% in 1995. The increase in the gross margin percentage was the
result of the impact of greater revenue on the fixed component of cost of
services.

Operating Expenses. Operating expenses increased $377,000, or 43.3%, to $1.2
million in 1996 from $870,000 in 1995. Operating expenses as a percentage of
revenue increased 2.0% to 33.6% in 1996 from 31.6% in 1995, primarily as the
result of costs associated with relocating the headquarters and the opening of
additional locations in 1996.

Operating Income. As a result of the foregoing, operating income increased
$67,000, or 66.7%, to $167,000 in 1996 from $100,000 in 1995. Operating margin
percentage improved 0.9% to 4.5% in 1996 from 3.6% in 1995.

FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS

Revenues from the Company's services historically have shown no significant
seasonal variations. Revenues can vary from period to period due to the
effects of the timing of acquisitions and the timing and magnitude of costs
related to such acquisitions, as well as the timing of the commencement,
settlement or completion of major lawsuits. The increase in corporate overhead
associated with future acquisitions will be reflected in the Company's results
of operations in the periods immediately following any such acquisition, while
the realization of benefits, if any, from such acquisitions may not be
reflected until future periods.

26
<PAGE>

SUPPLEMENTAL QUARTERLY RESULTS OF OPERATIONS

The following table sets forth selected unaudited quarterly financial
information and operating data for the six most recently completed quarters.
The information for the quarters ended March 31, June 30 and September 30,
1997 has been prepared on a pro forma basis and gives effect to: (i) the
acquisitions made by the Company; (ii) an adjustment to compensation expense
for the difference between actual compensation paid to certain officers of
businesses acquired and employment contract compensation negotiated in
connection with the acquisitions made by the Company; and (iii) amortization
expense relating to intangible assets recorded in conjunction with the
acquisitions made by the Company, and includes, in the opinion of management,
all normal and recurring adjustments that management considers necessary for a
fair statement of the quarterly results for the periods. The operating results
and data for any quarter are not necessarily indicative of the results for
future periods.

<TABLE>
<CAPTION>
PRO FORMA ACTUAL
-------------------------------- -------------------------------
THREE MONTHS ENDED
----------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1997 1997 1997 1997 1998 1998
--------- -------- ------------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Court reporting....... $4,646 $4,858 $ 5,189 $ 5,491 $5,559 $ 5,786
Records retrieval..... 1,915 2,149 2,116 2,167 2,107 2,310
Legal staffing........ 2,183 2,403 2,889 1,602 1,590 2,409
Other................. 328 395 310 451 419 518
------ ------ ------- ------- ------ -------
Total revenues....... 9,072 9,805 10,504 9,711 9,675 11,023
------ ------ ------- ------- ------ -------
Costs of services:
Court reporting....... 2,797 2,932 3,208 3,508 3,482 3,635
Records retrieval..... 1,318 1,471 1,461 1,360 1,393 1,375
Legal staffing........ 1,140 1,212 1,525 1,018 920 1,508
Other................. 146 176 132 177 110 131
------ ------ ------- ------- ------ -------
Total costs of
services............ 5,401 5,791 6,326 6,063 5,905 6,649
------ ------ ------- ------- ------ -------
Gross profit............ 3,671 4,014 4,178 3,648 3,770 4,374
Selling, general and
administrative
expenses............... 2,481 2,647 2,989 2,751 3,045 3,423
Depreciation and
amortization........... 303 304 303 304 298 239
Special charge.......... -- -- -- 3,266 -- --
------ ------ ------- ------- ------ -------
Operating income
(loss)................. $ 887 $1,063 $ 886 $(2,673) $ 427 $ 712
====== ====== ======= ======= ====== =======
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Court reporting....... 51.2% 49.6% 49.4% 56.6% 57.5% 52.5%
Records retrieval..... 21.1 21.9 20.1 22.3 21.8 20.9
Legal staffing........ 24.1 24.5 27.5 16.5 16.4 21.9
Other................. 3.6 4.0 3.0 4.6 4.3 4.7
------ ------ ------- ------- ------ -------
Total revenues....... 100.0 100.0 100.0 100.0 100.0 100.0
------ ------ ------- ------- ------ -------
Total costs of
services............ 59.5 59.1 60.2 62.4 61.0 60.3
------ ------ ------- ------- ------ -------
Gross profit............ 40.5 40.9 39.8 37.6 39.0 39.7
Selling, general and
administrative
expenses............... 27.4 27.0 28.5 28.3 31.5 31.0
Depreciation and
amortization........... 3.3 3.1 2.9 3.2 3.1 2.2
Special charge.......... -- -- -- 33.6 -- --
------ ------ ------- ------- ------ -------
Operating income
(loss)................. 9.8% 10.8% 8.4% (27.5)% 4.4% 6.5%
====== ====== ======= ======= ====== =======
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash requirements have been primarily to fund the cash portion
of the purchase price of the acquisitions and debt service. For the year ended
December 31, 1997, the aggregate cash consideration paid by the Company for
the acquired businesses was approximately $21.8 million, prior to giving
effect to any associated working capital adjustments. The Company has obtained
these funds principally through borrowings under the Bank Credit Agreement,
the proceeds from the placement of $10.0 million of Senior Subordinated Notes
and shares of Series A Convertible Preferred Stock, and cash provided by
operations.

27
<PAGE>

The Company's business has not typically required substantial capital
expenditures, and for 1997 capital expenditures were approximately $200,000.
However, the Company anticipates that capital expenditures will be
approximately $1.0 million in 1998, which includes approximately $750,000
expected to be used to: (i) upgrade and enhance operational billing and
scheduling systems and (ii) acquire and implement a new centralized accounting
and management information system.

The Company's existing Bank Credit Agreement provides for $17.1 million in a
revolving line of credit and term notes both of which are fully utilized.
Borrowings under the Bank Credit Agreement bear interest at a base rate plus
0.75%, or LIBOR plus 2.5%, at the Company's option. As of July 15, 1998, the
average annual interest rate on borrowings under the Bank Credit Agreement was
approximately 8.25% and such borrowings are secured by substantially all of
the assets of the Company, including the capital stock of subsidiaries. The
Bank Credit Agreement contains various covenants that, among other matters,
restrict or limit the Company's ability to pay dividends, incur indebtedness,
make capital expenditures and repurchase capital stock. The Company must also
maintain minimum fixed charge coverage and other ratios. All borrowings under
the Bank Credit Agreement are required to be repaid concurrently with the
completion of the Offering. In connection with the Offering, the Company
expects that the Bank Credit Agreement will be replaced by the New Credit
Agreement with Heller as discussed below. See "Capitalization." In the event
that the Offering is not consummated, the Company would seek to fund cash
requirements with additional private debt or equity financing.

The Company anticipates that it will require significant amounts of cash to
support its acquisition strategy after the Offering. The Company has entered
into the New Credit Agreement with Heller which provides for a $35.0 million
revolving credit facility upon completion of the Offering. The amount the
Company may borrow under the revolving credit facility will be subject to
limitations based upon the earnings before interest, taxes, depreciation and
amortization ("EBITDA") of the Company for the preceding twelve months,
adjusted to give effect to all acquisitions completed during such period or
pending as of the date of borrowing. The Company expects that, immediately
upon completion of the Offering, approximately $6.2 million will be borrowed
under the New Credit Agreement, including $2.7 million attributable to costs
associated with a delayed public offering and acquisitions terminated as a
result of such delay. See Note 1 of Notes to Consolidated Financial Statements
of U.S. Legal Support, Inc. After the Offering, approximately $8.0 million
will be available for additional borrowings. Additional borrowing capacity may
be available to the Company under the New Credit Agreement provided that the
Company achieves certain levels of financial performance through operations or
through acquisitions. Loans under the New Credit Agreement will bear interest
at rates based, at the Company's option, on either LIBOR or Prime rate plus,
in each case, an applicable margin. The applicable margin will be contingent
upon the ratio of the Company's senior debt to its pro forma EBITDA (the "Debt
Coverage Ratio") and will vary from 2.0% to 3.25% in the case of LIBOR loans
and 0.5% to 1.75% in the case of Prime rate loans. In addition, the Company
will be required to pay to the lenders a quarterly fee with respect to the
unused portion of the credit facility. The New Credit Agreement will also
permit $2.0 million of the amount available for borrowings to be used for the
issuance of letters of credit. A per annum fee based on the applicable margin
for LIBOR loans is payable each quarter with respect to the face amount of
letters of credit outstanding during the applicable quarter. See Note 7 of
Notes to Consolidated Financial Statements of U.S. Legal Support, Inc.

Borrowings under the New Credit Agreement will be secured by substantially
all of the assets of the Company and its subsidiaries and by a pledge of the
stock of the subsidiaries. In addition, subsidiaries of the Company will be
required to guarantee the Company's obligations under the New Credit Agreement
and grant a security interest in substantially all of their assets to secure
the guarantee. The New Credit Agreement also will require the Company and its
subsidiaries to comply with various affirmative and negative covenants related
to, among other matters: (i) the maintenance of certain financial ratios; (ii)
limitations on the incurrence of indebtedness; (iii) restrictions on liens,
guarantees, dividends and stock redemptions; and (iv) limitations on mergers
and sales of assets. The New Credit Agreement will terminate, and all
borrowings will be required to be repaid on June 30, 2003. Upon completion of
the Offering, the Company anticipates that bank borrowings

28
<PAGE>

and cash from operations will be sufficient to meet the Company's capital
requirements through at least the next eighteen months. However, the Company
may offer additional securities in the capital markets during such time as
market conditions permit.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130") and Statement of
Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("SFAS 131").

SFAS 130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. It requires: (i) classification of
the components of other comprehensive income by their nature in a financial
statement and (ii) the display of the accumulated balance of the components of
other comprehensive income separate from retained earnings and additional
paid-in-capital in the equity section of a statement of financial position.
SFAS 130 is effective for years beginning after December 15, 1997.

SFAS 131 establishes standards for reporting information about operating
segments in annual financial statements and requires selected information
about operating segments in interim financial reports issued to shareholders.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers. SFAS 131 is effective for
years beginning after December 15, 1997.

In April 1998, Statement of Position (SOP) 98-5, "Accounting for the Costs
of Start-Up Activities" was issued. SOP 98-5 requires costs of start-up
activities, inclusive of organization costs, to be expensed as incurred. Upon
adoption, entities are required to write-off all capitalized start-up costs as
a cumulative effect of a change in accounting principle. SOP 98-5 is effective
for financial statements for years beginning after December 15, 1998 and is
not expected to have a material impact on the financial position, results of
operations or cash flows of the Company.

29
<PAGE>

BUSINESS

GENERAL

The Company is one of the largest providers of legal support and staffing
services in the United States, providing court reporting, certified record
retrieval, legal placement and staffing, and other related services to law
firms and corporations, including insurance companies, through 36 offices in
five states and the District of Columbia. The Company seeks to become a
national, full-service provider of legal support and staffing services through
a combination of selective acquisitions and internal growth. Since commencing
operations in January 1997, the Company has acquired 13 businesses. During
1997, the Company provided court reporting and certified record retrieval
services to clients including (i) Fortune 500 businesses such as The Boeing
Company and Ford Motor Company; (ii) insurance companies such as ITT Hartford,
St. Paul Fire & Marine and Kemper Insurance Company; and (iii) large law firms.
For the year ended December 31, 1997, the Company had pro forma revenues of
$39.1 million and pro forma operating income of $3.4 million, excluding a
special charge of $3.3 million relating to expenses associated with a delayed
public offering and costs associated with acquisitions terminated as a result
of such delay.

Legal support and staffing services are frequently used by the participants
in civil litigation, particularly in cases involving personal injury, products
liability, workers' compensation and property casualty claims. While most civil
proceedings are resolved by settlement or are otherwise terminated prior to
trial, most legal support services are required in the pre-trial period. The
following presents the general progression of a civil lawsuit or other
proceeding and the opportunities for the Company to provide services to the
parties:

[Flowchart of basic steps in the progression of a lawsuit or other legal
proceeding identifying Company's services at each step as follows:] [Claimant
Retains Counsel--Legal Staffing and Placement]--[File Lawsuit]--[Defendant
Retains Counsel--Legal Staffing and Placement]--[Gather & Prepare Documents--
Certified Record Retrieval]--[Examine Witnesses by Deposition--Court
Reporting]--[Trial or Other Proceeding Occurs].

Legal Placement and Staffing. During the course of litigation, particularly
in the pre-trial phase of complex, multi-party cases, law firms and corporate
legal departments may hire additional attorneys on a permanent or temporary
basis to assist in the preparation of the case for trial. In addition, law
firms and corporations increasingly are utilizing temporary lawyers in other
areas of practice to more effectively manage fluctuating work loads.

Certified Record Retrieval. After the initiation of a lawsuit or other legal
proceeding, the parties typically seek medical, employment, financial or other
records to assist in the evaluation, furtherance or defense of the claims
asserted. These records must be obtained through the issuance of subpoenas or
other notices directed to hospitals, physicians, employers, banks or others in
accordance with applicable federal and state rules of procedure to ensure the
admissibility of the records in the lawsuit. The Company prepares and delivers
subpoenas and other document request notices, monitors the recipient's response
and coordinates the retrieval and dissemination of documents for litigation.

Court Reporting. Prior to commencement of a trial or other proceeding,
attorneys for the parties to the dispute and their insurance providers often
seek sworn oral testimony of witnesses. Oral testimony is generally obtained
through a deposition transcribed by a court reporter. The persons deposed may
include the parties to the proceeding as well as expert witnesses and others,
and the depositions may include testimony concerning the

30
<PAGE>

content of documents previously obtained through certified record retrieval.
Licensed court reporters typically transcribe the testimony given in
deposition and written copies are made available to the parties. Testimony
given during a deposition often leads to further depositions and to additional
certified document retrieval assignments.

INDUSTRY OVERVIEW

Based on available industry data, the Company estimates that the market for
legal support and staffing services in the United States exceeds $5.0 billion
annually. The industry is highly fragmented, with more than 1,000 court
reporting and record retrieval firms and over 400 legal placement and staffing
firms. The Company believes that the legal support and staffing services
market is growing due to several trends, including an increase in the: (i)
efforts by law firms and corporations, especially insurance providers, to
control legal support expenses; (ii) outsourcing of legal support services to
companies that specialize in providing such services at a lower cost; (iii)
use of lawyers on a temporary basis by law firms and corporations; (iv) volume
and complexity of litigation; and (v) national scope of litigation,
particularly in class action and product liability lawsuits.

Legal support services, such as court reporting and certified record
retrieval, traditionally have been marketed to law firms. Increasingly,
insurance providers and major corporations, who ultimately pay the costs of
legal support and staffing services, are seeking to: (i) control and reduce
the costs associated with lawsuits; (ii) centralize their purchasing
decisions; and (iii) ensure consistent service quality. As a result, these
companies are more frequently selecting the providers of legal support
services themselves, rather than delegating that decision to the law firms
engaged to represent them.

Currently, the legal support and staffing services industry is highly
fragmented and consists primarily of local and regional firms that typically
provide a single or limited number of legal support and staffing services. The
Company believes that many legal support and staffing businesses lack: (i) a
full range of legal support services; (ii) regional or national coverage;
(iii) access to capital; or (iv) effective marketing programs, and are
therefore unable to meet the needs of large, geographically dispersed clients.
In addition, there are limited opportunities for owners of local legal support
and staffing firms to obtain liquidity or to sell their businesses. The
Company consequently believes that many owners of such businesses will be
receptive to consolidation.

BUSINESS STRATEGY

The Company seeks to become a national, full-service provider of legal
support and staffing services in the United States. To achieve this goal, the
Company is implementing a focused business strategy that includes the
following key elements:

Establish Full Service Operations in Major Metropolitan Areas. The Company
seeks to capitalize on the trend toward vendor consolidation in the legal
support and staffing services industry. The Company believes that national and
regional accounts are increasingly contracting with vendors such as the
Company that are capable of delivering a full range of high-quality legal
support and staffing services on a broad geographic basis. The Company offers
an array of complementary services that includes court reporting, certified
record retrieval, legal placement and staffing, and related services through
36 offices located in or near major metropolitan markets in the United States.
The Company expects to continue to increase the variety and geographic scope
of its services in targeted metropolitan areas throughout the United States
through selected acquisitions and expansion of its existing businesses.

Adopt Best Practices, Policies and Procedures. The Company evaluates its
operating policies and procedures in order to identify and implement practices
that best serve the objectives of the Company and its clients ("best
practices"). The Company intends to integrate these best practices, including
marketing, sales, field operations, human resources policies and recruiting
and training programs into the operations of acquired businesses. The Company
also intends to evaluate the practices of each acquired company and to
implement selected practices of the acquired companies on a Company-wide
basis.

31
<PAGE>

Achieve Operating Efficiencies. The Company seeks to be a low-cost provider
of legal support services through operating efficiencies and cost savings,
which the Company believes can be achieved by combining a number of general
and administrative functions at the corporate level and by reducing or
replacing redundant functions and facilities of acquired companies. In
addition, the Company believes that it will be able to reduce costs in the
purchase of insurance, management information systems, advertising and other
services.

Maintain Decentralized Management. Many of the businesses the Company will
seek to acquire operate on a local or regional basis. To take advantage of
existing relationships between the acquired companies and their clients, the
Company intends to manage its business on a decentralized basis, with
acquired-company management retaining primary responsibility for day-to-day
operations and local marketing. The Company believes that allowing local
management to retain appropriate autonomy will provide opportunities for
internal growth, enhance competitiveness in attracting acquisition candidates
and assist in preserving the entrepreneurial spirit of the acquired-company
management.

GROWTH STRATEGY

The Company has implemented a strategy designed to continue its growth in
existing and new markets based on the following key elements:

Actively Pursue Strategic Acquisitions. The Company intends to pursue an
aggressive strategy of acquiring companies in the fragmented legal support and
staffing services industry. Through strategic acquisitions, the Company will
seek to serve new geographic markets, expand its presence in existing markets
and add complementary services. One source of acquisition candidates has been
the court reporting firms that have been affiliated with the Company's
national court reporting network, through which the Company provides court
reporting services to customers in locations not directly served by the
Company. Since inception, the Company has acquired four network affiliates.

Expand National Sales Program. Insurance providers and major corporations,
which ultimately pay the cost of legal support and staffing services, are
increasingly seeking to centralize their purchasing decisions on a national
and regional level and to control or reduce the costs associated with
lawsuits. The Company seeks to capitalize on these initiatives by marketing
its services directly to these companies and has established a national sales
force to pursue these opportunities. The Company seeks to be designated as the
exclusive or preferred provider of legal support services on a regional or
national basis, which may result in assignments substantially larger than
those obtained through local accounts.

Capitalize on Cross-Selling Opportunities. The Company believes that
significant cross-selling opportunities exist which could enhance the
Company's revenue growth. Many legal support and staffing companies are local
or regional and specialize in one segment of the legal support services
market. The Company believes that its acquisition of such companies will
enable it to become a full-service provider of legal support services
nationwide and to leverage its existing client relationships by selling such
clients a full range of legal support and staffing services. For example, as a
result of the Company's acquisition of a certified record retrieval business
in California, the Company recently obtained the California certified record
retrieval business from a national insurance provider, who previously had
utilized only the Company's court reporting services. In addition, the Company
works closely with its clients to identify cost-savings opportunities and to
develop solutions to their legal support needs.

Develop New and Expand Existing Client Relationships. The Company intends to
develop new client relationships and expand existing relationships with law
firms, insurance providers and major corporations through aggressive sales and
marketing of its services. Sales and marketing efforts are conducted on both a
local and national level and are designed to focus potential clients on the
Company's: (i) ability to provide a broad range of complementary legal support
and staffing services; (ii) national geographic coverage through 36 offices
and its network of more than 200 affiliated court reporting firms; and (iii)
high-quality services and programs.

32
<PAGE>

ACQUISITION AND INTEGRATION STRATEGY

The Company's acquisition strategy is to identify, acquire and integrate
companies with strong management, profitable operating results and recognized
local or regional market presence. The Company typically pursues acquisitions
that will allow it to accomplish one or more of the following: (i) expand the
geographic markets served by the Company; (ii) increase the Company's
penetration of existing markets; (iii) establish or enhance customer
relationships; and (iv) offer services complementary to those offered by the
Company.

The Company believes that there are numerous attractive acquisition
candidates due to the large size and fragmentation of the legal support and
staffing services industry. These candidates include but are not limited to
participants in the Company's referral network of over 200 affiliated court
reporting firms, through whom the Company supplies court reporting services to
its clients in locations not served directly by the Company. The Company has
acquired four businesses that were previously part of its affiliated network
and the Company believes that others in the affiliated network may be likely
acquisition candidates. The Company also pursues smaller "tuck-in" businesses
that can be easily assimilated into the Company's existing operations. Such
tuck-in acquisitions are intended to enable the Company to benefit from the
operating leverage of its existing business by adding market share while
eliminating or reducing certain general administrative and operating costs.
The Company has made three such acquisitions of court reporting businesses in
Texas.

The Company's corporate officers are responsible for identifying acquisition
prospects, conducting due diligence, negotiating the terms of acquisitions and
integrating acquired companies. The Company expects that the management of
acquired companies will actively assist the Company in identifying additional
acquisition candidates. The Company has utilized the services of The GulfStar
Group, Inc. ("GulfStar"), an investment banking firm and an affiliate of one
of the founding shareholders of the Company, in evaluating acquisition
candidates and negotiating acquisition terms. The Company's policy is to
include Common Stock as part of the consideration for acquisitions to more
closely align the interests of the shareholders and managers of acquired
companies with those of the Company. See "Certain Transactions."

The Company has relied on the existing accounting, financial and computer
systems of certain of the acquired companies for a transition period following
completion of their acquisition. Although the Company believes that its
existing financial reporting and accounting control systems are satisfactory
for the operation of the combined businesses for the near term, the Company is
currently evaluating alternatives in order to address the future needs of the
combined businesses and to standardize and centralize accounting and financial
procedures of acquired companies and establish a uniform system of accounts
and standardized budgeting and reporting processes. The marketing, sales,
field operations and personnel programs of the acquired companies also will be
evaluated and integrated with those of the Company under its best practices
program. Further, the Company seeks to identify any practices of an acquired
company that could be beneficial if implemented on a Company-wide basis.
Management of each of the acquired companies meet regularly to discuss the
assimilation of acquired companies, as well as cross-selling and other
opportunities to improve operating efficiency and increase revenue and
profitability. The Company has entered into employment agreements with the
principal executives of each acquired business and intends to enter into such
arrangements with principal executives and other key personnel of companies
acquired in the future.

33
<PAGE>

Since succeeding to the operations of Looney in January 1997, the Company
has acquired 13 businesses. Certain information relating to the Company's
acquisitions is summarized in the following table:

<TABLE>
<CAPTION>
ACQUIRED
COMPANY SERVICES PROVIDED HEADQUARTERS LOCATIONS

<S> <C> <C> <C>
Amicus Court Reporting New York Manhattan(2), Brooklyn
One and White Plains

- -------------------------------------------------------------------------------
Block Court Reporting Washington, D.C. Washington, D.C.,
Baltimore and Northern
Virginia

- -------------------------------------------------------------------------------
Elaine Legal Placement New York Manhattan
Dine and Staffing

- -------------------------------------------------------------------------------
G&G Court Reporting Los Angeles Los Angeles

- -------------------------------------------------------------------------------
Johnson Court Reporting Newport Beach Newport Beach
Group

- -------------------------------------------------------------------------------
Klein Court Reporting Miami Miami, Jacksonville,
Bury Orlando, Fort Lauderdale,
West Palm Beach
and Tampa

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
Legal En- Certified Record Los Angeles Los Angeles, Sacramento,
terprise Retrieval San Diego, Orange County,
Santa Monica, San Bruno
and Colton

Looney* Court Reporting and Houston Houston, Dallas(2), Austin,
Certified Record San Antonio, Corpus Christi,
Retrieval and Harlingen
- -------------------------------------------------------------------------------
Rocca Court Reporting Chicago Chicago

- -------------------------------------------------------------------------------
San Fran- Court Reporting San Francisco San Francisco
cisco
Reporting

- -------------------------------------------------------------------------------
Ziskind Legal Placement Los Angeles Los Angeles, San Diego,
Greene and Staffing San Francisco and
Orange County
</TABLE>

- --------
* Includes the operations of Cindi Rogers & Associates, Encore Reporting and
Preferred Records, Inc., which were acquired in 1997.

LEGAL SUPPORT AND STAFFING SERVICES

The Company provides court reporting, certified record retrieval, legal
placement and staffing and other services, as described below.

Court Reporting. Court reporting is the verbatim transcription of sworn oral
testimony, generally for use in legal proceedings. While the transcription of
legal proceedings held in a courtroom generally is performed by personnel
employed by the federal court system or by state agencies, counties or
municipalities, court reporting performed outside a courtroom is generally
conducted by private court reporters who transcribe depositions and certain
other proceedings. Most states require court reporters to be licensed under
regulations that require each

34
<PAGE>

candidate to attend a certified court reporting school, pass a written
examination and demonstrate transcription proficiency using machine shorthand
equipment. Court reporters are officers of the court and subject to ethical
codes governing their professional conduct.

The Company believes that its court reporters utilize state-of-the-art
technology, including computer-aided transcription ("CAT") systems. CAT
systems allow the testimony transcribed by a court reporter to be
simultaneously recorded on computer disk. In addition to CAT systems, the
Company utilizes the following technologies to provide high-quality court
reporting services:

. Transcription on a Real-Time Basis. The Company's court reporters provide
instant transcripts of testimony on computer monitors, which may be
located where the testimony is taking place, as well as at remote
locations. This system also allows attorneys to receive a transcript of
the testimony on diskette at the conclusion of the proceeding.

. Search and Retrieval Programs. Through the use of computers, court
reporters can search, store, index and manage transcripts and other
documents. In particular, a search through a transcript for a particular
reference in the text can be accomplished quickly.

. Compressed Transcripts. Compressed transcripts contain an index listing
all words in the transcript as well as the frequency and location of the
words, thereby simplifying the summarizing of transcripts. This technique
also reduces transcript bulk by organizing the text in block and columns.

. Video Services. Video services include the taping of depositions and
other testimony on videotape while the court reporter simultaneously
transcribes the testimony on a CAT system. Videotaped testimony is
sometimes used in legal proceedings when a witness is unable to appear in
person at trial or when capturing the demeanor of a witness is important.

The Company believes that voice recognition technologies currently do not
represent a practicable alternative to the Company's court reporting services
because of the extremely high accuracy required in the transcription of legal
proceedings, the difficulties associated with the electronic recognition of
multiple voices, variances in dialect and regional accents and the higher cost
of the application of voice recognition technology.

Certified Record Retrieval. The parties to legal proceedings frequently use
certified record retrieval services. Certified record retrieval services are
labor-intensive and involve the preparation, handling, tracking and delivery
of large numbers of written documents. A significant portion of the record
retrieval business involves medical records acquired on behalf of insurance
companies and their counsel. The Company's record retrieval services include
the preparation and delivery of written deposition notices and subpoenas, the
monitoring of the recipient's response and the coordination of document
retrieval and production for litigation or other legal proceedings.

The Company has developed customized computer software to link record
retrieval directly to law firms. This software permits instant communication
and promotes efficient litigation management. The Company anticipates that
certified document retrieval will increasingly be conducted electronically,
with deposition notices and subpoenas being transmitted electronically to
document custodians and witnesses, and responses similarly returned
electronically.

Legal Placement and Staffing. The Company provides clients with qualified
permanent and temporary attorneys through a team of nine recruiters located in
four metropolitan markets. The Company believes it is able to attract clients
based on the reputation and relationships of its recruiting personnel, its
emphasis on client service and its extensive legal staffing databases, which
allow it to match qualified personnel with its clients' needs. The Company's
permanent search activities consist primarily of the recruitment and placement
of attorneys on a permanent basis with law firms and corporate legal
departments. The Company also has been engaged from time to time on
assignments to establish entire departments or offices of corporations or law
firms. The Company is engaged and paid by the hiring firm or corporation on
either an exclusive or non-exclusive basis

35
<PAGE>

pursuant to arrangements that may include a non-refundable retainer paid to
the Company or entitle the Company to a fee only upon the successful placement
of a candidate with the client.

Law firms and corporate legal departments are increasingly using temporary
legal personnel to enable them to respond more effectively to fluctuations in
work load. In response to this trend, the Company expanded its services beyond
permanent placement services to supply attorneys to clients on a temporary
basis. Temporary attorney assignments may range from one day to more than a
year and may involve one attorney or a team composed of numerous lawyers. The
Company does not maintain malpractice insurance to cover the performance of
services by its temporary attorneys. Instead, the Company requests that
clients agree to include temporary attorneys under their policies and to
indemnify the Company from losses associated with the provision of legal
services by temporary attorneys. In addition, the Company believes that
malpractice insurance coverage maintained by its clients typically includes
coverage for temporary attorneys who are supervised by employees of clients.

Other Ancillary Services. The Company also offers its clients transcription,
closed captioning, translation and document management services, either
directly or through relationships or alliances with other companies. Document
management services include the electronic recording, storage, coding,
indexing and automated retrieval of documents, as well as database management
services. The Company markets these services to legal support applications.

CLIENT RELATIONSHIPS

The Company's client base is composed primarily of over 9,000 law firms,
insurance providers and corporations, and no client of the Company accounted
for more than 5% of the Company's pro forma revenues for 1997 or for the six
months ended June 30, 1998. Clients typically engage the Company on a case-by-
case basis, although the Company intends to market its services increasingly
to general counsels, regional or national litigation managers, or other
corporate officers in an effort to persuade such persons to retain the Company
on an exclusive or "preferred provider" basis. The Company also works closely
with its clients to identify cost-saving opportunities and to develop
solutions to the client's legal support needs.

SALES AND MARKETING

The Company markets its services through management and sales personnel
located in 36 offices. Because the Company derives a majority of its revenues
from local or regional accounts, the managers of the Company's individual
offices are primarily responsible for sales and marketing in their respective
markets. These managers seek to identify leads, qualify prospects and close
sales. The Company obtains new clients in local markets primarily through
direct sales, client referrals and a variety of local media, including direct
mail, telephone directories and trade publications. In response to the trend
among insurance providers and major corporations to centralize their
purchasing decisions and to engage legal support and staffing services on a
regional or national basis, the Company also has established a national sales
force consisting of five salespersons. These national sales personnel focus on
national accounts and seek to have the Company designated as the exclusive or
preferred provider of legal support and staffing services. Company operating
personnel also participate in marketing efforts by providing advice regarding
the Company's operational capabilities. Because the Company offers a variety
of services and is seeking to establish national market coverage, sales and
operating personnel also seek to capitalize on cross-selling opportunities.

The Company has developed and is continuing to expand its marketing and
advertising program of national brand identification, while preserving the
value of the established trade names and customer relationships of the
acquired companies. The Company's logo and identifying marks are featured in
promotional materials of the Company, in a manner designed not to detract from
the local recognition of an acquired business.

36
<PAGE>

COMPETITION

The market for legal support and staffing services is highly competitive.
The Company competes with a large number of local and regional court reporting
and certified record retrieval companies, as well as with permanent and
temporary legal staffing companies, including national temporary staffing
firms. A significant source of competition is also the in-house provision of
legal support and staffing services by law firms, insurance providers and
major corporations. There can be no assurance that these businesses will
continue to increase their outsourcing of legal support and staffing services
needs or that such businesses will not bring in-house services that they
currently outsource. Certain of the Company's competitors have substantially
greater resources and operate in broader geographic areas than the Company.
Many larger clients retain multiple legal support and placement and staffing
service providers, which exposes the Company to continuous competition. The
Company competes primarily on the basis of the quality, breadth and timeliness
of service, geographic coverage and price.

The Company believes that further consolidation among legal support and
staffing services providers will continue during the next few years and that
there will be significant competition for attractive acquisition candidates.
This competition could lead to higher prices being paid for businesses. The
Company believes that it will have certain advantages in completing
acquisitions, including: (i) management's personal relationships with existing
legal support and staffing companies; (ii) its decentralized, entrepreneurial
management strategy; (iii) its greater size and scope of services; and (iv)
its visibility and resources as a public company. However, there can be no
assurance that the Company's acquisition program will be successful or that
the Company will be able to compete effectively for acquisitions.

INDEPENDENT CONTRACTORS

The Company provides court reporting services through the use of independent
contractors who are not employees of the Company. The Company does not pay
federal or state employment taxes or withhold income taxes with respect to
these independent contractors or include such persons in the Company's
employee benefit plans. Independent court reporters are responsible for owning
and operating their court reporting equipment. The use of independent
contractors as court reporters is widespread industry practice and allows the
Company to control costs. In the event the Company were required to treat
these court reporters as its employees, the Company could become responsible
for the taxes required to be paid or withheld and could incur additional costs
associated with employee benefits and other employee costs on both a current
and a retroactive basis.

EMPLOYEES

The Company currently employs approximately 300 persons and believes that
its relationships with employees are good.

FACILITIES

The Company maintains 36 leased office locations in five states and the
District of Columbia. The initial terms of most of the Company's leases range
from one to five years and do not contain renewal terms. The Company's leases
generally specify a fixed annual rent with fixed increases, or increases based
on changes in the Consumer Price Index, at various intervals during the lease
term. Generally, the leases are net leases which require the Company to pay
all or a portion of the cost of insurance, maintenance and utilities. The
Company believes that these facilities are adequate to serve its current level
of operations. If additional facilities are required, the Company believes
that suitable additional or alternative space will be available as needed on
commercially reasonable terms. Substantially all of the leasehold interests
and personal property of the Company are subject to a lien under its Bank
Credit Agreement. All of the Company's leasehold interests and personal
property of the Company will be subject to liens under its New Credit
Agreement. See "Certain Transactions."

37
<PAGE>

REGULATION

Court reporters are subject to significant regulation under state licensing
programs. The conduct of court reporters is also subject to ethical and other
restrictions imposed by state laws and regulations. While these regulations
are not directly applicable to the Company, they affect the Company's court
reporting business. In addition, attorneys are subject to significant
regulation by committees on legal ethics and professional responsibility of
the various state and national bar associations, who from time to time,
examine and issue opinions regarding attorney services, including the use of
temporary attorneys through a placement agency. Changes in these laws and
regulations, particularly in California, New York, Florida or Texas, the
states from which the Company derives most of its revenues, could have a
material effect on its business, results of operations and financial
condition.

LEGAL PROCEEDINGS

In September 1997, the Company entered into an agreement (the "Agreement")
to purchase for $2 million the legal placement business of James M. Wilson,
who concurrently became an officer of the Company under an employment
agreement. Under the Agreement, the acquisition of the business was
conditioned upon, among other things, the completion of an initial public
offering of the Common Stock of the Company (an "IPO") by February 16, 1998.
An IPO was not completed by that date and the Company elected not to close the
purchase of the business and concurrently terminated Mr. Wilson's employment.
In April 1998, Mr. Wilson asserted claims against the Company, including
wrongful termination, breach of contract and fraud, and offered to settle his
claims for $2.4 million. No arbitration proceeding under the Agreement or Mr.
Wilson's employment agreement has been initiated nor has suit been filed
against Company. Although the Company is unable to determine whether any such
proceeding will be initiated or if initiated whether Mr. Wilson would make
different or additional claims, the Company believes the ultimate resolution
of this matter will not have a material adverse effect on its business,
results of operations, and financial condition.

The Company is involved in legal proceedings from time to time in the
ordinary course of its business. Management believes that no pending legal
proceeding will have a material adverse effect on the financial condition or
results of operations of the Company.

38
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the executive
officers and directors of the Company and certain persons who will become
directors or executive officers upon completion of the Offering:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------- --- ------------------------------------------------
<S> <C> <C>
Richard O. Looney.............. 41 Chairman of the Board, President and Chief
Executive Officer
David P. Tusa.................. 38 Executive Vice President and Chief Financial
Officer
Tony L. Maddocks............... 41 Vice President, Sales and Marketing
Michael A. Klein............... 53 Director; President--Klein Bury
Fentress Bracewell............. 76 Director
Robert J. Cresci............... 54 Director
G. Kent Kahle.................. 46 Director
</TABLE>

Richard O. Looney has served as Chairman of the Board, President and Chief
Executive Officer of the Company since January 1997. Mr. Looney founded Looney
& Company in 1988 and served as its President until October 1997. Mr. Looney
is an active member of the National Court Reporters Association and the Texas
Court Reporters Association.

David P. Tusa joined the Company in November 1997 as Executive Vice
President and Chief Financial Officer. From August 1994 until August 1997, Mr.
Tusa served as Senior Vice President of Finance and Administration of Serv-
Tech, Inc., a publicly held specialty provider of technology driven industrial
maintenance services. From 1990 until 1994, Mr. Tusa was with CRSS, Inc., a
publicly held diversified engineering and construction services firm, most
recently as Corporate Controller.

Tony L. Maddocks joined the Company in August 1997 as Vice President, Sales
and Marketing. From June 1993 until August 1997, Mr. Maddocks served as
President and Chief Executive Officer of Legal Enterprise, a certified record
retrieval company. The Company purchased substantially all of the assets of
Legal Enterprise in August 1997. From 1981 until June 1993, Mr. Maddocks
served as Vice President of Sales and Marketing of Compex, Inc., a document
management and record retrieval firm.

Michael A. Klein has been a director of the Company since January 1997. Mr.
Klein is the founder and President of Klein Bury, the Company's Florida-based
subsidiary, and has been directly involved in the court reporting industry for
over twenty-nine years. The Company purchased all of the capital stock of
Klein Bury in January 1997.

Fentress Bracewell has agreed to serve as a director of the Company
effective upon the closing of the Offering. Mr. Bracewell is a founder of and
Senior Counsel to the law firm of Bracewell & Patterson, L.L.P. He also serves
as the Chairman of the Board of Directors of First Investors Financial
Services, Inc., an automobile finance company and is a member of the Board of
Trustees of the Institute of International Education. Mr. Bracewell served as
the Chairman of the Port of Houston Authority from 1970 to 1985.

Robert J. Cresci has served as a director of the Company since January 1997.
Since September 1990, Mr. Cresci has been a Managing Partner of Pecks
Management Partners Ltd., an investment firm. Mr. Cresci currently serves on
the boards of Bridgeport Machines, Inc., EIS International, Inc., Sepracor,
Inc., Garnet Resources Corporation, HarCor Energy, Inc., Meris Laboratories,
Inc., Westbrae Natural, Inc., Arcadia Financial, Ltd., Hitox, Inc., Film
Roman, Inc., Castle Dental Centers, Inc., Educational Medical, Inc., Source
Media, Inc. and NetPower, Inc.

39
<PAGE>

G. Kent Kahle has served as a director of the Company since its formation.
Mr. Kahle has been a Managing Director of GulfStar since 1990. Prior to
joining GulfStar he was a Senior Vice President and Director of Rotan Mosle,
Inc., a subsidiary of PaineWebber Inc. Mr. Kahle currently serves on the board
of Castle Dental Centers, Inc.

See "Certain Transactions" for a description of the terms of transactions or
other relationships between the Company and certain of its officers and
directors.

BOARD OF DIRECTORS

Directors are elected annually by the Company's shareholders. Pursuant to
the terms of an agreement entered into in connection with the Company's
acquisition of all of the capital stock of Klein Bury, as long as the Company
is indebted to Mr. Klein under the Subordinated Promissory Note in the
original principal amount of $1.4 million issued in connection with such
acquisition, Mr. Klein is entitled to be nominated to serve as a director of
the Company. The Subordinated Promissory Note becomes due and payable upon
completion of the Offering. Mr. Cresci serves as a director of the Company
pursuant to the terms of the Securities Purchase Agreement between the Company
and the purchasers of the Senior Subordinated Notes and the Series A
Convertible Preferred Stock. The Securities Purchase Agreement will terminate
immediately prior to the completion of the Offering.

The Board of Directors has established two standing committees, the Audit
Committee and the Compensation Committee. Pursuant to resolutions of the Board
of Directors, these committees have the following responsibilities and
authority.

Audit Committee. The Audit Committee has the responsibility, among other
things, to: (i) recommend the selection of the Company's independent public
accountants; (ii) review and approve the scope of the independent public
accountants' audit activity and extent of non-audit services; (iii) review
with management and the Company's independent public accountants the adequacy
of the Company's basic accounting system and the effectiveness of the
Company's internal audit plan and activities; (iv) review with management and
the independent public accountants the Company's financial statements and
exercise general oversight of the Company's financial reporting process; and
(v) review litigation and other legal matters that may affect the Company's
financial condition. The Audit Committee is composed of Messrs. Kahle (Chair)
and Cresci.

Compensation Committee. The Compensation Committee has the responsibility,
among other things, to: (i) recommend to the Board of Directors the salary
rates of officers of the Company and its subsidiaries; (ii) examine
periodically the compensation structure of the Company; and (iii) supervise
the welfare and pension plans and compensation plans of the Company. The
Compensation Committee is composed of all of the non-employee directors,
currently Messrs. Kahle (Chair) and Cresci.

The Company's Board of Directors also may establish other committees.

DIRECTOR COMPENSATION

Prior to the date of this Prospectus, directors of the Company did not
receive compensation for their services as directors or for attending board
meetings. Upon completion of the Offering, non-employee directors of the
Company will receive options to purchase 15,625 shares of Common Stock at the
initial public offering price. In addition, each non-employee director will
receive an annual fee of $6,000, a fee of $1,000 for each meeting of the Board
of Directors attended and $500 for each meeting of a Board of Directors
committee attended. Each director will also be reimbursed for travel expenses
incurred for each non-telephonic meeting of the Board of Directors or any
committee thereof attended.

40
<PAGE>

EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS

The following table provides certain summary information concerning
compensation paid to or earned by the Company's Chief Executive Officer and
the other executive officers of the Company whose compensation exceeded
$100,000 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE (1)

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- -----------------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(2) AWARDS OPTIONS/SARS COMPENSATION
------------------ ---- --------- ------- --------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard O. Looney...... 1997 $ 200,000 $75,000 -- -- 125,000 --
Chairman of the Board,
President and Chief
Executive Officer
David P. Tusa.......... 1997 $ 165,000 -- -- -- 93,750 --
Executive Vice
President and Chief
Financial Officer
Tony L. Maddocks....... 1997 $ 162,500 -- -- -- -- --
Vice President--Sales
and Marketing
Michael A. Klein....... 1997 $ 175,000 -- -- -- -- --
President, Klein Bury
</TABLE>
- --------
(1) The Company did not pay any compensation prior to January 17, 1997.
Consequently, none of the executive officers of the Company earned
compensation from the Company for the entire fiscal year ended
December 31, 1997. The amounts for each Named Executive Officer in the
table above represent the compensation that each Named Executive Officer
would have received had such person been employed by the Company for the
entire fiscal period.
(2) No Named Executive Officer received any other annual compensation,
restricted stock awards, stock appreciation rights, long term incentive
plan payouts or any perquisites or other personal benefits, securities or
property that exceeded the lesser of $50,000 or 10% of the total annual
salary and bonus for such Named Executive Officer during the fiscal year
ended December 31, 1997.

The Company and Mr. Looney have entered into an employment agreement that
provides for an annual base salary of $200,000, which will increase to
$250,000 upon completion of the Offering, and a semi-annual cash bonus based
on a percentage of the annual pre-tax profits of the Company, subject to an
annual maximum of $100,000. Mr. Looney's employment agreement expires on
January 17, 2000. In the event his employment is terminated without cause, Mr.
Looney's annual salary and bonus opportunity will continue until the earlier
to occur of one year from the date of such termination or January 17, 2000.
Mr. Looney has also agreed not to compete with the Company in a court
reporting or litigation support service business within 50 miles of an office
served by the Company until the later to occur of January 17, 2002, or three
years after his employment terminates.

The Company and Mr. Tusa have entered into an employment agreement which
provides for an annual base salary of $165,000, which was increased to
$175,000 on January 1, 1998. In the event his employment is terminated without
cause, Mr. Tusa shall be entitled to receive $175,000 within 30 days of
termination. In addition, 50% of (a) the original 93,750 options to purchase
Common Stock granted to Mr. Tusa and (b) any options granted to Mr. Tusa
subsequent thereto, shall vest upon termination, unless a greater number of
options shall have vested under their initial vesting term. In the event that
Mr. Tusa terminates his employment with the

41
<PAGE>

Company, Mr. Tusa would be entitled to receive (i) $87,500 within 30 days from
the date of termination and (ii) all options that had vested as of the date of
his termination.

The Company and Mr. Maddocks have entered into an employment agreement which
provides for an annual base salary of $162,500 and an annual cash bonus not to
exceed $60,000, based on annual new national account sales of the Company. Mr.
Maddocks' employment agreement expires on August 29, 2000. In the event his
employment is terminated without cause, Mr. Maddocks' annual salary and bonus
opportunity will continue until the earlier to occur of one year from the date
of termination or August 29, 2000 or Mr. Maddocks' death. Mr. Maddocks has
agreed not to compete with the Company until the last to occur of August 29,
2002, or three years after his employment under the agreement terminates.

Mr. Klein has entered into an employment agreement with the Company which
provides for an annual base salary of $175,000 and entitles Mr. Klein to a
percentage of certain revenues derived from specified clients, a percentage of
court reporting fees billed by Mr. Klein and a cash bonus based on the
increase in the annual net profits of Klein Bury. Under such bonus, Mr. Klein
will receive 10% of the amount, if any, by which the annual net profits of
Klein Bury exceed the prior year's net profits. In addition, Mr. Klein is
entitled to receive: (i) 85% of the amount billed on any eight depositions per
month transcribed by him individually in his capacity as a court reporter and
(ii) a percentage of any non Florida-based revenue primarily attributable to
Mr. Klein's promotional efforts. The agreement expires on January 17, 2000. In
the event his employment is terminated without cause, Mr. Klein's annual
salary, commissions and bonus opportunity will continue until the earlier to
occur of one year following the date of termination or January 17, 2000. In
addition, Mr. Klein has agreed not to compete with the Company within 50 miles
of any office location operated by the Company until the last to occur of
January 17, 2002, or three years after his employment under the agreement
terminates.

STOCK OPTION PLANS

Prior Stock Option Plans

Prior to the Company's adoption of the Company's 1997 Stock Incentive Plan,
the Company granted options to purchase 37,153 shares of Common Stock to
employees and consultants of the Company. These options have exercise prices
ranging from $10.26 to $13.60 and vest at rates ranging from 20% to 33% each
year. In most cases, options expire ten years from the respective date of
grant and unvested options are subject to the optionee's forfeiture in the
event that the optionee is no longer employed by the Company, or with respect
to consultants, providing consulting services to the Company. In certain
circumstances, unexercised options expire one year after the date the
consulting agreement is terminated.

1997 Stock Incentive Plan

The Company's 1997 Stock Incentive Plan provides for the granting to
eligible employees or directors of the Company and its subsidiaries of options
to purchase shares of Common Stock, which may be incentive stock options
within the meaning of Section 422(b) of the Internal Revenue Code or non-
qualified options. The 1997 Stock Incentive Plan is administered by the
Compensation Committee of the Board of Directors, which designates option
recipients, the number and type of options granted and their terms and
conditions, including the exercise price and vesting schedule. A total of
468,750 shares of Common Stock have been reserved for issuance pursuant to
options granted under the 1997 Stock Incentive Plan. Options to purchase
207,344 shares of Common Stock had been granted as of December 31, 1997, with
exercise prices ranging from $10.26 to $16.32. All options granted under the
1997 Stock Incentive Plan vest 20% annually, are fully vested on the fifth
anniversary of the date of grant and expire 10 years after the date of grant.

42
<PAGE>

Option Grants

The following table sets forth information regarding options to purchase
shares of Common Stock granted to the Named Executive Officers during 1997.

<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------- --------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED EXERCISE PRICE EXPIRATION
NAME GRANTED TO EMPLOYEES PER SHARE DATE 5% 10%
- ------------------------ ---------- ------------ -------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard O. Looney....... 125,000 35.5% (1) 9/07 $1,006,231 2,549,988
David P. Tusa........... 93,750 27.1% (1) 11/07 754,674 1,912,491
Tony L. Maddocks........ -- -- --
Michael A. Klein........ -- -- --
</TABLE>
OPTION GRANTS DURING 1997

- --------
(1) Options granted to Messrs. Looney and Tusa are exercisable at the price to
the public set forth on the cover page of this Prospectus.

Option Exercises and Holdings

The following table sets forth information concerning the number and value
of unexercised options to purchase shares of Common Stock held by the Named
Executive Officers as of December 31, 1997. No Named Executive Officer
exercised any options to purchase shares of Common Stock during 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES EXERCISABLE/ IN-THE-
ACQUIRED UNEXERCISABLE MONEY
UPON VALUE OPTIONS AT OPTIONS AT
NAME EXERCISE REALIZED YEAR-END YEAR-END
- ---- -------- -------- ------------- -----------
<S> <C> <C> <C> <C>
Richard O. Looney................... -- -- (1) (2)
David P. Tusa....................... -- -- (1) (2)
Tony L. Maddocks.................... -- -- -- --
Michael A. Klein.................... -- -- -- --
</TABLE>
- --------
(1) All options were unexercisable on December 31, 1997.
(2) All the options granted to Messrs. Looney and Tusa are exercisable at the
price to the public set forth on the cover of this Prospectus.

Stock Option Plan for Non-Employee Directors

The Company has adopted the U.S. Legal Support, Inc. Stock Option Plan for
Non-Employee Directors (the "Directors' Stock Option Plan"). A total of 93,750
shares of Common Stock have been reserved for issuance under the Directors'
Stock Option Plan, which provides for the grant of options to purchase 15,625
shares of Common Stock with an exercise price equal to the fair market value
on the date of grant, to each incumbent director and to each person who
becomes a director concurrently with his or her first election to the Board.
Options granted under the Directors' Stock Option Plan vest 20% annually and
are fully vested on the fifth anniversary of the date of grant. Upon
completion of the Offering, each non-employee director of the Company will be
awarded options to purchase 15,625 shares of Common Stock.

43
<PAGE>

LIMITATIONS ON DIRECTORS' LIABILITIES AND INDEMNIFICATION

Pursuant to the Company's Articles of Incorporation, as amended, the
directors of the Company are not liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty, for acts or omissions not in good
faith which involve intentional misconduct or a knowing violation of law, for
unlawful dividend payments or stock repurchases or any transaction in which a
director has derived an improper personal benefit. The Company maintains
liability insurance for the benefit of its directors and its officers.

44
<PAGE>

CERTAIN TRANSACTIONS

In connection with the initial capitalization of the Company on October 2,
1996, the Company issued 527,400 shares of Common Stock to Mr. Looney, the
Chairman of the Board, President and Chief Executive Officer of the Company,
in exchange for services rendered to the Company by Mr. Looney, which were
valued by the Company at $8,438.40. In January 1997, the Company and Looney
entered into a business combination in which the Company acquired the capital
stock of Looney for consideration consisting of $4,087,834 in cash and
2,046,667 shares of Series B Convertible Preferred Stock.

On January 17, 1997, the Company acquired all of the outstanding capital
stock of Klein Bury from Mr. Klein who became a director of the Company upon
consummation of the sale. The purchase price consisted of: (i) $3,850,397 in
cash; (ii) 106,625 shares of Common Stock issued to Mr. Klein; (iii) a
Subordinated Promissory Note issued by a subsidiary of the Company in the
adjusted principal amount of $1,424,113, which bears interest at the rate of
10.0% annually and is due on February 1, 2002; and (iv) options to purchase
25,000 shares of Common Stock granted to various employees and independent
contractors of Klein Bury. At the option of Mr. Klein, the payment of the
principal and all accrued interest on the note may be accelerated at any time
after the Offering. The Company expects to repay the principal and accrued
interest on the note with a portion of the proceeds of the Offering. In
addition, Mr. Klein may receive contingent consideration equal to 50% of the
accounts receivable of Klein Bury that were 120 days past due as of January
16, 1997 but which are collected by the Company. Such contingent consideration
is estimated by the Company to be $500,000, the contractual maximum. In
addition, since 1993, Klein Bury has leased its offices in Fort Lauderdale,
Florida from Mr. Klein, his wife and Richard Bury. The lease is on a month to
month basis and provides for annual rental of approximately $50,400 ($4,200 on
a monthly basis). The Company believes that the terms of the lease are no less
favorable to the Company than would be available under a similar lease entered
into with an unaffiliated third party.

On January 17, 1997, the Company sold $9.0 million principal amount of
Senior Subordinated Notes and 1,000,000 shares of Series A Convertible
Preferred Stock to three investors (the "Investors") for an aggregate purchase
price of $10.0 million. The Company used the proceeds from the sale to finance
a portion of the purchase price for the acquisition of Looney and Klein Bury.
Mr. Robert Cresci, a director of the Company, is a Managing Partner of Pecks
Management Partners Ltd., which provides investment advisory services to each
of the Investors. Pecks received a $35,000 structuring fee paid by the Company
in connection with the transaction. The Senior Subordinated Notes bear
interest at an annual interest rate of 12.0% and will be due and payable on
January 27, 2004, subject to mandatory prepayment two days following the
completion of the Offering. In addition, on February 26, 1998, the Investors
purchased an additional $2.0 million principal amount of Senior Subordinated
Notes (the "Additional Senior Subordinated Notes") and 151,405 shares of
Series A Convertible Preferred Stock. The Additional Senior Subordinated Notes
also bear interest at an annual rate of 12.0% and will be due and payable on
December 31, 1998, subject to mandatory prepayment two days following the
completion of the Offering. The Company is permitted to issue, at the
Investors' election, promissory notes in lieu of making cash interest
payments, which have the same interest rate and repayment terms as the
Company's Senior Subordinated Notes (the "Interest Notes"). The Company has
issued Interest Notes in the aggregate principal amount of approximately
$1,200,000 with respect to interest owed on the Senior Subordinated Notes to
the Investors at September 30, 1997, December 31, 1997, March 31, 1998 and
June 30, 1998. The Interest Notes are also subject to mandatory prepayment two
days following the completion of the Offering. In connection with the Interest
Notes, the Investors received an additional 121,357 shares of Series A
Convertible Preferred Stock.

The Series A Convertible Preferred Stock will be converted into a total of
1,240,934 shares of Common Stock upon completion of the Offering. The Company
and the investors also entered into a Registration Rights Agreement pursuant
to which the Company has agreed in certain circumstances to register the
shares of Common Stock issued on conversion of the Series A Convertible
Preferred Stock. See Note 8 of Notes to Consolidated Financial Statements of
U.S. Legal Support, Inc. and "Shares Eligible For Future Sale--Registration
Rights."

On August 29, 1997, the Company acquired substantially all of the assets of
Legal Enterprise, including the name Legal Enterprise. Mr. Maddocks, who
serves as Vice President, Sales and Marketing of the Company, was

45
<PAGE>

the President and a 50% shareholder of Legal Enterprise. The purchase price
consisted of: (i) $1,189,169 in cash; (ii) a Subordinated Promissory Note in
the principal amount of $316,458; (iii) a Convertible Subordinated Promissory
Note in the principal amount of $813,748; and (iv) options to purchase 4,375
shares of Common Stock granted to an employee of Legal Enterprise. The
promissory notes bear interest at a rate of 6.375% per annum, are payable on
August 31, 2005 and were issued by a subsidiary of the Company. On March 31,
1998, the selling company received additional consideration of $934,000. This
additional consideration was based on the financial performance of the Legal
Enterprise operations and payable under the terms of the agreement in cash, a
subordinated note and a convertible note. Pursuant to an agreement among the
parties, this obligation was satisfied by the Company through the issuance of
Subordinated Promissory Notes and Convertible Subordinated Promissory Notes
totaling $934,000. The Company also may be obligated to pay Additional
Consideration to the selling company, based upon the future financial
performance of the Legal Enterprise operations. Such amount, if any, will be
payable on February 28, 2000. At the option of the selling company, the
payment of the principal and all interest accrued on the Subordinated
Promissory Note, including indebtedness owing as additional consideration, may
be accelerated at any time after the Offering. The Company expects to repay
the principal and accrued interest on all of the Subordinated Promissory Notes
with a portion of the proceeds of the Offering or borrowings under the New
Credit Agreement. Concurrently with the Offering, the Convertible Subordinated
Promissory Notes will be converted into shares of Common Stock. Any accrued
but unpaid interest on such notes will be paid in cash, upon the completion of
the Offering.

On September 4, 1997, the Company acquired substantially all of the non-cash
assets of Amicus One, a holder of more than 5.0% of the currently outstanding
Common Stock. The purchase price consisted of: (i) $1.9 million in cash; (ii)
72,794 shares of Common Stock; and (iii) a Subordinated Promissory Note issued
by a subsidiary of the Company in the principal amount of $560,000, which
bears interest at the rate of 6.0% annually, and is due on July 1, 2002. The
Company expects to repay the principal and accrued interest on the note with a
portion of the proceeds of the Offering. On March 16, 1998, as a result of
post closing adjustments made to the purchase price paid by the Company for
the assets of Amicus One, the Subordinated Promissory Note in the original
principal amount of $560,000 was modified and renewed, and a new Subordinated
Promissory Note in the principal amount of $574,000 was issued to Amicus One
and the prior note in the amount of $560,000 was cancelled. Other than the
adjustment to the principal amount of the Subordinated Promissory Note, no
other term of this note was modified. At the option of Amicus One, the payment
of the principal and all accrued interest on the note may be accelerated
concurrently with the Offering.

On September 17, 1997, the Company acquired all of the outstanding capital
stock of Burton House, Inc, doing business as Ziskind Greene, from Gregg
Ziskind and Susan Ziskind. The purchase price consisted of $1.4 million in
cash and 99,264 shares of Common Stock. In addition, the Ziskinds may receive
additional consideration beginning on January 1, 1998, in the amount of 20.0%
of the amount by which earnings before taxes, depreciation and amortization of
Burton House, Inc. exceeds threshhold amounts ranging from $150,000 for the
period from the date of the acquisition through December 31, 1997, to $750,000
for the year ended December 31, 2000.

The Company has entered into Registration Rights Agreements with Messrs.
Looney, Maddocks, Klein Ziskind, Susan Ziskind and Amicus One, pursuant to
which the Company has agreed to include shares of Common Stock held by them in
any registration of securities effected by the Company, subject to certain
customary provisions restricting the number of shares to be included.

In October 1996, the Company issued 93,750 shares of its Common Stock to
GulfStar Investments, Ltd., an affiliated partnership of GulfStar, in exchange
for investment banking services rendered to the Company by GulfStar. GulfStar
has provided merger and acquisition advisory services to the Company since its
inception. Mr. Kahle, a director of the Company, is a Managing Director of
GulfStar. In addition, the Company paid investment banking fees aggregating
$475,000 to GulfStar for services in connection with the placement of the
Senior Subordinated Notes and Series A Convertible Preferred Stock,
negotiation of the Company's Bank Credit

46
<PAGE>

Agreement, and the acquisitions of Looney and Klein Bury in January 1997.
Pursuant to the terms of a letter agreement dated April 24, 1997 (the "Letter
Agreement") between GulfStar and the Company, GulfStar provided negotiation
and other financial advisory services to the Company in connection with the
Company's evaluation of acquisitions. During 1997, the fees payable to
GulfStar under the Letter Agreement in connection with such acquisitions were
$280,000, of which $33,000 has been paid. On May 8, 1998, GulfStar and the
Company entered into a Letter Agreement (the "May Letter Agreement"), which
supersedes all previous agreements between the Company and GulfStar, and
pursuant to which GulfStar will provide limited assistance to the Company in
connection with the negotiation of the New Credit Agreement with Heller. The
Company has agreed, upon successful completion of such financing, to pay
GulfStar a fee equal to 1.0% of the principal amount of the senior debt
facility arranged and to reimburse GulfStar for its reasonable out-of-pocket
expenses.

47
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of June 30, 1998, certain information
regarding beneficial ownership of the Common Stock as of June 30, 1998, and as
adjusted to reflect the sale of the Common Stock offered hereby, by: (i) each
person who is the beneficial owner of 5.0% or more of the outstanding shares
of Common Stock; (ii) each person who is or is expected to become a director
upon completion of the Offering; (iii) each Named Executive Officer; (iv) the
Selling Shareholder; and (v) all officers and directors as a group. All
persons listed have an address in care of the Company's principal executive
offices at 1001 Fannin Street, Suite 650, Houston, Texas 77002, and have sole
voting and investment power with respect to shares beneficially owned by them,
unless otherwise noted. Information set forth in the table with respect to
beneficial ownership of the Company's equity securities has been provided to
the Company by such holders.

<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
BENEFICIALLY
NUMBER OF OWNED
SHARES -----------------
BENEFICIALLY BEFORE AFTER
NAME OWNED OFFERING OFFERING
- ---- ------------ -------- --------
<S> <C> <C> <C>
Richard O. Looney (1).......................... 721,215 56.2% 12.5%
David P. Tusa (2).............................. -- -- --
Tony L. Maddocks (3)........................... 94,301 8.0 1.6

Michael A. Klein............................... 106,625 9.8 1.9
Fentress Bracewell (4)......................... -- -- --
Robert J. Cresci (5)........................... 1,240,933 53.4 21.4
G. Kent Kahle (6).............................. 93,750 8.6 1.6

Delaware State Employees' Retirement Fund (7).. 831,428 43.4 14.3
Declaration of Trust for Defined Benefit Plan
of
ICI American Holdings Inc. (8)............... 241,980 18.2 4.2
Declaration of Trust for Defined Benefit Plan
of Zeneca Holdings Inc. (9).................. 167,525 13.4 2.9
GulfStar Investments, Ltd. (10)............... 93,750 8.6 1.6
Gregg M. and Susan L. Ziskind (11)............. 99,264 9.2 1.7
Legal Enterprise, Inc. (12)................... 90,401 7.7 1.6
Amicus One (13)................................ 72,794 6.7 1.3
All executive officers and directors as a group
(7 persons) (14).............................. 2,256,824 83.8 38.9
</TABLE>
- --------
(1) Includes (a) 200,065 shares of Common Stock issuable upon conversion of
the Series B Convertible Preferred Stock; and (b) 56,250 shares of Common
Stock held by trusts for the benefit of Mr. Looney's children. Excludes
125,000 shares of Common Stock subject to unvested options granted
pursuant to the Company's 1997 Stock Incentive Plan. Mr. Looney has
granted the Underwriters a 30-day option to purchase up to 62,500 shares
of Common Stock solely to cover any over-allotments. If this option is
exercised in full, Mr. Looney would hold 658,715 shares of Common Stock,
representing 10.7% of the outstanding Common Stock after the Offering.
(2) Excludes 93,750 shares of Common Stock subject to unvested options
granted pursuant to the Company's 1997 Stock Incentive Plan.
(3) Includes 90,401 shares of Common Stock issuable upon conversion of
Convertible Subordinated Promissory Notes held by Legal Enterprise, a
corporation of which Mr. Maddocks is President and a 50.0% shareholder.
(4) Excludes 15,625 shares of Common Stock subject to unvested options
granted pursuant to the Directors' Stock Option Plan to be awarded upon
completion of the Offering.

48
<PAGE>

(5) Mr. Cresci owns no shares directly. Includes 1,240,933 shares issuable
upon conversion of an aggregate of 1,272,762 shares of Series A
Convertible Preferred Stock, held by three pension or defined benefit
plans for whom Pecks Management Partners Ltd. provides investment
management services. Mr. Cresci is a Managing Director of Pecks
Management Partners Ltd. and therefore may be deemed to be a beneficial
owner of such shares. Mr. Cresci disclaims beneficial ownership of all
such shares. Excludes 15,625 shares of Common Stock subject to unvested
options granted pursuant to the Directors' Stock Option Plan to be
awarded upon completion of the Offering. The shareholders' addresses of
record is c/o Pecks Management Partners Ltd., One Rockefeller Plaza, New
York, New York 10020.
(6) Mr. Kahle owns no shares directly. Includes 93,750 shares held by
GulfStar Investments, Ltd., an affiliate of GulfStar. Mr. Kahle serves as
a Managing Director of GulfStar. Excludes 15,625 shares of Common Stock
subject to unvested options to be awarded upon completion of the Offering
pursuant to the Company's Directors' Stock Option Plan. The shareholder's
address of record is 700 Louisiana Street, Suite 3800, Houston, Texas
77002.

(7) Represents shares of Common Stock issuable upon conversion of 852,751
shares of Series A Convertible Preferred Stock. The shareholder's address
of record is c/o Pecks Management Partners Ltd., One Rockefeller Plaza,
New York, New York 10020.

(8) Represents shares of Common Stock issuable upon conversion of 248,188
shares of Series A Convertible Preferred Stock. The shareholder's address
of record is c/o Pecks Management Partners Ltd., One Rockefeller Plaza,
New York, New York 10020.

(9) Represents shares of Common Stock issuable upon conversion of 171,823
shares of Series A Convertible Preferred Stock. The shareholder's address
of record is c/o Pecks Management Partners Ltd., One Rockefeller Plaza,
New York, New York 10020.
(10) The shareholder's address of record is 700 Louisiana Street, Suite 3800,
Houston, Texas 77002.
(11) The shareholder's address of record is 2666 Overland Avenue, Suite 600,
Los Angeles, California 90064.
(12) Represents shares of Common Stock issuable upon conversion of Convertible
Subordinated Promissory Notes. The shareholder's address of record is
4232-1 Las Virgenes Road, Suite 100, Calabasas, California 91302.
(13) The shareholder's address of record is 20 Vesey Street, 9th Floor, New
York, New York 10007.
(14) Excludes an aggregate of 246,875 shares of Common Stock subject to
unvested options granted pursuant to the Company's 1997 Stock Incentive
Plan and 46,875 shares subject to unvested options granted pursuant to
the Company's Directors' Option Plan.

49
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

Under the Company's Articles of Incorporation, as amended (the "Articles"),
the Company has authority to issue 110,000,000 shares of capital stock,
consisting of 10,000,000 shares of Preferred Stock, par value $1.00 per share
(the "Preferred Stock") and 100,000,000 shares of Common Stock, par value $.01
per share. As of March 31, 1998, the Company had outstanding 1,084,098 shares
of Common Stock and 3,550,679 shares of Preferred Stock (1,272,762 shares of
Series A Convertible Preferred Stock, 2,046,667 shares of Series B Convertible
Preferred Stock and 231,250 shares of Series C Convertible Preferred Stock).
All of the outstanding Preferred Stock will be converted into Common Stock
upon completion of the Offering or will be redeemed with the net proceeds of
the Offering. See Note 8 of Notes to Consolidated Financial Statements of U.S.
Legal Support, Inc. for a description of the terms of each of the outstanding
series of Preferred Stock. Shares of Preferred Stock that are redeemed will
return to authorized shares of Preferred Stock undesignated as to series.

At June 15, 1998, there were 20 shareholders of record of the Company's
Common Stock.

The following summary description of the capital stock of the Company is
intended as a summary only and is qualified in its entirety by reference to
the Articles, a copy of which has been filed as an exhibit to this
Registration Statement.

PREFERRED STOCK

The Articles authorize the issuance of the Preferred Stock, in one or more
series having designations, rights and preferences determined from time to
time by the Board of Directors. One of the effects of undesignated Preferred
Stock may be to enable the Board of Directors, without approval of holders of
Common Stock, to issue Preferred Stock with dividends, liquidation,
conversion, voting or other rights that could adversely affect the voting
power or other rights of the holders of the Common Stock. In the event of
issuance, the Preferred Stock could be used, under certain circumstances, as a
method of discouraging, delaying or preventing a change in control of the
Company. Although the Company has no present intention to issue any additional
shares of its Preferred Stock, there can be no assurance that it will not do
so in the future.

COMMON STOCK

Voting Rights. Holders of Common Stock are entitled to one vote for each
share on all matters on which shareholders generally are entitled to vote,
including elections of directors. The Articles do not provide for cumulative
voting for the election of directors; therefore, the holders of a majority of
the voting power of the total number of outstanding shares of Common Stock are
able to elect the entire Board of Directors of the Company. Holders of Common
Stock have no preemptive, subscription, redemption or conversion rights.

Dividends. Subject to the preferential rights of any outstanding Preferred
Stock created by the Board of Directors under the Articles, dividends may be
paid to holders of Common Stock when, as and if declared by the Board of
Directors out of funds legally available for such purpose. Dividends may be
paid by the Company out of "surplus" (as defined under Article 1.02 of the
Texas Business Corporation Act) or, if there is no surplus, out of net profits
for the fiscal year in which the dividends are declared and/or the preceding
fiscal year. Further, dividends may be paid out of any net profits for the
current and/or prior fiscal year, if any. The declaration and payment of
dividends on Common Stock could be restricted by the terms of any Preferred
Stock issued.

Liquidation. In the event of the dissolution or winding up of the Company,
after payment or provision for payment of debts and other liabilities of the
Company and any other series or class of the Company's securities that rank
senior to the Common Stock, the holders of Common Stock will be entitled to
share ratably in all remaining assets of the Company. All outstanding shares
of Common Stock are, and the shares of Common Stock to be sold by the Company
in this Offering will be, duly and validly issued, fully paid and
nonassessable.

50
<PAGE>

The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank, Houston, Texas.

STATUTORY BUSINESS COMBINATION PROVISION

The Company is subject to Article 13 of the TBCA ("Article 13") which, with
certain exceptions, prohibits a Texas corporation from engaging in a "business
combination" (as defined in Article 13) with any shareholder who is a
beneficial owner of 20.0% or more of the corporation's voting power for a
period of three years after such shareholder's acquisition of a 20.0%
ownership, unless: (i) the board of directors of the corporation approves the
transaction or the shareholder's acquisition of shares prior to the
acquisition or (ii) two-thirds of the unaffiliated shareholders of the
corporation approve the transaction at a shareholders' meeting held no earlier
than six months after the shareholder acquires that ownership. Shares that are
issuable pursuant to options, conversion or exchange rights or other
agreements are not considered outstanding for purposes of Article 13.

51
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
approximately 5,796,845 shares of Common Stock (6,199,345 shares if the
Underwriters' over-allotment option is exercised in full). Of these shares,
3,100,000 shares (3,565,000 shares if the Underwriters' over-allotment option
is exercised in full) sold in the Offering will be freely transferable without
restriction or limitation under the Securities Act, except for any shares
purchased by an "affiliate" (as defined in the Securities Act) of the Company.
The remaining 2,696,845 shares of Common Stock held by existing shareholders
of the Company are "restricted securities" within the meaning of Rule 144
promulgated under the Securities Act of 1933, as amended.

The Company's directors, executive officers and certain shareholders, who
hold an aggregate of 2,428,882 shares of Common Stock, have entered into lock-
up agreements with the Representatives of the Underwriters. These persons have
agreed not to offer, sell, contract to sell, grant any option with respect to,
pledge, hypothecate or otherwise dispose of, any shares of Common Stock owned
by them until the date occurring 180 days after the date of this Prospectus
without the prior written consent of Hambrecht & Quist LLC. All such shares
will become available for sale upon expiration of these lock-up agreements,
subject to compliance with Rule 144 promulgated under the Securities Act. In
addition, certain shareholders have the right to have the shares of Common
Stock owned by them registered by the Company under the Securities Act as
described below.

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned, for a
least one year, shares of Common Stock that have not been registered under the
Securities Act or that were acquired from an "affiliate" of the Company is
entitled to sell within any three-month period the number of shares of Common
Stock which does not exceed the greater of one percent of the number of the
then outstanding shares or the average weekly reported trading volume during
the four calendar weeks preceding the sale. Sales under Rule 144 are also
subject to certain notice requirements and to the availability of current
public information about the Company and must be made in unsolicited brokers'
transactions or to a market maker. A person (or persons whose shares are
aggregated) who is not an "affiliate" of the Company under the Securities Act
during the three months preceding a sale and who has beneficially owned such
shares for at least two years is entitled to sell such shares under Rule 144
without regard to the volume and notice provisions of such Rule. Commencing 90
days after the completion of the Offering, approximately 2,696,845
"restricted" shares of Common Stock will be eligible for resale pursuant to
Rule 144, subject to the volume, manner of sale and other limitations thereof.

On the date of this Prospectus, the Company had outstanding options to
purchase 471,744 shares of Common Stock, including options granted to
employees and consultants, options granted pursuant to the 1997 Stock
Incentive Plan and options granted in connection with certain acquisitions. In
addition, the Company intends to grant options to purchase 46,875 shares of
Common Stock pursuant to the Company's Stock Option Plan for Non-Employee
Directors upon completion of the Offering. Options to purchase at least an
additional 116,000 shares of Common Stock are available for grant under the
1997 Stock Incentive Plan and the Non Employee Directors Stock Option Plan.
The Company expects to file a registration statement on Form S-8 under the
Securities Act to register all of the shares of Common Stock issuable upon
exercise of options granted under options granted to employees and consultants
and options granted pursuant to the 1997 Stock Incentive Plan and the Non
Employee Directors Stock Option Plan. Accordingly, such shares will be freely
tradeable by holders who are not affiliates of the Company and, subject to the
volume and manner of sale limitations of Rule 144, by holders who are
affiliates of the Company.

Prior to this Offering, there has been no market for the Common Stock. No
predictions can be made of the effect, if any, that market sales of shares of
Common Stock or the availability of such shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of significant
amounts of Common Stock could adversely affect the prevailing market price of
Common Stock, as well as impair the ability of the Company to raise capital
through the issuance of additional equity securities.

52
<PAGE>

REGISTRATION RIGHTS

Pursuant to several Registration Rights Agreements (the "Registration Rights
Agreements"), the Company has agreed to register under the Securities Act
substantially all of the shares of Common Stock outstanding on the date of
this Prospectus (approximately 1,084,098 shares) as well as the 1,240,934
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock and the 200,065 shares of Common Stock issuable upon
conversion of the Series B Convertible Preferred Stock. Pursuant to the
Registration Rights Agreements, shareholders and their permitted transferees
have certain "piggyback" registration rights and will be entitled, subject to
certain limitations, to include their shares of Common Stock in a registration
of shares of Common Stock by the Company under the Securities Act.

In addition, a Registration Rights Agreement with the holders of the Series
A Convertible Preferred Stock provides that following the Offering, any one or
more of such shareholders shall twice have the right to require the Company to
effect registration of all or any part of the shareholders' shares of Common
Stock under the Securities Act. In order to demand registration of the Common
Stock, the holder or holders of Common Stock requesting such registration must
own more than 50.0% (by number of shares) of the shares subject to the
agreement and the aggregate market value to be registered must be at least
$3.0 million. The number of shares included in any registration is subject to
customary provisions providing for a reduction in the number of shares to be
registered if in the opinion of the managing underwriter such shares would
affect the marketing or the selling price of the securities to be sold.

The Registration Rights Agreements require the Company to pay the expenses
associated with any registration other than sales discounts, commissions,
transfer taxes and amounts to be borne by underwriters or as otherwise
required by law and include customary provisions for indemnification against
liabilities arising under federal securities laws in connection with such
registration.

53
<PAGE>

UNDERWRITING

Subject to certain terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their representatives
Hambrecht & Quist LLC and ING Baring Furman Selz LLC (the "Representatives"),
have severally agreed to purchase from the Company the following respective
number of shares of Common Stock:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Hambrecht & Quist LLC...........................................
ING Baring Furman Selz LLC......................................
---------
3,100,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligations is such that
they are committed to purchase all shares of Common Stock offered hereby if
any of such shares are purchased. The Underwriters have informed the Company
that the Underwriters do not expect to make sales of Common Stock offered by
this Prospectus to accounts over which they exercise discretionary authority
in excess of 5% of the number of shares of Common Stock offered hereby.

The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow and such dealers may
reallow a concession not in excess of $ per share to certain other
dealers. After the initial public offering of the shares, the offering price
and other selling terms may be changed by the Representatives.

The Company and a Selling Shareholder have granted to the Underwriters an
option, excercisable no later than 30 days after the date of this Prospectus,
to purchase up to 465,000 additional shares of Common Stock at the initial
public offering price, less the underwriting discount, set forth on the cover
page of this Prospectus. To the extent that the Underwriters exercise this
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by it shown in the table above bears to the total number
of shares of Common Stock offered hereby. The Company and the Selling
Shareholder will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent that the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the Offering without notice. The Underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.

The Company and a Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

The Company's directors, executive officers and principal shareholders who
will own in the aggregate 2,428,882 shares of Common Stock after the Offering,
have agreed that they will not, without the prior written consent of Hambrecht
& Quist LLC, offer, sell or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock or securities
exchangeable for or convertible into shares of

54
<PAGE>

Common Stock owned by them during the 180-day period following the date of
this Prospectus. The Company has agreed that it will not, without the prior
written consent of Hambrecht & Quist LLC, offer, sell or otherwise dispose of
any shares of Common Stock, options or warrants to acquire shares of Common
Stock during the 180-day period following the date of this Prospectus without
the prior written consent of Hambrecht & Quist LLC, except for: (i) the
issuance of shares of Common Stock upon conversion of debt or equity
securities of the Company or any of its subsidiaries outstanding as of the
date of this Prospectus; (ii) the grant, award, issuance or sale of shares of
Common Stock or options or other rights to purchase or acquire Common Stock
pursuant to the terms of any stock option, stock bonus or other plan or
arrangement referred to in this Prospectus; or (iii) the issuance of shares of
Common Stock, Preferred Stock or any security convertible into or exchangeable
for Common Stock or Preferred Stock in connection with the acquisition of
court reporting, certified record retrieval and legal staffing and placement
businesses and related assets.

Prior to this Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock was determined
by negotiation among the Company and the Representative. Among the factors
considered in determining the initial public offering price were prevailing
market and economic conditions, revenues and earnings of the Company, market
valuations of other companies engaged in activities similar to the Company,
the present state of the Company's business operations, the Company's
management and other factors deemed relevant. The estimated initial public
offering price set forth on the cover of this preliminary prospectus is
subject to change as a result of market conditions and other factors.

Certain persons participating in this offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the
open market, including by entering stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids. A stabilizing bid means the
placing of any bid or effecting any purchase for the purpose of pegging,
fixing or maintaining the price of the Common Stock. A syndicate covering
transaction means the placing of any bid on behalf of the underwriting
syndicate or the effecting of any purchase to reduce a short position created
in connection with the Offering. A penalty bid means an arrangement that
permits the Underwriters to reclaim a selling concession from a syndicate
member in connection with the Offering when shares of Common Stock sold by the
syndicate member are purchased in the syndicate covering transactions. Such
transactions may be effected on the Nasdaq Stock Market, in the over-the
counter market, or otherwise. Such stabilizing, if commenced, may be
discontinued at any time.

LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for the
Company by Bracewell & Patterson, L.L.P., Houston, Texas, and for the
Underwriters by Locke Purnell Rain Harrell (A Professional Corporation),
Dallas, Texas.

EXPERTS

The financial statements and schedules of U.S. Legal Support, Inc., Looney,
Klein Bury, G&G, San Francisco Reporting, Legal Enterprise, Elaine Dine,
Ziskind Greene, Johnson Group, Amicus One and Block included in this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by
PricewaterhouseCoopers LLP (a successor firm to Coopers & Lybrand L.L.P.),
independent accountants, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing. The report on
the audit of the financial statements of U.S. Legal Support, Inc. includes an
explanatory paragraph.

55
<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement (which
term encompasses any and all amendments thereto) under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus, which is filed as
part of the Registration Statement, does not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain items of which were omitted in accordance with the rules and
regulations of the Commission. Statements made in this Prospectus concerning
the contents of any contract, agreement or other document referred to are
summaries of the terms of such contract, agreement or other document and are
not necessarily complete. With respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
hereby made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference. For further information with respect to the Company, reference
is hereby made to the Registration Statement and such exhibits and schedules
filed as a part thereof, which may be inspected, without charge, at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: 7 World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of all or any portion of the Registration Statement may
be obtained from the Public Reference facilities of the Commission, upon
payment of the prescribed fees. The Registration Statement is also available
on the Internet at the Commission's World Wide Web site at http://www.sec.gov.

As a result of the Offering, the Company will be subject to the reporting
requirements under the Exchange Act and, in accordance therewith, will file
reports, proxy statements, information statements and other information with
the Commission. The Company intends to furnish annual reports to its
shareholders containing audited financial statements reported on by an
independent certified public accounting firm.

56
<PAGE>

INDEX TO FINANCIAL STATEMENTS

U.S. LEGAL SUPPORT, INC.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
U.S. LEGAL SUPPORT, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS:
Basis of Presentation.................................................... F-4
Unaudited Pro Forma Combined Balance Sheet as of June 30, 1998........... F-6
Notes to Unaudited Pro Forma Combined Balance Sheet...................... F-7
Unaudited Pro Forma Combined Statement of Income for the Six Months Ended
June 30, 1998........................................................... F-8
Unaudited Pro Forma Combined Statement of Income for the Year Ended
December 31, 1997....................................................... F-9
Notes to Unaudited Pro Forma Combined Statement of Income ............... F-10
HISTORICAL FINANCIAL STATEMENTS:
Report of Independent Accountants........................................ F-11
Consolidated Balance Sheet as of December 31, 1997 and June 30, 1998
(Unaudited)............................................................. F-12
Consolidated Statement of Income for the Year Ended December 31, 1997 and
the Six Months Ended June 30, 1997 and 1998 (Unaudited)................. F-13
Consolidated Statement of Stockholders' Deficit for the Year Ended
December 31, 1997 and the Six Months Ended June 30, 1998 (Unaudited).... F-14
Consolidated Statement of Cash Flows for the Year Ended December 31, 1997
and the Six Months Ended June 30, 1997 and 1998 (Unaudited)............. F-15
Notes to Consolidated Financial Statements............................... F-16
LOONEY & COMPANY
Report of Independent Accountants........................................ F-32
Balance Sheet as of December 31, 1995 and 1996........................... F-33
Statement of Operations for the Years Ended December 31, 1994, 1995 and
1996 ................................................................... F-34
Statement of Stockholder's Equity for the Years Ended December 31, 1994,
1995 and 1996........................................................... F-35
Statement of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996 ................................................................... F-36
Notes to Financial Statements............................................ F-37
KLEIN, BURY & ASSOCIATES
Report of Independent Accountants........................................ F-42
Balance Sheet as of September 30, 1995 and December 31, 1996............. F-43
Statement of Income for the Years Ended September 30, 1995 and December
31, 1996................................................................ F-44
Statement of Stockholders' Equity for the Years Ended September 30, 1995
and December 31, 1996................................................... F-45
Statement of Cash Flows for the Years Ended September 30, 1995 and
December 31, 1996....................................................... F-46
Notes to Financial Statements............................................ F-47
G&G COURT REPORTERS
Report of Independent Accountants........................................ F-50
Balance Sheet as of December 31, 1995 and 1996........................... F-51
Statement of Income for the Years Ended December 31, 1995 and 1996 and
for the Six Months Ended June 30, 1996 and the Period from January 1,
1997 through Date of Acquisition, May 19, 1997 (Unaudited).............. F-52
Statement of Owner's Equity for the Years Ended December 31, 1995 and
1996 and the Period from January 1, 1997 through Date of Acquisition,
May 19, 1997 (Unaudited)................................................ F-53
Statements of Cash Flows for the Years Ended December 31, 1995 and 1996
and the Period from January 1, 1997 through Date of Acquisition, May 19,
1997 (Unaudited)........................................................ F-54
Notes to Financial Statements............................................ F-55
</TABLE>

F-1
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SAN FRANCISCO REPORTING SERVICE
Report of Independent Accountants......................................... F-57
Balance Sheet as of December 31, 1996 and May 14, 1997.................... F-58
Statement of Income for the Year Ended December 31, 1996 and for the Six
Months Ended June 30, 1996 and for the Period from January 1, 1997
through Date of Acquisition, May 14, 1997................................ F-59
Statement of Partners' Capital for the Year Ended December 31, 1996 and
for the Period from January 1, 1997 through Date of Acquisition, May 14,
1997..................................................................... F-60
Statement of Cash Flows for the Year Ended December 31, 1996 and for the
Period from January 1, 1997 through Date of Acquisition, May 14, 1997.... F-61
Notes to Financial Statements............................................. F-62
LEGAL ENTERPRISE, INC.
Report of Independent Accountants......................................... F-65
Balance Sheet as of December 31, 1996 and June 30, 1997 (Unaudited)....... F-66
Statement of Income for the Years Ended December 31, 1995 and 1996 and the
Six Months Ended June 30, 1996 and 1997 (Unaudited)...................... F-67
Statement of Stockholders' Equity for the Years Ended December 31, 1995
and 1996 and the Six Months Ended June 30, 1996 and 1997 (Unaudited)..... F-68
Statement of Cash Flows for the Years Ended December 31, 1995 and 1996 and
the Six Months Ended June 30, 1996 and 1997 (Unaudited).................. F-69
Notes to Financial Statements............................................. F-70
ELAINE P. DINE, INC.
Report of Independent Accountants......................................... F-72
Balance Sheet as of March 31, 1996 and 1997 and June 30, 1997
(Unaudited).............................................................. F-73
Statement of Income for the Years Ended March 31, 1996 and 1997 and for
the Three Months Ended June 30, 1996 and 1997 (Unaudited)................ F-74
Statement of Stockholder's Equity for the Years Ended March 31, 1996 and
1997 and the Three Months Ended June 30, 1997 (Unaudited)................ F-75
Statement of Cash Flows for the Years Ended March 31, 1996 and 1997 and
the Three Months Ended June 30, 1996 and 1997 (Unaudited)................ F-76
Notes to Financial Statements............................................. F-77
BURTON HOUSE, INC.
D.B.A. ZISKIND, GREENE, WATANABE & NASON
Report of Independent Accountants......................................... F-79
Balance Sheet as of December 31, 1995 and 1996 and June 30, 1997
(Unaudited).............................................................. F-80
Statement of Operations for the Years Ended December 31, 1995 and 1996 and
the Six Months Ended June 30, 1996 and 1997 (Unaudited).................. F-81
Statement of Stockholder's Deficit for the Years Ended December 31, 1995
and 1996 and the Six Months Ended June 30, 1997 (Unaudited).............. F-82
Statement of Cash Flows for the Years Ended December 31, 1995 and 1996 and
the Six Months Ended June 30, 1996 and 1997 (Unaudited).................. F-83
Notes to Financial Statements............................................. F-84
</TABLE>

F-2
<PAGE>

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
JOHNSON COURT REPORTING GROUP
Report of Independent Accountants........................................ F-87
Combined Balance Sheet as of December 31, 1995 and 1996 and June 30, 1997
(Unaudited)............................................................. F-88
Combined Statement of Income for the Years Ended December 31, 1995 and
1996 and for the Six Months Ended June 30, 1996 and 1997 (Unaudited).... F-89
Combined Statement of Shareholder's Equity for the Years Ended December
31, 1995 and 1996 and for the Six Months Ended June 30, 1997
(Unaudited)............................................................. F-90
Combined Statement of Cash Flows for the Years Ended December 31, 1995
and 1996 and for the Six Months Ended June 30, 1996 and 1997
(Unaudited)............................................................. F-91
Notes to Combined Financial Statements................................... F-92
AMICUS ONE LEGAL SUPPORT SERVICES, INC.
Report of Independent Accountants........................................ F-95
Balance Sheet as of December 31, 1996 and September 5, 1997.............. F-96
Statement of Income for the Year Ended December 31, 1996 and the Period
Ended September 5, 1997................................................. F-97
Statement of Stockholders' Equity for the Year Ended December 31, 1996
and the Period Ended September 5, 1997.................................. F-98
Statement of Cash Flows for the Year Ended December 31, 1996 and the
Period Ended September 5, 1997.......................................... F-99
Notes to Financial Statements............................................ F-100
BLOCK COURT REPORTING, INC.
Report of Independent Accountants........................................ F-103
Balance Sheet as of December 31, 1995 and 1996 and June 30, 1997
(Unaudited)............................................................. F-104
Statement of Operations for the Years Ended December 31, 1995 and 1996
and the Six Months Ended June 30, 1997 and 1996 (Unaudited)............. F-105
Statement of Stockholder's Equity (Deficit) for the Years Ended December
31, 1995 and 1996 and the Six Months Ended June 30, 1997 (Unaudited).... F-106
Statement of Cash Flows for the Years Ended December 31, 1995 and 1996
and the Six Months Ended June 30, 1997 and 1996 (Unaudited)............. F-107
Notes to Financial Statements............................................ F-108
</TABLE>

F-3
<PAGE>

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The following Unaudited Pro Forma Combined Balance Sheet as of June 30, 1998
and the Unaudited Pro Forma Combined Statement of Income for the year ended
December 31, 1997 and the six months ended June 30, 1998 have been prepared to
reflect adjustments to the historical financial position and results of
operations to give effect to certain of the transactions described below. The
Unaudited Pro Forma Combined Balance Sheet reflects such transactions as if
they had occurred as of June 30, 1998, and the Unaudited Pro Forma Combined
Statement of Income for the year ended December 31, 1997 and the six months
ended June 30, 1998 reflect such transactions as if they had occurred as of
January 1, 1997.

U.S. Legal Support, Inc., a Texas Corporation ("U.S. Legal") was formed in
October 1996 to continue the business of Looney & Company, a Texas
Corporation, ("Looney") and to create a leading provider of legal support and
staffing services to law firms, insurance providers and major corporations. In
January 1997, U.S. Legal was combined with Looney in a transaction accounted
for as a merger of entities under common control in which Looney became a
wholly-owned subsidiary of U.S. Legal (Looney and U.S. Legal are hereinafter
referred to as the "Company"). Simultaneously, the Company entered into a
Securities Purchase Agreement (the "Securities Purchase Agreement") with three
investors represented by Pecks Management Partners Ltd. pursuant to which the
Company issued 1,000,000 shares of Series A Convertible Preferred Stock (the
"Series A Preferred Stock") and $9.0 million principal amount of 12% Senior
Subordinated Notes (the "Senior Subordinated Notes"). Concurrently, the
Company entered into a Bank Credit Agreement with a commercial bank, which
provided for a revolving credit facility of $4.0 million. The Company amended
the Bank Credit Agreement to, among other things, reduce the revolving credit
facility to $2.0 million and to provide for term loans up to $14.0 million,
for acquisitions.

On the same date as the transactions described above, the Company acquired
all of the outstanding capital stock of Klein, Bury & Associates, Inc. ("Klein
Bury") headquartered in Miami, Florida with offices in various locations
throughout the state of Florida. In May 1997, the Company acquired certain net
assets of G & G Court Reporters and San Francisco Reporting Service
headquartered in Los Angeles and San Francisco, California, respectively.

In August 1997, the Company acquired all of the outstanding capital stock of
Goren of Newport, Inc., Rapidtext, Inc. and Medtext, Inc. (the "Johnson Court
Reporting Group") and acquired certain assets and assumed certain liabilities
of Legal Enterprise, Inc. Both companies are headquartered in California.

In September 1997, the Company acquired the assets and assumed certain
liabilities of Elaine P. Dine, Inc. and acquired all of the outstanding
capital stock of Burton House, Inc. d.b.a. Ziskind Greene Watanabe & Nason
headquartered in New York, New York and Los Angeles, California, respectively.
Additionally, the Company acquired all of the outstanding capital stock of
Block Court Reporting, Inc. and acquired certain assets and assumed certain
liabilities of Amicus One Legal Support Services, Inc. headquartered in
Washington, D.C. and New York, New York, respectively.

The Company has outstanding $17.1 million in term notes and revolving line
of credit under its Bank Credit Agreement at June 30, 1998. The revolving line
of credit matures on September 30, 1998. On February 26, 1998, the Company
sold an additional $2,000,000 in Senior Subordinated Notes and 151,405 Shares
of Series A Preferred Stock. The Additional Senior Subordinated Notes also
bear interest at an annual rate of 12% and will be due and payable on December
31, 1998, subject to mandatory prepayment two days following the completion of
the Offering. The Company is permitted to issue, at the three investors
represented by Pecks election, promissory notes in lieu of making cash
interest payments, which have the same interest rate and repayment terms as
the Company's issuance of Senior Subordinated Promissory Notes (the "Interest
Notes"). The Company has issued Interest Notes in the aggregate principal
amount of $1,200,000 with respect to interest owed on the Senior Subordinated
Notes to the three investors through June 30, 1998. The Interest Notes are
subject to mandatory prepayment two days following the completion of the
Offering. In conjunction with the Interest Notes, the Investors received an
additional 121,357 shares of Series A Convertible Preferred Stock.

F-4
<PAGE>

The Company intends to sell approximately 3,100,000 shares of common stock,
par value $.01 per share (the "Common Stock") at an assumed initial offering
price of $11.00 per share to the public (the "Offering"). The businesses
acquired prior to the Offering were acquired using a combination of cash,
preferred stock, Common Stock and subordinated promissory notes. Upon
completion of the Offering, all of the shares of preferred stock will be
converted into shares of Common Stock, other than 231,250 shares of Series C
Preferred Stock which will be redeemed for $231,250 upon completion of the
Offering. The aggregate consideration paid by the Company for the acquisitions
consisted of: (i) $21,800,000 in cash, (ii) 2,046,667 shares of Series B
Convertible Preferred Stock (the "Series B Preferred Stock"); (iii) 231,250
shares of Series C Convertible Preferred Stock (the "Series C Preferred
Stock"); (iv) $5,444,000 of Subordinated Promissory Notes; and (v) $2,174,000
Convertible Subordinated Promissory Notes.

The Unaudited Pro Forma Combined Balance Sheet as of June 30, 1998 gives
effect to: (i) the sale of 3,100,000 shares of Common Stock shares of Common
Stock at an assumed initial offering price of $11.00 per share and the
application of the net proceeds therefrom, as described in "Use of Proceeds";
(ii) the conversion of all outstanding shares of Series A Preferred Stock and
Series B Preferred Stock into shares of Common Stock; (iii) the conversion of
$2,174,000 of Convertible Subordinated Promissory Notes into shares of Common
Stock; (iv) the redemption of 231,250 shares of Series C Preferred Stock for
$231,250; and (v) initial borrowings to be made upon completion of the
Offering under the Company's New Credit Agreement with Heller Financial, Inc.
All pro forma information gives effect to the 5-for-8 reverse stock split to
stockholders of record as of July , 1998. The Unaudited Pro Forma Combined
Statement of Income for the year ended December 31, 1997, and the six months
ended June 30, 1998, give effect to: (i) the sale of 3,100,000 shares of
Common Stock at an assumed initial offering price of $11.00 per share and the
application of net proceeds therefrom as described in "Use of Proceeds"; (ii)
the conversion of all outstanding shares of Series A and Series B Preferred
Stock into shares of Common Stock; (iii) the conversion of $2,174,000
principal amount of Convertible Subordinated Promissory Notes into Common
Stock; and (iv) for 1997, the acquisitions previously described as if they had
occurred on January 1, 1997.

The pro forma combined financial statements have been prepared by the
Company based on the historical financial statements of the Company and the
businesses acquired, the financial statements of which are included elsewhere
in this Prospectus. These pro forma combined financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the results that would have been obtained if the transactions had occurred on
the dates indicated or that may be realized in the future. The Company is not
aware of any pre acquisition contingencies that could result in adjustments
that would have a material effect on the unaudited pro forma financial
statements. The pro forma information should be read in conjunction with the
Consolidated Financial Statements of U.S. Legal Support, Inc. and the Notes
thereto and the historical financial statements of the companies acquired and
the notes thereto included elsewhere in this Prospectus.

F-5
<PAGE>

U.S. LEGAL SUPPORT, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

JUNE 30, 1998

(IN THOUSANDS)

<TABLE>
<CAPTION>
HISTORICAL
----------
OFFERING
COMPANY ADJUSTMENTS PRO
ASSETS (A) (B) FORMA
------ ---------- ----------- --------
<S> <C> <C> <C>
Current assets:
Cash......................................... $ 1,234 $ -- $ 1,234
Accounts receivable.......................... 9,268 -- 9,268
Prepaid expenses and other current assets.... 498 -- 498
-------- -------- --------
Total current assets....................... 11,000 -- 11,000
Property and equipment, net................... 1,121 -- 1,121
Intangibles................................... 29,627 -- 29,627
Deferred charges.............................. 658 (520) 138
Other assets.................................. 166 -- 166
-------- -------- --------
Total assets............................... $ 42,572 $ (520) $ 42,052
======== ======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- ----------------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable
Trade........................................ $ 1,500 $ (897) $ 603
Affiliates................................... 130 -- 130
Accrued liabilities.......................... 8,436 (1,803) 6,633
Income taxes payable......................... 250 -- 250
Current maturities of long-term obligations.. 6,289 (6,155) 134
-------- -------- --------
Total current liabilities.................. 16,605 (8,855) 7,750
Long-term obligations, net of current
maturities................................... 26,542 (20,301) 6,241
Commitments and contingencies
Redeemable preferred stock
Series A Convertible Preferred Stock......... 6,695 (6,695) --
Series B Convertible Preferred Stock......... 2,047 (2,047) --
Series C Convertible Preferred Stock......... 231 (231) --
-------- -------- --------
Total redeemable preferred stock........... 8,973 (8,973) --
-------- -------- --------
Stockholders' equity (deficit):
Common stock................................. 11 47 58
Additional paid-in capital................... 1,967 42,189 44,156
Retained earnings (deficit).................. (11,526) (4,627) (16,153)
-------- -------- --------
Total stockholders' equity (deficit)....... (9,548) 37,609 28,061
-------- -------- --------
Total liabilities and stockholders' equity
(deficit)................................. $ 42,572 $ (520) $ 42,052
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial statements.

F-6
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET

(A) Represents the June 30, 1998 historical consolidated balance sheet of
the Company.

(B) Represents the issuance of 3,100,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $11.00 per
share and the application of the net proceeds therefrom as follows (in
thousands):

<TABLE>
<CAPTION>
<S> <C>
Gross proceeds of the Offering.................................. $34,100
Underwriting discounts and commissions.......................... (2,387)
Expenses related to the Offering................................ (393)
-------
Net proceeds.................................................. 31,320
Borrowings under new credit agreement........................... 6,241
Repayment of long-term debt, including current portion.......... (34,630)
Payment of delayed offering and terminated acquisition costs.... (2,700)
Redemption of 231,250 shares of Series C Preferred Stock at
$1.00 per share................................................ (231)
-------
Net increase in cash and cash equivalents..................... $ --
=======
</TABLE>

In addition, upon completion of the Offering, $2,174,000 of Subordinated
Convertible Promissory Notes, the 1,272,762 shares of Series A Preferred Stock
and the 2,046,667 shares of the Series B Preferred Stock will be converted
into shares of Common Stock. The principal amount of Subordinated Convertible
Promissory Notes convert at prices ranging from $12.10 to $13.60 per share.
The 1,272,762 shares of Series A Preferred Stock convert into 1,240,934 shares
of common stock. The Series B Preferred Stock converts at 93% of the assumed
initial public offering price and the Company anticipates recording a $149,000
noncash dividend, that reflects the discount from the assumed initial offering
price at which it will convert to Common Stock.

The Offering and the conversion of the Convertible Subordinated Promissory
Notes, Series A Preferred Stock and Series B Preferred Stock will affect the
pro forma equity, as follows (in thousands):

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN-
STOCK CAPITAL TOTAL
------ ---------- -------
<S> <C> <C> <C>
Offering....................................... $31 $31,289 $31,320
Subordinated Convertible Promissory Notes...... 2 2,172 2,174
Series A Preferred Stock....................... 12 6,683 6,695
Series B Preferred Stock....................... 2 2,045 2,047
--- ------- -------
$47 $42,189 $42,236
=== ======= =======
</TABLE>

The net retirement of long-term obligations is calculated as follows (in
thousands):

<TABLE>
<CAPTION>
<S> <C>
Other assets................................................. $ (520)(a)
Current portion of long-term obligations..................... 6,155
Long-term debt, net of current maturities.................... 26,542
Common Stock................................................. (2)
Additional paid-in capital................................... (2,172)
Retained earnings............................................ 4,627 (b)
-------
Cash paid.................................................... $34,630
=======
</TABLE>
- --------
(a) To write off deferred financing costs related to the retirement of the
Senior Subordinated Notes.
(b) To reflect the reduction in retained earnings for extraordinary losses on
the retirement of indebtedness repaid with cash.

F-7
<PAGE>

U.S. LEGAL SUPPORT, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 1998

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL OFFERING PRO
COMPANY (A) ADJUSTMENT FORMA
----------- ---------- -------
<S> <C> <C> <C>
Revenues.................................. $20,698 $ -- $20,698
Cost of services.......................... 12,554 -- 12,554
------- ------ -------
Gross profit.............................. 8,144 -- 8,144
Selling, general and administrative
expenses................................. 6,468 -- 6,468
Depreciation and amortization............. 537 -- 537
------- ------ -------
Operating income.......................... 1,139 -- 1,139
Interest expense.......................... 2,858 (2,620)(F) 238
------- ------ -------
Income (loss) before income taxes......... (1,719) 2,620 901
Provision for income taxes................ -- 378(G) 378
------- ------ -------
Net (loss) income......................... (1,719) 2,242 523
Accretion of preferred stock.............. (1,265) 1,265(I) --
------- ------ -------
Net income (loss) attributable to common
shareholders............................. $(2,984) $3,507 $ 523
======= ====== =======
Basic earnings per share ................. $ (2.75) $ 0.09
======= =======
Basic weighted average shares
outstanding.............................. 1,084 5,797(H)
======= =======
Diluted earnings per share................ $(2.75) $ 0.09
======= =======
Diluted weighted average shares
outstanding.............................. 1,084 5,879(H)
======= =======
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial statements.

F-8
<PAGE>

U.S. LEGAL SUPPORT, INC.

UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL
---------------------
COMPANY ACQUISITIONS OFFERING PRO
(A) (B) ADJUSTMENTS COMBINED ADJUSTMENTS FORMA
------- ------------ ----------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $24,291 $14,801 $ -- $39,092 $ -- $39,092
Cost of services........ 15,382 8,199 -- 23,581 -- 23,581
------- ------- ----- ------- ------ -------
Gross profit............ 8,909 6,602 -- 15,511 -- 15,511
Selling, general and
administrative
expenses............... 6,859 4,769 (760)(C) 10,868 -- 10,868
Depreciation and
amortization........... 681 161 372 (D) 1,214 -- 1,214
Special charge.......... 3,266 -- -- 3,266 -- 3,266
------- ------- ----- ------- ------ -------
Operating income........ (1,897) 1,672 388 163 -- 163
Interest expense........ 1,971 47 1,298 (E) 3,316 (2,842)(F) 474
------- ------- ----- ------- ------ -------
Income (loss) before
income taxes........... (3,868) 1,625 (910) (3,153) 2,842 (311)
Provision (benefit) for
income taxes........... (156) 757 (425)(G) 176 1,137 (G) 1,313
------- ------- ----- ------- ------ -------
Net income (loss)....... (3,712) 868 (485) (3,329) 1,705 (1,624)
Accretion of preferred
stock.................. (1,093) -- -- (1,093) 1,093 (I) --
------- ------- ----- ------- ------ -------
Net income (loss)
attributable to common
shareholders........... $(4,805) $ 868 $(485) $(4,422) $2,798 $(1,624)
======= ======= ===== ======= ====== =======
Basic and diluted
earnings per share..... $ (4.43) $ (0.28)
======= =======
Basic and diluted
weighted average shares
outstanding............ 1,084 5,797 (H)
======= =======
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial statements.

F-9
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME

(A) Represents the historical Consolidated Statement of Operations data of
the Company, which includes the operations of the acquisitions from
respective dates of acquisition through December 31, 1997.

(B) Represents the combined historical statement of operations data for the
acquisitions from January 1, 1997 through their respective dates of
acquisition.

(C) Represents adjustments to reflect the excess of historical compensation
paid to owners of the acquired businesses over compensation that would
have been payable under the terms of employment agreements entered into
in connection with each acquisition as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
Aggregate owners historical compensation................... $1,626
Less: Aggregate Salary Per Post-Acquisition Employment
Contracts................................................. (866)
------
Adjustment............................................... $760
======
</TABLE>

(D) Represents an increase in amortization of goodwill associated with the
acquisitions. The excess of cost over the fair value of the net assets
acquired will be amortized over a period of 10 to 40 years.

(E) Represents an adjustment to accrue interest expense on debt incurred in
connection with the acquisitions, such expense computed based on fixed
or variable interest rates, as appropriate, at the time the Company
entered into each agreement. The annual effect on net income of a 1/8%
variance of the interest rate would be $26,750.

(F) Represents a net adjustment to reduce interest expense on debt that
will be repaid with proceeds of the Offering and increased interest
expense on debt under the New Credit Agreement. The pro forma
statements of income do not include the extraordinary losses on the
retirement of indebtedness repaid with proceeds of the Offering and
borrowings under the New Credit Agreement.

(G) Represents adjustments to accrue income taxes on earnings for certain
acquisitions not previously taxed at the corporate level and to reflect
the tax effects of adjustments based on estimated combined federal and
state statutory tax rates of 40%. The Company's total effective tax
rate approximates 42% for both the six months ended June 30, 1998, and
for the year ended December 31, 1997, because of non-deductible portion
of the goodwill recorded in connection with the acquisitions.

(H) Pro forma earnings per share gives effect to: (i) 1,084,098 shares
outstanding prior to the offering; (ii) 3,100,000 shares to be issued
in the Offering; (iii) 1,612,747 shares to be issued upon conversion of
preferred stock and Subordinated Convertible Promissory Notes; and (iv)
dilutive options utilizing the treasury stock method.

(I) Represents adjustment to eliminate accretion of redeemable preferred
stock which will be converted to Common Stock.

F-10
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying consolidated balance sheet of U.S. Legal
Support, Inc. and Subsidiaries as of December 31, 1997, and the related
consolidated statements of income, stockholder's deficit and cash flows for
the year then ended. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of U.S. Legal
Support, Inc. and Subsidiaries as of December 31, 1997 and the consolidated
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that U.S. Legal Support, Inc. and Subsidiaries will continue as a
going concern. The Company has incurred losses from operations and has current
maturities of debt which cannot be repaid without additional financing. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans, which include an initial public offering to
repay debt, are described in Note 1 to the consolidated financial statements.
The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

PricewaterhouseCoopers LLP

Houston, Texas

May 20, 1998, except for
Note 13, as to which the
date is July 22, 1998

F-11
<PAGE>

U.S. LEGAL SUPPORT, INC.

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
UNAUDITED
------------------------
PRO FORMA
DECEMBER 31, JUNE 30, JUNE 30,
1997 1998 1998(1)
ASSETS ------------ ----------- -----------
<S> <C> <C> <C>
Current assets:
Cash....................................... $ 437,368 $ 1,234,327 $ 1,234,327
Accounts receivable, net of allowance of
$755,657 and $768,185..................... 8,366,608 9,268,426 9,268,426
Prepaid expenses and other current assets.. 204,408 497,925 497,925
----------- ----------- -----------
Total current assets................... 9,008,384 11,000,678 11,000,678
Property and equipment, net.................. 1,164,196 1,120,541 1,120,541
Intangibles, net............................. 28,949,940 29,627,419 29,627,419
Deferred charges............................. 665,598 658,344 658,344
Other assets................................. 179,574 165,504 165,504
----------- ----------- -----------
Total assets................................. $39,967,692 $42,572,486 $42,572,486
=========== =========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C> <C> <C>
Current liabilities:
Accounts payable........................... $ 2,053,419 $ 1,500,159 $ 1,500,159
Accounts payable, related parties.......... 193,906 129,894 129,894
Accrued liabilities........................ 7,516,670 8,435,799 8,435,799
Income taxes payable....................... 138,745 250,100 250,100
Current maturities of long-term
obligations............................... 6,257,734 6,289,009 6,289,009
----------- ----------- -----------
Total current liabilities.............. 16,160,474 16,604,961 16,604,961
Long-term obligations, net of current
maturities.................................. 26,000,545 26,541,941 24,838,547
Redeemable preferred stock:
Series A Convertible Preferred Stock, $1.00
par value, 2,000,000 shares authorized;
1,000,000 shares and 1,272,762 shares
issued and outstanding at December 31,
1997 and June 30, 1998, respectively...... 2,093,000 6,695,427 --
Series B Convertible Preferred Stock, $1.00
par value, 2,500,000 shares authorized;
2,046,667 shares issued and outstanding... 2,046,667 2,046,667 --
Series C Convertible Preferred Stock, $1.00
par value, 231,250 shares authorized,
issued and outstanding.................... 231,250 231,250 231,250
----------- ----------- -----------
Total redeemable preferred stock....... 4,370,917 8,973,344 231,250
Commitments and contingencies
Stockholders' deficit:
Preferred Stock, $1.00 par value,
10,000,000 shares authorized, 3,277,917
shares and 3,515,108 shares issued and
outstanding as Redeemable Preferred Stock
at December 31, 1997 and June 30, 1998,
respectively.............................. -- -- --
Common Stock, $.01 par value, 100,000,000
shares authorized; 1,084,098 shares issued
and outstanding (2,696,845 pro forma
shares issued and outstanding)............ 10,841 10,841 26,968
Additional paid-in capital................. 3,232,496 1,967,070 12,396,431
Accumulated deficit........................ (9,807,581) (11,525,671) (11,525,671)
----------- ----------- -----------
Total stockholders' deficit............ (6,564,244) (9,547,760) 897,728
----------- ----------- -----------
Total liabilities and stockholders' deficit.. $39,967,692 $42,572,486 $42,572,486
=========== =========== ===========
</TABLE>
- --------

(1) Gives effect to the conversion of (i) 1,272,762 shares of Series A
Convertible Preferred Stock into 1,240,934 shares of Common Stock; (ii)
2,046,667 shares of Series B Convertible Preferred Stock into 200,065
shares of Common Stock; and (iii) $2,173,783 principal amount ($1,703,394
net of discount) of Convertible Subordinated Promissory Notes into 171,748
shares of Common Stock.

The accompanying notes are an integral part of the consolidated financial
statements.

F-12
<PAGE>

U.S. LEGAL SUPPORT, INC.

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
UNAUDITED
---------------------------
YEAR SIX MONTHS
ENDED SIX MONTHS ENDED
DECEMBER 31, ENDED JUNE 30, JUNE 30,
1997 1997 1998
------------ -------------- ------------
<S> <C> <C> <C>
Revenues........................... $24,291,354 $8,401,833 $ 20,698,523
Cost of services................... 15,382,264 5,489,044 12,554,107
----------- ---------- ------------
Gross profit....................... 8,909,090 2,912,789 8,144,416
Selling, general and administrative
expenses.......................... 6,859,023 2,166,510 6,468,328
Depreciation and amortization...... 681,078 176,694 536,667
Special charge..................... 3,266,446 -- --
----------- ---------- ------------
Operating income (loss)........ (1,897,457) 569,585 1,139,421
Interest expense................... 1,971,275 650,423 2,857,511
----------- ---------- ------------
Loss before income taxes........... (3,868,732) (80,838) (1,718,090)
Benefit for income taxes........... (155,875) -- --
----------- ---------- ------------
Net loss........................... (3,712,857) (80,838) (1,718,090)
Accretion of preferred stock....... (1,093,000) -- (1,265,426)
----------- ---------- ------------
Net loss attributable to common
shareholders...................... $(4,805,857) $ (80,838) $ (2,983,516)
=========== ========== ============
Basic and diluted loss per share... $ (4.43) $ (0.10) $ (2.75)
=========== ========== ============
Basic and diluted weighted average
shares outstanding................ 1,084,000 852,000 1,084,000
=========== ========== ============
If the shares necessary to fund the
cash portion of the distribution
to Richard O. Looney were
outstanding for the entire period,
net loss per common share and
weighted average shares
outstanding would have been as
follows:
Pro forma basic and diluted loss
per common share................ $ (3.44) $ (0.07)
=========== ==========
Basic and diluted weighted
average shares outstanding...... 1,396,031 1,164,031
=========== ==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-13
<PAGE>

U.S. LEGAL SUPPORT, INC.

STATEMENT OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT (DEFICIT)
--------- ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance as of January 1,
1997................... 621,150 $ 6,211 $ 3,726 $ (72,760) $ (62,823)
Net assets acquired in
connection with
reorganization of the
Company and Looney &
Company ............... -- -- -- 207,763 207,763
Distribution in
connection with
reorganization of the
Company and Looney &
Company................ -- -- -- (6,227,902) (6,227,902)
Issuance of Common
Stock.................. 462,948 4,630 4,321,770 -- 4,326,400
Series A Convertible
Accretion of Preferred
Stock.................. -- -- (1,093,000) -- (1,093,000)
Series C Convertible
Preferred Stock
Dividend............... -- -- -- (1,825) (1,825)
Net loss................ -- -- -- (3,712,857) (3,712,857)
--------- ------- ----------- ------------ -----------
Balance as of December
31, 1997............... 1,084,098 10,841 3,232,496 (9,807,581) (6,564,244)
Series A Converible
Accretion of Preferred
Stock.................. -- -- (1,265,426) -- (1,265,426)
Net loss................ -- -- -- (1,718,090) (1,718,090)
--------- ------- ----------- ------------ -----------
Balance at June 30, 1998
(Unaudited)............ 1,084,098 $10,841 $ 1,967,070 $(11,525,671) $(9,547,760)
========= ======= =========== ============ ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-14
<PAGE>

U.S. LEGAL SUPPORT, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
UNAUDITED
----------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 30, JUNE 30,
1997 1997 1998
------------ ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss................................. $(3,712,857) (80,838) (1,718,090)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization........... 681,078 176,694 536,667
Amortization of debt issue costs and
debt discount.......................... 246,288 113,854 1,174,099
Provision for doubtful accounts......... 132,644 137,705 12,528
Deferred income taxes................... (420,750) (227,000) --
Changes in operating assets and
liabilities:
Accounts receivable.................... (2,587,455) (152,565) (914,346)
Prepaid expenses and other current
assets................................ (46,443) (147,541) (263,830)
Accounts payable and accrued
liabilities........................... 4,576,561 40,492 478,994
Income taxes payable................... (76,955) (100,482) 147,379
Deferred charges and other ............ (494,001) 363,867 13,718
----------- ---------- ----------
Net cash provided by (used in)
operating activities............... (1,701,890) 124,186 (532,881)
----------- ---------- ----------
Cash flows from investing activities:
Capital expenditures..................... (198,568) (56,250) (109,034)
Acquisitions, net of cash acquired....... (20,801,197) (6,533,278) --
----------- ---------- ----------
Net cash used in investing
activities......................... (20,999,765) (6,589,528) (109,034)
----------- ---------- ----------
Cash flows from financing activities:
Issuance of redeemable preferred stock... 1,000,000 1,000,000 236,858
Debt issuance costs...................... (572,139) (545,989) (93,176)
Borrowings under senior credit
agreement............................... 17,635,000 1,850,000 500,000
Issuance of subordinated debt............ 10,120,260 9,000,000 2,000,000
Principal payments on long-term
obligations............................. (1,064,950) (915,583) (1,202,091)
Series C Convertible Preferred Stock
dividends paid ......................... (1,825) -- --
Distribution to the Looney & Company
shareholder............................. (4,087,960) (3,994,000) --
Other.................................... 90,032 50,309 (2,717)
----------- ---------- ----------
Net cash provided by financing
activities......................... 23,118,418 6,444,737 1,438,874
----------- ---------- ----------
Increase in cash and cash equivalents..... 416,763 (20,605) 796,959
Cash and cash equivalents at beginning of
period................................... 20,605 20,605 437,368
----------- ---------- ----------
Cash and cash equivalents at end of
period................................... $ 437,368 $ -- $1,234,327
=========== ========== ==========
Supplemental cash flow information:
Cash paid for interest................... $ 1,272,761 $ 491,220 $ 976,879
Cash paid for income taxes............... $ 414,004 $ -- $ --
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-15
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY:

U.S. Legal Support, Inc. (the "Company") was founded in 1996 by Richard O.
Looney and GulfStar Investments, Ltd. to continue the business of Looney &
Company ("Looney") and create a leading provider of legal support services,
including court reporting, certified record retrieval, legal placement and
temporary staffing, to law firms, insurance providers and major corporations
throughout the United States. As described in Note 3 to these financial
statements, the merger with Looney was accounted for as a merger of entities
under common control. Accordingly, these financial statements should be read
in conjunction with the historical financial statements of Looney included
elsewhere in this prospectus. The Company operates in one business segment.
The Company, including Looney, has completed the acquisition of 13 companies.
The Company requires additional financing in order to implement its business
strategy. The Company intends to offer and sell 3,100,000 shares of common
stock, par value $.01 per share (the "Common Stock") at an estimated offering
price between $10 and $12 per share. Additionally, 1,578,066 shares of Common
Stock are expected to be issued upon the conversion of (i) 1,237,191 shares of
Series A Convertible Preferred Stock into 1,206,253 shares of Common Stock;
(ii) 2,046,667 shares of Series B Convertible Preferred Stock into 200,065
shares of Common Stock; and (iii) $2.2 million principal amount of Convertible
Subordinated Promissory Notes into 171,748 shares of Common Stock.

The Company's operations to date have been financed through the issuance of
redeemable convertible preferred stock, convertible debt, subordinated debt
and bank debt. The proceeds of the planned initial public offering would be
used to repay a portion of existing debt and redeem preferred stock. Certain
convertible debt and convertible preferred stock is expected to be converted
into common stock upon completion of the initial public offering. The failure
to raise additional equity in the planned initial public offering would
require restructuring of debt and equity securities. Additionally, without
additional equity financing, the Company would be unable to implement its
business strategy beyond 1998. Unless the Company were able to obtain
financing from other sources or negotiate an extension, the bank could
exercise its rights under the loan agreement giving it additional authority
over the Company's operations and the ability to call the outstanding balance
of the revolving line of credit and term loans (Note 7). Any impediment to the
Company's ability to obtain additional capital could have a material adverse
effect on the Company's business, financial position, results of operations
and cash flows. The proceeds from the planned initial public offering coupled
with borrowings under the proposed credit agreement are expected to be
sufficient to remove the immediate threat concerning the Company's ability to
continue as a going concern.

As of December 31, 1997, the Company had incurred approximately $3.3 million
of costs which pertained to a planned initial public offering and for
acquisitions contingent upon completion of such offering. The initial public
offering was delayed in excess of 90 days. Consequently, the Company was
unable to consummate or obtain extensions relating to the acquisitions.
Accordingly, these costs totalling approximately $3.3 million were recognized
as a special charge in the statement of income during the fourth quarter of
1997.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-16
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid debt instruments purchased
with original maturities of three months or less. The Company maintains cash
deposits in banks. The balance, at times, may exceed federally insured amounts
although management believes the risk of loss is minimal.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets.
Expenditures for improvements that extend the life of such assets are
capitalized, while maintenance and repairs are charged to expense as incurred.
When property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and any
resulting gain or loss is included in operations.

Intangibles

Intangibles consist primarily of goodwill, which is amortized on a straight
line basis over the estimated useful life of 10 to 40 years. Accumulated
amortization of goodwill was approximately $343,000 at December 31, 1997.
Amounts allocated to covenants not to compete in the amount of $105,000 are
amortized over the lives of the related contract. Accumulated amortization of
such covenants was approximately $4,000 at December 31, 1997. The Company
evaluates, for impairment, the carrying value of intangible assets by
comparing the carrying value to the anticipated future undiscounted cash flows
from the businesses whose acquisition gave rise to the asset. If the
intangible asset is impaired, the asset is written down to fair value.

Debt Issue Costs

Debt issue costs relating to long-term debt are included in other assets and
are amortized to interest expense over the scheduled maturity of the debt
utilizing the interest method.

Income Taxes

The Company utilizes the liability method of accounting for income taxes.
Deferred income taxes are recognized for the tax consequences of differences
in the tax bases of assets and liabilities and their financial reporting
amounts based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable income. A
valuation allowance is established, when necessary, to reduce deferred income
tax assets to the amount expected to be realized.

Revenue Recognition

The Company recognizes revenues from its court reporting and certified
record retrieval services upon delivery of prepared transcripts and as
documents or records are delivered to customers. With respect to the Company's
legal placement and staffing services, the Company recognizes revenue from its
permanent placement services when candidates accept job offers, and with
respect to its temporary placement services, as services are provided to the
Company's clients. An allowance is provided for anticipated bad debts, based
on historical experience and current estimates.

Concentration of Credit Risk

The Company grants credit, primarily to law firms, insurance companies, and
major corporations. The Company maintains allowances for potential credit
losses, and such losses have been within management's estimates.

F-17
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Earnings per Share Data

In 1997, the Company adopted Statement of Financial Accounting Standards No.
128, "Earnings Per Share," effective December 31, 1997.

Basic earnings per share data is computed using the weighted average number
of common shares outstanding during each period presented. Diluted earnings
per share data is computed using the weighted average number of common shares
outstanding plus potential common shares, including convertible debt,
convertible preferred stock, and dilutive stock options. Supplementary pro
forma earnings (loss) per share have been presented for the year ended
December 31, 1997 to reflect issuance of the number of shares that would have
been necessary to fund the cash portion of the $6,227,902 distribution in
January 1997 (at an assumed public offering price of $11.00 per share).

Basic and diluted loss per share amounts calculated in accordance with SFAS
No. 128 are presented below for the year ended December 31, 1997.

<TABLE>
<CAPTION>
BASIC DILUTED
------------ ------------
<S> <C> <C>
Basic and diluted net loss attributable to
common shareholders......................... $(4,805,857) $(4,805,857)
============ ============
Basic and diluted average common shares
outstanding(1).............................. 1,084,103 1,084,103
============ ============
</TABLE>
- --------
(1) All common stock equivalents are anti-dilutive therefore diluted net loss
attributable to common shareholders and diluted average common shares
outstanding are the same as basic loss attributable to common
shareholders and basic common shares outstanding.

Stock-Based Compensation

The Company uses the intrinsic value based method of accounting for stock-
based compensation. Under this method, the Company records no compensation
expense for stock options granted when the exercise price for options granted
is equal to the fair value of the Company's stock on the date of grant. The
Company has implemented the fair value disclosure requirements for stock based
compensation.

Financial Instruments

For all financial instruments, including cash and cash equivalents, accounts
receivable, accounts payable, and long-term debt, the carrying value is
considered to approximate fair value.

Use of Estimates

New Accounting Standards

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130") and Statement of Financial Accounting Standards No. 131,
"Disclosure about Segments of an Enterprise and Related Information" ("SFAS
131").

F-18
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

SFAS 130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. It requires (a) classification of the
components of other comprehensive income by their nature in a financial
statement and (b) the display of the accumulated balance of the other
comprehensive income separate from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. SFAS 130
is effective for years beginning after December 15, 1997.

In April 1998, Statement of Position (SOP) 98-5, "Accounting for the Costs
of Start-Up Activities" was issued. SOP 98-5 will require costs of start-up
activities, inclusive of organization costs, to be expensed as incurred. Upon
adoption, entities are required to write-off all capitalized start-up costs as
a cumulative effect of a change in accounting principle and is effective for
financial statements for years beginning after December 15, 1998. The adoption
of SOP 98-5 is not expected to have a material impact on the financial
position, results of operations or cash flows of the Company.

3. REORGANIZATION AND BUSINESS COMBINATIONS:

In a reorganization in January 1997, the Company received 100% of the
outstanding capital stock of Looney & Company ("Looney"), a Texas-based court
reporting and certified records retrieval company. The Company paid Richard
Looney approximately $4,088,000 in cash and issued 2,046,667 shares of the
Company's Series B Convertible Preferred Stock, $1.00 par value (the "Series B
Preferred Stock"). Looney has been deemed to be the accounting acquiror
because the two companies were under common control and prior to their
combination, the Company had no substantive operations. Therefore, the net
assets of Looney have been recorded at their historical cost basis. The
consideration paid for the net assets of Looney was recorded as a capital
distribution to Looney's shareholder.

In January 1997, the Company acquired all of the outstanding capital stock
of Klein, Bury and Associates, Inc. ("Klein Bury"), a Florida based court
reporting company. The purchase price consisted of approximately $3,850,000 in
cash; 106,625 shares of the Company's Common Stock; a $1,424,000 promissory
note payable over five years with interest at 10%; options to purchase 25,000
shares of the Company's Common Stock and 50% of amounts collected in respect
of accounts receivable over 120 days past due as of the closing date, up to a
maximum of $500,000. The acquisition was accounted for under the purchase
method of accounting. The results of operations of Klein Bury are included
from the date of the acquisition. The excess of the cost over the fair value
of the assets acquired less liabilities assumed attributed to goodwill was
approximately $5,912,000 and is being amortized over 40 years.

In May 1997, the Company acquired the assets of San Francisco Reporting
Service ("San Francisco Reporting"), a California-based court reporting
company. The purchase price consisted of approximately $545,000 in cash,
19,130 shares of the Company's Common Stock and 231,250 shares of the
Company's Series C Convertible Preferred Stock, $1.00 par value. The
acquisition was accounted for under the purchase method of accounting. The
results of operations of San Francisco Reporting are included from the date of
acquisition. The excess of the cost over the fair value of the assets acquired
less liabilities assumed attributed to goodwill was approximately $813,000 and
is being amortized over 40 years.

F-19
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In May 1997, the Company acquired the assets of G & G Court Reporters
("G&G"), a California-based court reporting company. The purchase price
consisted of approximately $1,268,000 in cash and two subordinated promissory
notes in the aggregate amount of $1,038,000, which were subsequently adjusted
to $996,000. The acquisition was accounted for under the purchase method of
accounting. The results of operations of G&G are included from the date of
acquisition. The excess of the cost over the fair value of the assets acquired
less liabilities assumed attributed to goodwill was approximately $2,146,000
and is being amortized over 40 years.

In August 1997, the Company acquired by merger Goren of Newport, Inc.,
Rapidtext, Inc. and Medtext, Inc. (the "Johnson Group"), three California-
based companies involved in court reporting, closed captioning, and medical
transcription. The purchase price consisted of approximately $983,000 in cash,
$246,000 in subordinated notes and 88,954 shares of the Company's Common
Stock. The acquisition has been accounted for under the purchase method of
accounting. The results of operations of the Johnson Group are included from
the date of acquisition. The excess of the cost over the fair value of the
assets acquired less liabilities assumed attributed to goodwill was
approximately $2,307,000 and is being amortized over 40 years.

In August 1997, the Company acquired the assets of Legal Enterprise, Inc.,
("Legal Enterprise") a California-based document retrieval and data management
company. The purchase price consisted of approximately $1,200,000 in cash,
$1,130,206 in subordinated notes and options to purchase 4,375 shares of
Company Common Stock. In March 1998, the Company paid $934,000 to the owners
of Legal Enterprise as additional consideration relating to the operations of
Legal Enterprise achieving a targeted operating income level. The acquisition
has been accounted for under the purchase method of accounting. The results of
operations of Legal Enterprise are included from the date of acquisition. The
excess of the cost over the fair value of the assets acquired less liabilities
assumed attributed to goodwill was approximately $1,508,000 and is being
amortized over 40 years.

In September 1997, the Company acquired the assets of Amicus One Legal
Support Services, Inc. ("Amicus"), a New York-based court reporting company.
The purchase price was approximately $1,886,000 in cash, $560,000 in a
subordinated note and 72,794 shares of the Company's common stock. On March
16, 1998, as a result of post closing adjustments made to the purchase price
paid by the Company for the assets of Amicus, the subordinated note of
$560,000 was modified, cancelled and reissued as a new subordinated note in
the principal amount of $574,000. The acquisition has been accounted for under
the purchase method of accounting. The results of operations of Amicus are
included from the date of acquisition. The excess of the cost over the fair
value of the assets acquired less liabilities assumed attributed to goodwill
was approximately $3,111,000 and is being amortized over 40 years.

In September 1997, the Company acquired the stock of Block Court Reporting
("Block"), a court reporting company serving Washington, D.C., Northern
Virginia, and Baltimore. The purchase price was approximately $600,000 in cash
and $600,000 in subordinated notes. The acquisition has been accounted for
under the purchase method of accounting. The results of operations of Block
are included from date of acquisition. The excess of the cost over the fair
value of the assets acquired less liabilities assumed attributed to goodwill
was approximately $1,140,000 and is being amortized over 40 years.

In September 1997, the Company acquired the stock of Burton House, Inc.
d.b.a. Ziskind, Greene, Watanabe and Nason ("Ziskind Greene"), a California-
based company providing permanent legal search services. The purchase price
was approximately $1,350,000 in cash and 99,265 shares of the Company's Common
Stock. The acquisition has been accounted for under the purchase method of
accounting. The results of operations of Ziskind Greene have been included
from the date of acquisition. The excess of the costs over the fair value of
the assets acquired less liabilities assumed attributed to goodwill was
approximately $2,830,000 and is being amortized over 40 years.

F-20
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In September 1997, the Company acquired the assets of Elaine P. Dine, Inc.,
("Elaine Dine"), a New York-based company providing permanent legal search and
temporary legal staffing services. The purchase price was approximately
$6,000,000 in cash, $2,000,000 in subordinated notes and 47,794 shares of the
Company's Common Stock and 25,735 options to purchase shares of Company Common
Stock. Additionally, the Company is obligated to pay a $597,000 deferred
purchase price adjustment. The acquisition was accounted for under the
purchase method of accounting. The results of operations of Elaine Dine have
been included from the date of acquisition. The excess of the cost over the
fair value of the assets acquired less liabilities assumed attributed to
goodwill was approximately $9,184,000 and is being amortized over 40 years.

The following unaudited pro forma summary for the year ended December 31,
1997 presents consolidated results of operations information as if the
aforementioned acquisitions had been completed at the beginning of 1997. These
results do not purport to be indicative of the results of operations of the
Company that might have occurred nor are they indicative of future results.

<TABLE>
<S> <C>
Revenues..................................................... $39,092,000
Operating income............................................. $163,000
Net loss attributable to common shareholders................. $(4,422,000)
Basic and diluted loss per common share...................... $(4.08)
</TABLE>

Adjustments made in arriving at the pro forma unaudited results of
operations include interest expense on acquisition debt, amortization of
goodwill, compensation reductions and related tax adjustments. No effect has
been given to synergistic benefits which may be realized from the acquisitions
or to the use of proceeds from the Company's proposed initial public offering
(the "Offering"). Operating Income and net loss attributable to common
shareholders include a special charge of $3,266,000 for costs relating a
delayed offering and acquisitions terminated as a result of such delay.

In addition, with respect to certain of the businesses acquired, the Company
may be obligated to pay cash or common stock in the form of an "earn-out"
payment. In most cases, the earn-out is payable in cash and common stock based
on increases in the businesses' future operating income in excess of target
levels. The "earn-out" payments will be recorded as additional goodwill. In
March 1998, approximately $934,000 of additional goodwill was recorded for
"earn-out" payments which were earned during the first quarter of 1998 related
to the Legal Enterprise Acquisition.

4. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER
USEFUL LIVES 31, 1997
------------ -----------
<S> <C> <C>
Leasehold improvements.......................... 5 years $163,764
Furniture, fixtures and equipment............... 5 to 7 years 2,235,576
-----------
2,399,340
Less accumulated depreciation................... (1,235,144)
-----------
$ 1,164,196
===========
</TABLE>

The Company has entered into various capital leases. The leases were
recorded upon their inception using the interest rate implicit in the lease
agreements. The capitalized cost of leased office equipment and related
accumulated depreciation was approximately $414,000 and $252,000,
respectively, at December 31, 1997.

F-21
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. ACCRUED LIABILITIES:

Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Accrued interest........................................... $ 162,896
Accrued delayed public offering and terminated acquisition
costs..................................................... 1,751,000
Deferred purchase price.................................... 597,000
Payroll and payroll taxes.................................. 568,524
Commissions/contract labor................................. 2,176,382
Stock options.............................................. 443,398
Other...................................................... 1,817,470
----------
$7,516,670
==========
</TABLE>

6. INCOME TAXES:

The benefit for income taxes consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Current...................................................... $ 264,876
Deferred..................................................... (420,751)
---------
$(155,875)
=========
</TABLE>

A reconciliation of the differences between income taxes computed at the U.S.
federal statutory rate of 34% and the Company's reported benefit for income
taxes is:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Income tax benefit at statutory rate........................ $(1,315,369)
State tax provision, net of federal income tax benefit...... (154,750)
Nondeductible amortization and other expenses............... 77,433
Valuation allowance on deferred tax assets.................. 1,236,811
-----------
$ (155,875)
===========
</TABLE>

The components of deferred income tax assets and liabilities were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Deferred tax assets:
Other assets.............................................. $ 1,379,657
Allowance for doubtful accounts........................... 193,908
Valuation allowance....................................... (1,236,811)
-----------
Deferred tax assets.................................... 336,754
-----------
Deferred tax liabilities:
Conversion from cash to accrual basis for tax reporting
purposes................................................. (204,578)
Property and equipment.................................... (18,388)
Intangibles............................................... (113,788)
-----------
Deferred tax liability................................. (336,754)
-----------
Net deferred income taxes.............................. $ --
===========
</TABLE>

The Company established a valuation allowance for certain of the deferred tax
assets since presently it is more likely than not that the deferred tax assets
will not be realized.

F-22
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. LONG-TERM DEBT:

Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Bank notes payable:
Revolving line of credit....................................... $ 3,635,000
Term loans..................................................... 13,970,833
Senior subordinated notes, interest at 12% payable quarterly,
principal due in three annual installments beginning January
2002 but must be repaid within two days of an initial public
offering or a change of control................................. 9,540,000
Subordinated Promissory Note, interest at 10% discounted to yield
an effective interest rate of 15%, quarterly principal payments
of $71,206 through February 1, 2002 but must be repaid within
two days of an initial public offering or a change of control... 1,210,496
Subordinated Promissory Notes, interest at rates ranging from 6%
to 7.5% payable beginning August 1997, discounted to yield an
effective interest rate of 15%, principal payments payable
beginning August 1998, maturing in 2002, principal must be paid,
or at the holders' option, converted into common stock at the
issuance price on the closing date of an initial public offering
or a change of control.......................................... 1,693,099
Convertible Subordinated Promissory Notes, interest at 6.375%
payable monthly, principal due in 2005, discounted to yield an
effective interest rate of 15% convertible at the holders'
option into common stock at conversion prices ranging from
$12.10 to $13.60, automatically converts into common stock on
the closing date of an initial public offering or a change of
control......................................................... 1,837,543
Subordinated Promissory Notes, interest at 6.375% payable
monthly, discounted to yield an effective interest rate of 15%,
principal due in 2005, principal must be repaid at the closing
date of an initial public offering or a change of control....... 2,000,000
Capital lease obligations........................................ 224,309
-----------
Total debt....................................................... 34,111,280
Less discount on debt(1)......................................... 1,853,001
-----------
Long term debt, net of discount.................................. 32,258,279
Less current maturities.......................................... 6,257,734
-----------
$26,000,545
===========
</TABLE>
- --------
(1) The debt discount is applicable to the various categories of long-term debt
as follows:

<TABLE>
<S> <C>
10% Subordinated Promissory Note.............................. $ 328,688
6% to 7.5% Subordinated Promissory Notes...................... 384,294
6.375% Convertible Subordinated Promissory Notes.............. 498,069
6.375% Subordinated Promissory Notes.......................... 641,950
----------
$1,853,001
==========
</TABLE>

Maturities of debt, excluding capital lease obligations of $224,309, are as
follows:

<TABLE>
<S> <C>
1998.......................................................... $ 6,257,734
1999.......................................................... 3,450,032
2000.......................................................... 9,595,865
2001.......................................................... 672,703
2002.......................................................... 3,396,633
Thereafter.................................................... 10,514,004
-----------
$33,886,971
===========
</TABLE>

F-23
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Revolving Credit and Term Loan Agreements

The Company's Bank Credit Agreement initially provided for a revolving line
of credit of $2,000,000, all of which had been fully utilized at December 31,
1997 and matured on July 10, 1998 (extended to September 30, 1998 as noted
below). The Bank Credit Agreement also provided for an acquisition line of
credit of $14,000,000, all of which had been fully utilized at December 31,
1997. The acquisition line of credit borrowings have been made under term
loans with maturity dates through May 2000. Borrowings under this agreement
bear interest at the base rate plus 0.75%, or LIBOR plus 2.5%, at the
Company's option. At December 31, 1997, the average interest rate under the
credit facility was 8.5%. Borrowings under the facility are collateralized by
substantially all the assets of the Company and the stock of the subsidiaries.
The Bank Credit Agreement contains various financial covenants including the
maintenance of certain financial ratios, restrictions on capital expenditures,
and a prohibition against the payment of dividends.

In October 1997, the Company amended the Bank Credit Agreement to increase
the revolving line of credit from $2,000,000 to $3,250,000 and further amended
the Agreement in December 1997 to increase the revolving line of credit to
$4,250,000. The additional borrowings of $2,250,000 were originally scheduled
to mature on February 15, 1998. During 1998, the Company repaid $1,000,000
under the revolving line of credit. Additionally, in April 1998, the Company
amended the Bank Credit Agreement to extend the maturity date until
September 30, 1998, and to defer all principal payments until June 30, 1998
and a portion of principal payments through September 30, 1998. If the Company
is unable to pay such amount, the bank has the ability to call the outstanding
balance of both the revolving line of credit and the term loans. The revolving
credit and term loans must be repaid within three days of the closing of an
initial public offering or a change of control. Also, the holders of the
Senior Subordinated Notes agreed to defer the receipt of interest payments in
the amount of $540,000 and $854,000 at December 31, 1997 and March 31, 1998,
respectively, until the earlier of September 30, 1998 or the completion of an
initial public offering.

In July, the Company entered into a New Credit Agreement which provides for
a $35.0 million revolving credit facility upon completion of the proposed
offering.

Senior Subordinated Notes

On January 17, 1997, the Company sold $9.0 million principal amount of
Senior Subordinated Notes and 1,000,000 shares of Series A Convertible
Preferred Stock to three investors (the "Investors") for an aggregate purchase
price of $10.0 million. The Company used the proceeds from the sale to finance
a portion of the purchase price for the acquisition of Looney and Klein Bury.
Mr. Robert Cresci, a director of the Company, is a Managing Partner of Pecks
Management Partners Ltd., which provides investment advisory services to each
of the investors. Pecks received a $35,000 structuring fee paid by the Company
in connection with the transaction. The Senior Subordinated Notes bear
interest at an annual interest rate of 12.0% and will be due and payable on
January 27, 2004, subject to mandatory prepayment two days following the
completion of the Offering. In addition, on February 26, 1998, the Investors
purchased an additional $2.0 million principal amount of Senior Subordinated
Notes (the "Additional Senior Subordinated Notes") and 151,405 shares of
Series A Convertible Preferred Stock. The Additional Senior Subordinated Notes
also bear interest at an annual rate of 12.0% and will be due and payable on
December 31, 1998, subject to mandatory prepayment two days following the
completion of the Offering. The Company is permitted to issue, at the
Investors' election, promissory notes in lieu of making cash interest
payments, which have the same interest rate and repayment terms as the
Company's Senior Subordinated Notes (the "Interest Notes"). The Company has
issued Interest Notes in the aggregate principal amount of $1,200,000 with
respect to interest owed on the Senior Subordinated Notes to the Investors
through June 30, 1998. The Interest Notes are also subject to mandatory
prepayment two days following the completion of the Offering. In connection
with the Interest Notes, the Investors received an additional 121,357 shares
of Series A Convertible Preferred Stock.

F-24
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. PREFERRED STOCK:

Series A Convertible Preferred Stock

Pursuant to the terms of the Articles of Incorporation, the Board of
Directors has authorized Preferred Stock consisting of 2,000,000 shares of
Series A Convertible Preferred Stock (the "Series A Preferred Stock"). As of
December 31, 1997, 1,000,000 shares of Series A Preferred Stock were issued
and outstanding. The Series A Preferred Stock (a) has a liquidation preference
of $1.00 per share, plus accrued but unpaid dividends and (b) entitles the
holder, concurrently with each dividend paid on the Common Stock, to dividends
in the same amount payable on the number of shares of Common Stock then
issuable on conversion of the Series A Preferred Stock. Holders of Series A
Preferred Stock vote together with the Common Stock on all matters submitted
to a vote of the shareholders, and each share of Series A Preferred Stock
entitles the holder to one vote for each share of Common Stock issuable on
conversion thereof. The Series A Preferred Stock ranks on a parity with the
Common Stock with respect to dividends and senior to Common Stock and the
Series B Preferred Stock described below as to distributions of assets upon
liquidation. Shares of Series A Preferred Stock may be converted into Common
Stock, at the option of the holder, at an initial conversion rate of 1.56
shares of Common Stock for each share of Series A Preferred Stock, subject to
adjustment. The Company may elect to convert all outstanding Series A
Preferred Stock into shares of Common Stock at the foregoing conversion rate,
at any time after the closing of an underwritten public offering of equity
securities of the Company resulting in gross proceeds of at least $15,000,000
(a "Qualifying Public Offering"), provided the $9,540,000 principal amount of
12% Senior Subordinated Notes issued by a subsidiary of the Company are no
longer outstanding. Under the terms of the Securities Purchase Agreement
pursuant to which the Series A Preferred Stock was issued, the holders have
the right to require the Company to redeem any or all shares of Series A
Preferred Stock upon the occurrence of a Change of Control (as defined in the
Agreement). The redemption price is payable in cash in an amount equal to the
Market Price (as defined) at the time notice of the Change of Control is
given, together with a premium in the maximum aggregate amount of $2,700,000.
If at any time after January 17, 2003, there is no Liquid Secondary Market (as
defined), the holders of the Series A Preferred Stock shall have the right to
require the Company to redeem any or all of the outstanding shares of Series A
Preferred Stock in three annual installments, at a redemption price equal to
the Fair Market Value (as defined) of the shares of Common Stock into which
the Series A Preferred Stock are then convertible, together with interest on
the unpaid balance at an annual rate of 12.0%. For the year ended December 31,
1997, the Company has accreted $1,093,000 toward the redemption value of the
Series A Preferred Stock. Subject to the rights of the holders of the Series A
Preferred Stock to convert their shares into Common Stock, the Company may
redeem the Series A Preferred Stock, in whole but not in part, at any time on
or after a Qualifying Public Offering, provided the Senior Subordinated Notes
are no longer outstanding. The redemption price for shares redeemed at the
option of the Company shall be $.001 for each share of Common Stock issuable
upon conversion of the Series A Preferred Stock so redeemed (subject to
adjustments). As part of the $2 million Senior Subordinated Notes issued in
February 1998 (see Note 7), the Company issued 151,405 shares of Series A
Convertible Preferred Stock to their investors.

Series B Preferred Stock

Pursuant to the terms of the Articles of Incorporation, the Board of
Directors has authorized Preferred Stock consisting of 2,500,000 shares of
Series B Convertible Preferred Stock (the "Series B Preferred Stock"). As of
December 31, 1997, 2,046,667 shares of Series B Preferred Stock were issued
and outstanding. The Series B Preferred Stock (a) has a liquidation preference
of $1.00 per share, (b) ranks junior to the Series A Preferred Stock with
respect to distributions of assets on liquidation and (c) is convertible into
Common Stock in the event of a Qualifying Public Offering at a conversion
price equal to 93% of the price at which shares of Common Stock are offered to
the public in the Qualifying Public Offering. Holders of Series B Preferred
Stock are not entitled to receive any dividends. Within five business days
after the receipt of notice from the Company that the Company has filed a
Registration Statement with the Securities and Exchange Commission (the
"Commission") related to a Qualifying Public Offering, the holder is required
to notify the Company if such holder elects to

F-25
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

cause the Company to redeem all or part of the Series B Preferred Stock for a
cash redemption price of $1.00 per share or to convert such shares into Common
Stock at the rate specified above. In the event the holder fails to give the
Company notice of its election, all conversion and redemption rights shall
immediately terminate. Any shares of Series B Preferred Stock not redeemed or
converted into Common Stock, must be redeemed by the Company quarterly, during
the 20 fiscal quarters following the quarter in which a Qualifying Public
Offering occurs. The Series B Preferred Stock does not entitle the holders to
vote on any matter submitted to the Company's shareholders, except as required
by law.

Series C Preferred Stock

The Board of Directors has authorized 231,250 shares of Series C Convertible
Preferred Stock (the "Series C Preferred Stock") which were issued and
outstanding as of December 31, 1997. The Series C Preferred Stock has a
liquidation preference of $1.00 per share, plus accrued and unpaid dividends.
The Series C Preferred Stock ranks senior to the Series A Preferred Stock and
the Common Stock with respect to dividends and distributions of assets upon
liquidation, and ranks senior to the Series B Preferred Stock with respect to
distributions of assets on liquidation. The Series C Preferred Stock carries
an annual dividend equal to $.06 per share, payable quarterly in respect of
any quarter in which aggregate net income before taxes, depreciation, and
amortization of the business represented by SFRS exceeds $160,000. Dividends
of $1,825 were paid on the Series C Preferred Stock in the year ended December
31, 1997. The Series C Preferred Stock is convertible into Common Stock upon
the occurrence of a Qualifying Public Offering, at a conversion rate equal to
the initial public offering price. Within 10 business days after the receipt
of notice from the Company that the Company has filed a Registration Statement
with the Commission related to a Qualifying Public Offering, the holder is
required to notify the Company if such holder elects to cause the Company to
redeem all or part of the Series C Preferred Stock for a cash redemption price
of $1.00 per share or to convert such shares into Common Stock at the rate
specified above. In the event the holder fails to give the Company notice of
its election, all conversion and redemption rights shall immediately
terminate. On or after May 15, 1998, any holder of Series C Preferred Stock
may require the Company to redeem all such holders of shares of Series C
Preferred Stock quarterly over the 16 fiscal quarters ended after notice of
such election is delivered to the Company. The Series C Preferred Stock does
not entitle the holders to vote on any matter submitted to the Company's
shareholders, except as required by law.

9. COMMITMENTS AND CONTINGENCIES:

Leases

The Company leases various office space under noncancelable operating leases
with remaining terms of up to four years. The Company also leases certain
office and computer equipment under operating leases. Rental expense
associated with these operating leases for the year ended December 31, 1997
was approximately $586,000.

The future minimum rental payments under noncancelable operating leases from
1997 through 2002 are as follows (in thousands):

<TABLE>
<S> <C>
1998........................................................... $ 802,617
1999........................................................... 726,259
2000........................................................... 680,736
2001........................................................... 365,615
2002........................................................... 143,652
Thereafter..................................................... 35,133
----------
$2,754,012
==========
</TABLE>

Independent Contractors

F-26
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

or state employment taxes with respect to these independent contractors.
Independent court reporters are responsible for acquiring and operating court
reporting equipment. The use of independent contractors as court reporters is
consistent with industry practice and allows the Company to better manage
operating costs. In the event the Company were required to treat these court
reporters as its employees, the Company could become responsible for the taxes
required to be withheld and could incur additional costs associated with
employee benefits and other employee costs.

Year 2000 Compliance. Many currently installed computer systems are not
capable of distinguishing 21st century dates from 20th century dates. As a
result, in less than two years, computer systems and software used by many
companies may need to be updated to comply with such "Year 2000" requirements.
Although the Company is currently implementing a new centralized accounting
and management information system that is Year 2000 compliant, it intends to
implement a Year 2000 program with respect to other computer systems to ensure
that all of its systems and applications will function properly beyond 1999.
The Company expects that implementation of its new systems and upgrade of
existing systems to address Year 2000 issues will be successfully completed on
a timely basis. However, there can be no assurance that such completion will
occur as planned. The Company does not expect to incur significant
expenditures to address Year 2000 compliance. The ability of third parties
with whom the Company transacts business to address adequately their Year 2000
compliance is beyond the Company's control. The failure of the Company or such
third parties to address adequately their respective Year 2000 compliance
could have a material adverse effect on the Company's business, results of
operations and financial condition.

Legal Proceedings

10. STOCK OPTION PLANS:

Prior Stock Option Plans

F-27
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1997 Stock Incentive Plan

The Company's 1997 Stock Incentive Plan provides for granting options to
eligible employees or directors of the Company and its subsidiaries of options
to purchase shares of Common Stock, which may be incentive stock options
within the meaning of Section 422(b) of the Internal Revenue Code or non-
qualified options. The 1997 Stock Incentive Plan is administered by the
Compensation Committee of the Board of Directors, which designates the
employees who will receive options, the type of options, the number of shares
of Common Stock subject to these options and their terms and conditions,
including their exercise price and vesting schedule. A total of 750,000 shares
of Common Stock have been reserved for issuance pursuant to options granted
under the 1997 Stock Incentive Plan. As of December 31, 1997 options to
purchase a total of 332,313 shares of Common Stock had been granted under the
1997 Stock Incentive Plan with exercise prices ranging from $10.26 to $16.32.
All options granted under the 1997 Stock Incentive Plan vest 20% annually, are
fully vested on the fifth anniversary of the date of grant and expire 10 years
after the date of grant. Subsequent to December 31, 1997, the Company granted
an additional 19,868 stock options under the 1997 Stock Incentive Plan with an
exercise price equal to the initial public offering price.

Stock Option Plan for Non-Employee Directors

The Company also has adopted the U.S. Legal Support, Inc. Stock Option Plan
for Non-Employee Directors (the "Directors' Stock Option Plan"). A total of
150,000 shares of Common Stock have been reserved for issuance under the
Directors' Stock Option Plan which provides for the grant of options to
purchase 15,625 shares of Common Stock, with an exercise price equal to the
fair market value on the date of grant, to each incumbent director and to each
person who becomes a director concurrently with his or her first election to
the Board. Options granted under the Directors' Stock Option Plan vest 20%
annually and are fully vested on the fifth anniversary of the date of grant.
Upon completion of the Offering, each director of the Company will be awarded
options to purchase 15,625 shares of Common Stock with an exercise price equal
to the per share price set forth on the cover page of this Prospectus.

The following is a summary of stock option activity for the year ended
December 31, 1997:

<TABLE>
<CAPTION>
# OF SHARES OF
UNDERLYING WEIGHTED AVERAGE
OPTIONS EXERCISE PRICES
-------------- ----------------
<S> <C> <C>
Outstanding at beginning of the year.......... -- --
Granted....................................... 369,496 $12.77
Exercised..................................... -- --
Forfeited..................................... -- --
Expired....................................... -- --
Outstanding at end of year.................... 369,496 $12.77
Exercisable at end of year.................... 1,250 $13.60
Weighted average fair value of options
granted...................................... $3.78
</TABLE>

The fair value of each stock option granted is estimated on the date of
grant using The Black-Scholes pricing model with the following assumptions for
grants during the year ended December 31, 1997: expected dividend yield of 0%;
risk-free interest rates of 6%; and weighted average expected life of five
years. The minimum value method has been applied, which excludes expected
volatility.

F-28
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Options outstanding as of December 31, 1997 are summarized below:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------------------------------
WGTD. AVG.
REMAINING WGTD. AVG. WGTD. AVG.
RANGE OF EXERCISE NUMBER LIFE EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING (IN YEARS) PRICE EXERCISABLE PRICE
----------------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$10.26 to $12.10 51,544 9 $10.74 -- --
$12.11 to $16.32 317,952 10 $13.10 1,250 $13.60
----------------- ------- --- ------ ----- ------
$10.26 to $16.32 369,496 10 $12.77 1,250 $13.60
</TABLE>

Had the compensation expense been recognized for the fair value of stock
options granted the Company's net loss and net loss per common share for the
year ended December 31, 1997 would have been as follows (in thousands except
per share data):

<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
----------- -----------
<S> <C> <C>
Net loss attributable to common
shareholders................................ $(4,805,857) $(4,901,544)
Net loss per common share.................... $ (4.43) $ (4.52)
</TABLE>

The pro forma effects of fair value accounting for option grants may not be
representative of the pro forma impact in future years.

Purchase Price Options

In connection with the acquisitions of Klein Bury, Legal Enterprise and
Elaine Dine, the Company granted non-compensatory stock options as partial
consideration. The fair value of the options granted was determined at the
date of acquisition and accounted for as part of the purchase price.
Additionally, options were granted to employees of Looney in connection with
the combination of Looney and compensation expense of approximately $20,000
was recognized.

Other Options outstanding as of December 31, 1997 are summarized below:

<TABLE>
<CAPTION>
OPTION OPTIONS OPTIONS
GRANTED PRICE EXERCISED OUTSTANDING
------- ------ --------- -----------
<S> <C> <C> <C>
65,210 $.016 7,800 57,410
25,000 $.160 -- 25,000
</TABLE>

11. RELATED PARTY TRANSACTIONS:

To finance the distribution to Richard Looney and the acquisition of Klein
Bury, the Company issued $9,000,000 principal amount of Senior Subordinated
Notes to three investors managed by Pecks in January 1997. Additionally, in
February 1998 the Company issued an additional $2,000,000 principal amount of
Senior Subordinated Notes to three investors managed by Pecks (Note 7). A
director of the Company serves as a Managing Partner of Pecks.

The GulfStar Group, Inc. ("GulfStar") has provided merger and acquisition
advisory services to the Company since its inception. A director of the
Company is a Managing Director of GulfStar. In October 1996, GulfStar
Investments, Ltd., an affiliate of GulfStar was issued 93,750 shares of Common
Stock at a fair value of $1,500 in exchange for services rendered in
connection with the organization of the Company and strategic planning. The
estimated fair value of the shares received by GulfStar was approximately
$60,000, or $.64 per share, based on a January 17, 1997 valuation which
considers the combination with Looney. Upon completion of the initial public
offering, such amount will be recorded as a simultaneous increase and decrease
to paid-in

F-29
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

capital. If the offering is not successful, such amount will be charged to
expense. GulfStar also received an investment banking fees aggregating
$475,000 for services in connection with the placement of the Senior
Subordinated Notes, the placement of the Series A Preferred Stock, the
negotiation of the Bank Credit Agreement and the acquisition of Looney and
Klein Bury in January 1997. Pursuant to the terms of a letter agreement dated
April 24, 1997 (the "Letter Agreement") between GulfStar and the Company,
GulfStar provided negotiation and other financial advisory services to the
Company in connection with the Company's evaluation of acquisition. During
1997, the fees payable to GulfStar under the Letter Agreement in connection
with such acquisitions were $280,000, of which $33,000 has been paid. On May
8, 1998, GulfStar and the Company entered into a Letter Agreement (the "May
Letter Agreement"), which supersedes, in their entirety, all previous
agreements between the Company and GulfStar, and pursuant to which GulfStar
will provide limited assistance to the Company in connection with the
negotiation of the new credit agreement with Heller. The Company has agreed,
upon successful completion of such financing, to pay GulfStar a fee equal to
1.0% of the principal amount of the senior debt facility arranged and to
reimburse GulfStar for its reasonable out-of-pocket expenses.

F-30
<PAGE>

U.S. LEGAL SUPPORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. SUPPLEMENTAL CASH FLOW INFORMATION:

The following represents supplemental noncash investing and financing
activities:

<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Common control exchange of shares between Looney and the Company
Net assets acquired in connection with reorganization.......... $ 207,763
Issuance of Series B Preferred Stock........................... 2,046,667
Acquisition of Klein Bury
Net assets acquired, net of cash............................... 510,521
Grant of stock options......................................... 12,000
Issuance of a note payable..................................... 1,424,113
Issuance of Common Stock....................................... 68,240
Acquisition of San Francisco Reporting
Net assets acquired, net of cash............................... 112,814
Issuance of Preferred Stock.................................... 231,250
Issuance of Common Stock....................................... 12,243
Acquisition of G&G
Net assets acquired, net of cash............................... 152,012
Issuance of notes payable...................................... 995,568
Acquisition of Legal Enterprise
Net assets acquired, net of cash............................... 625,707
Grant of stock options......................................... 59,500
Issuance of notes payable...................................... 1,140,500
Acquisition of Ziskind Greene
Net assets acquired, net of cash............................... 4,259
Issuance of Common Stock....................................... 1,350,000
Acquisition of Block
Net liabilities assumed, net of cash........................... (32,494)
Issuance of notes payable...................................... 600,000
Acquisition of Elaine Dine
Net assets acquired, net of cash............................... 286,000
Issuance of Common Stock....................................... 650,000
Grant of stock options......................................... 350,000
Issuance of notes payable...................................... 2,000,000
Deferred purchase price........................................ 500,000
Acquisition of Johnson Group
Net assets acquired, net of cash............................... 199,868
Issuance of Common Stock....................................... 1,211,046
Issuance of notes payable...................................... 245,760
Acquisition of Amicus One
Net assets acquired, net of cash............................... 363,029
Issuance of Common Stock....................................... 990,000
Issuance of a note payable..................................... 560,000
</TABLE>

13. STOCK SPLIT:

All share and per share data give effect to a 5-for-8 reverse stock split.

F-31
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of Looney & Company as of
December 31, 1995 and 1996, and the related statements of operations,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Looney & Company as of
December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Houston, Texas
September 5, 1997

F-32
<PAGE>

LOONEY & COMPANY

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
ASSETS ---------- ----------
<S> <C> <C>
Current assets:
Cash.................................................... $-- $20,605
Accounts receivable:
Trade, net of allowance of $142,581 and $223,331,
respectively.......................................... 2,095,032 1,307,330
Related parties........................................ 69,531 319,302
Prepaid expenses and other current assets............... 56,049 45,926
Deferred income taxes................................... -- 26,742
---------- ----------
Total current assets............................... 2,220,612 1,719,905
Property and equipment, net.............................. 590,101 426,296
Other assets............................................. 51,041 27,500
Deferred income taxes.................................... -- 18,500
---------- ----------
Total assets............................................. $2,861,754 $2,192,201
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable........................................ $452,125 $183,389
Accrued liabilities..................................... 897,265 1,140,163
Income taxes payable.................................... 123,303 --
Deferred income taxes................................... 15,188 --
Current maturities of long-term obligations............. 832,157 529,413
---------- ----------
Total current liabilities.......................... 2,320,038 1,852,965
Long-term obligations, net of current maturities......... 227,378 131,473
Deferred income taxes.................................... 122,274 --
Commitments and contingencies
Stockholder's equity:
Common stock, $1 par value, 100,000 shares authorized,
1,000 shares issued and outstanding.................... 1,000 1,000
Retained earnings....................................... 191,064 206,763
---------- ----------
Total stockholder's equity......................... 192,064 207,763
---------- ----------
Total liabilities and stockholder's equity............... $2,861,754 $2,192,201
========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-33
<PAGE>

LOONEY & COMPANY

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Revenues.................................... $8,362,920 $9,103,728 $7,667,539
Cost of services............................ 5,589,599 5,763,195 4,838,932
---------- ---------- ----------
Gross profit................................ 2,773,321 3,340,533 2,828,607
Selling, general and administrative
expenses................................... 3,042,999 1,970,310 2,351,669
Depreciation................................ 223,680 230,353 212,277
---------- ---------- ----------
Operating income (loss)..................... (493,358) 1,139,870 264,661
Interest expense............................ 184,414 229,969 238,251
---------- ---------- ----------
Income (loss) before income taxes........... (677,772) 909,901 26,410
Income tax (benefit) expense................ (182,979) 327,177 10,711
---------- ---------- ----------
Net income (loss)........................... $ (494,793) $ 582,724 $ 15,699
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-34
<PAGE>

LOONEY & COMPANY

STATEMENT OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDER'S
STOCK EARNINGS EQUITY
------ -------- -------------
<S> <C> <C> <C>
Balance as of January 1, 1994.................... $1,000 $103,133 $104,133
Net loss......................................... -- (494,793) (494,793)
------ -------- --------
Balance as of December 31, 1994.................. 1,000 (391,660) (390,660)
Net income....................................... -- 582,724 582,724
------ -------- --------
Balance as of December 31, 1995.................. 1,000 191,064 192,064
Net income....................................... -- 15,699 15,699
------ -------- --------
Balance as of December 31, 1996.................. $1,000 $206,763 $207,763
====== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-35
<PAGE>

LOONEY & COMPANY

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1995 1996
---------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................. $(494,793) $582,724 $15,699
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation................................. 223,680 230,353 212,277
Provision for doubtful accounts.............. 28,566 82,773 80,750
Deferred income taxes........................ 40,263 75,272 (182,704)
Loss on disposal of equipment................ 47,345 -- --
Changes in operating assets and liabilities:
Accounts receivable......................... (161,513) (256,538) 706,952
Other receivables, related parties.......... -- 34,407 (249,771)
Prepaid expenses and other current assets... (12,116) (1,199) 10,123
Accounts payable and accrued liabilities.... 275,578 (305,706) 76,138
Income taxes payable........................ -- 123,303 (123,303)
Other assets................................ 148,305 3,010 23,541
---------- -------- --------
Net cash provided by operating
activities.............................. 95,315 568,399 569,702
---------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment............ (182,331) (7,654) (51,028)
---------- -------- --------
Net cash used in investing activities ... (182,331) (7,654) (51,028)
---------- -------- --------
Cash flows from financing activities:
Proceeds from borrowings...................... 972,517 -- --
Principal payments on long-term obligations... (1,013,769) (491,404) (396,093)
Other......................................... 128,268 (69,341) (101,976)
---------- -------- --------
Net cash provided by (used in) financing
activities ............................. 87,016 (560,745) (498,069)
---------- -------- --------
Increase in cash............................... -- -- 20,605
Cash and cash equivalents at beginning of
period........................................ -- -- --
---------- -------- --------
Cash and cash equivalents at end of period..... $ -- $ -- $ 20,605
========== ======== ========
Cash paid for interest......................... $252,906 $229,969 $238,251
Cash paid for income taxes..................... -- 120,000 297,590
Non cash investing and financing activities:
Equipment acquired under capital leases....... 123,126 44,504 13,051
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-36
<PAGE>

LOONEY & COMPANY

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Looney & Company (the "Company"), a Texas corporation, was founded in 1988
and operates in six Texas offices, providing litigation support services
primarily to insurance companies, law firms and large corporations. The
Company's primary business is court reporting, the transcription of spoken
legal testimony into the written word, the retrieval of records used in
conjunction with the investigation and litigation of legal proceedings, and
copying services. Looney is the predecessor to U.S. Legal Support, Inc.
("USLS"). The interim financial statements for the nine months ended September
30, 1996 should be read in conjunction with the interim financial statements
of USLS included elsewhere in this prospectus.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The financial statements for the nine months ended September 30, 1996,
reflect all adjustments that are, in the opinion of management, necessary or a
fair presentation of the results for the period. Such adjustments are
considered to be of a normal recurring nature unless otherwise identified.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash

Cash is maintained in two banks. The balances, at times, may exceed
federally insured amounts although management believes that risk of loss is
minimal.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets.
Expenditures for improvements that extend the life of such assets are
capitalized while maintenance and repairs are charged to expense as incurred.
When property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and any
resulting gain or loss is included in the statement of operations.

Revenue Recognition

The Company recognizes revenue as the documents or records are delivered to
its customers. An allowance is provided for anticipated bad debts based
primarily on historical experience and current estimates.

Concentration of Credit Risk

The Company grants credit to various companies primarily in the legal and
insurance industries which may be affected by economic or other external
conditions. The Company maintains allowances for potential credit losses, and
such losses have been within management's expectations.

Income Taxes

F-37
<PAGE>

LOONEY & COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. RECEIVABLES, RELATED PARTIES:

Receivables, related parties, consisted of the following at December 31:

<TABLE>
<CAPTION>
1995 1996
------- --------
<S> <C> <C>
Shareholder............................................. $69,531 --
U.S. Legal Support, Inc................................. -- $258,988
Klein, Bury & Associates................................ -- 60,314
------- --------
$69,531 $319,302
======= ========
</TABLE>

In 1996, the Company paid, on behalf of Klein, Bury & Associates ("Klein
Bury") and U.S. Legal Support, Inc. ("USLS"), costs incurred related to the
January 1997 acquisitions of the Company and Klein Bury by USLS (see Note 9).

4. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
USEFUL LIVES 1995 1996
------------ ---------- ----------
<S> <C> <C> <C>
Furniture, fixtures and
equipment.............. 5 to 7 years $1,304,264 $1,367,342
Vehicles................ 5 years 56,640 21,782
---------- ----------
1,360,904 1,389,124
Less accumulated
depreciation........... (770,803) (962,828)
---------- ----------
$ 590,101 $ 426,296
========== ==========
</TABLE>

The Company has entered into various capital leases. The leases were
recorded upon their inception using the interest rate implicit in the lease
agreements. The capitalized cost of leased office equipment was approximately
$581,000 and $594,000 at December 31, 1995 and 1996, respectively.

F-38
<PAGE>

LOONEY & COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. LONG-TERM OBLIGATIONS:

Long-term obligations consisted of the following at December 31:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
--------- --------
<S> <C> <C>
Note payable to a bank under line of credit, providing
borrowings up to $1,500,000, with interest at the prime
rate plus 2.25%, collateralized by substantially all
assets of the Company not otherwise pledged............. $657,422 $438,853
Obligations under capital leases of certain equipment,
due in monthly installments through July 2000, with
implicit interest rates ranging from 8.0% to 20%........ 319,024 218,533
Notes payable to bank, due in monthly installments,
including interest at 7% to 9.25%, through January 1997,
collateralized by certain equipment..................... 83,089 3,500
--------- --------
1,059,535 660,886
Less current maturities.................................. (832,157) (529,413)
--------- --------
$227,378 $131,473
========= ========
</TABLE>

At December 31, 1996, future minimum payments under long-term obligations
were as follows:

<TABLE>
<CAPTION>
NOTE CAPITAL
YEAR ENDED PAYABLE LEASES
---------- -------- --------
<S> <C> <C>
1997................................................... $442,353 $109,516
1998................................................... -- 83,560
1999................................................... -- 59,179
2000................................................... -- 9,093
-------- --------
442,353 261,348
Less amounts representing interest..................... -- 42,815
-------- --------
$442,353 $218,533
======== ========
</TABLE>

6. INCOME TAXES:

The provision for income taxes consisted of the following for the years ended
December 31:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1995 1996
--------- -------- --------
<S> <C> <C> <C>
Current........................................... $(223,242) $251,905 $193,415
Deferred.......................................... 40,263 75,272 (182,704)
--------- -------- --------
$(182,979) $327,177 $ 10,711
========= ======== ========
</TABLE>

F-39
<PAGE>

LOONEY & COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

A reconciliation of the differences between income taxes computed at the
U.S. federal statutory rate of 34% and the Company's reported provision
(benefit) for income taxes follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1995 1996
--------- -------- -------
<S> <C> <C> <C>
Income tax provision (benefit) at statutory
rate............................................ $(230,442) $309,366 $8,979
State tax provision, net of federal income tax
benefit......................................... 20,333 27,297 792
Nondeductible expenses and other................. 27,130 (9,486) 940
--------- -------- -------
$(182,979) $327,177 $10,711
========= ======== =======
</TABLE>

The components of deferred income tax assets and liabilities were as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
--------- -------
<S> <C> <C>
Deferred tax assets:
Accrued liabilities....................................... $54,331 $84,884
Allowance for doubtful accounts........................... 52,755 82,632
--------- -------
Deferred tax assets..................................... 107,086 167,516
Deferred tax liabilities:
Conversion from cash to accrual basis for tax reporting
purposes................................................. 244,548 122,274
--------- -------
Net deferred tax asset (liability)...................... $(137,462) $45,242
========= =======
</TABLE>

7. ACCRUED LIABILITIES:

Accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- ----------
<S> <C> <C>
Customer overpayments...................................... $602,361 $ 519,711
Payroll.................................................... 154,904 160,452
Litigation settlements and other........................... 140,000 100,000
Ownership interests........................................ -- 360,000
-------- ----------
$897,265 $1,140,163
======== ==========
</TABLE>

The Company recorded a charge of $360,000 in the fourth quarter of 1996 for
the fair value of ownership interests granted to certain employees by the
Company's shareholder. The obligation was satisfied in January 1997 in
connection with the acquisition of the Company's stock (Note 9).

Customer overpayments arise primarily when customers make duplicate payments
or payments in excess of billed amounts. The customers have generally denied
the Company's refund attempts, which the management of the Company believes is
due to the significant volume and relatively small amount of each individual
billing. Legal counsel has advised the Company that any claims by third
parties for overpayments are subject to statute-of-limitation laws and related
interpretations, which vary by state, and the ultimate resolution of any such
third-party claims, if made, is not certain.

In 1997, the Company paid all outstanding amounts owed under litigation
settlements.

F-40
<PAGE>

LOONEY & COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

8. COMMITMENTS AND CONTINGENCIES:

Independent Contractors

The Company, like most court reporting firms, provides court reporting
services through the use of independent contractors, who are not employees of
the Company. The Company does not pay or withhold federal or state employment
taxes with respect to these independent contractors. Independent court
reporters are responsible for acquiring and operating their court reporting
equipment. The use of independent contractors as court reporters is consistent
with industry practice and allows the Company to control costs. In the event
the Company were required to treat these court reporters as its employees, the
Company could become responsible for the taxes required to be withheld and
could incur additional costs associated with employee benefits and other
employee costs.

Operating Leases

Aggregate minimum rental commitments under noncancelable operating leases
with lease terms in excess of one year are as follows:

Rent expense recorded in 1995 and 1996 totaled approximately $295,000 and
$260,000, respectively. Certain rental agreements provide for additional rent
based on the lessors' operating expenses.

Legal Proceedings

The Company is involved in certain lawsuits and claims arising in the normal
course of business. In the opinion of management, uninsured losses, if any,
resulting from the ultimate resolution of these matters will not have a
material adverse effect on the Company's financial position, results of
operations or cash flows.

9. FORMATION OF NEW COMPANY:

In October 1996, the Company's shareholder, along with an investment firm,
formed U.S. Legal Support, Inc. ("USLS") to create a nationwide a leading
provider of legal support and staffing services to law firms, insurance
providers and major corporations. In January 1997, the Company's stock was
exchanged for stock of USLS as part of a common control combination (see Note
1 of the U.S. Legal Support, Inc. financial statements).

F-41
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of Klein, Bury & Associates,
Inc. as of September 30, 1995 and December 31, 1996, and the related
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Klein, Bury & Associates,
Inc. as of September 30, 1995 and December 31, 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Houston, Texas
August 15, 1997

F-42
<PAGE>

KLEIN, BURY & ASSOCIATES, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1996
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash.............................................. $ -- $315,437
Accounts receivable, net of allowance of $216,619
and $235,823, respectively....................... 1,908,325 2,120,265
---------- ----------
Total current assets............................ 1,908,325 2,435,702
Property and equipment, net......................... 61,278 30,411
Other assets........................................ 4,405 4,405
---------- ----------
Total assets........................................ $1,974,008 $2,470,518
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable.................................. $ 843,577 $1,167,787
Accrued liabilities............................... 4,296 4,638
Income taxes payable.............................. -- 140,482
Deferred income taxes............................. 425,407 358,474
---------- ----------
Total current liabilities....................... 1,273,280 1,671,381
Deferred income taxes............................... 25,605 26,507
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value, 500 shares authorized,
issued and outstanding........................... 500 500
Additional paid-in capital........................ 30,000 30,000
Retained earnings................................. 644,623 742,130
---------- ----------
Total stockholders' equity...................... 675,123 772,630
---------- ----------
Total liabilities and stockholders' equity.......... $1,974,008 $2,470,518
========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-43
<PAGE>

KLEIN, BURY & ASSOCIATES, INC.

STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1995 1996
------------- ------------
<S> <C> <C>
Revenues............................................. $7,302,368 $8,525,386
Cost of services..................................... 4,837,854 5,586,241
---------- ----------
Gross profit......................................... 2,464,514 2,939,145
Selling, general and administrative expenses......... 2,263,112 2,779,564
Depreciation......................................... 16,343 15,367
---------- ----------
Income before income taxes........................... 185,059 144,214
Income taxes......................................... 76,901 55,065
---------- ----------
Net income......................................... $ 108,158 $ 89,149
========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-44
<PAGE>

KLEIN, BURY & ASSOCIATES, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------ ---------- -------- -------------
<S> <C> <C> <C> <C>
October 1, 1994...................... $500 $ -- $536,465 $536,965
Capital contributions................ -- 30,000 -- 30,000
Net income........................... -- -- 108,158 108,158
---- ------- -------- --------
September 30, 1995................... 500 30,000 644,623 675,123
Net income, three months ended
December 31, 1995................... -- -- 8,358 8,358
---- ------- -------- --------
December 31, 1995.................... 500 30,000 652,981 683,481
Net income........................... -- -- 89,149 89,149
---- ------- -------- --------
December 31, 1996.................... $500 $30,000 $742,130 $772,630
==== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-45
<PAGE>

KLEIN, BURY & ASSOCIATES, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1995 1996
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................... $108,158 $89,149
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation...................................... 16,343 15,367
Provision for doubtful accounts................... 86,801 64,366
Deferred tax expense.............................. 76,901 92,528
Changes in operating assets and liabilities:
Accounts receivable.............................. (453,406) (428,690)
Accounts payable................................. 12,451 244,132
Accrued liabilities.............................. 141,336 (63,740)
-------- --------
Net cash provided by operating activities..... (11,416) 13,112
-------- --------
Cash flows from investing activities:
Capital expenditures............................... -- (2,261)
-------- --------
Net cash used in investing activities......... -- (2,261)
-------- --------
Cash flows from financing activities:
Capital contribution............................... 30,000 --
Cash overdraft..................................... (18,616) --
-------- --------
Net cash provided by financing activities..... 11,384 --
-------- --------
Increase (decrease) in cash......................... (32) 10,851
Cash and cash equivalents at beginning of year...... 32 304,586
-------- --------
Cash and cash equivalents at end of year............ $ -- $315,437
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-46
<PAGE>

KLEIN, BURY & ASSOCIATES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Klein, Bury & Associates, Inc., (the "Company"), a Florida corporation, was
founded in 1977 as a court reporting business based in Miami, Florida, with
four additional offices in Florida. The Company provides general court
reporting services, the transcription of spoken legal testimony into the
written word, and has particular expertise in handling cases involving medical
malpractice.

The Company changed its fiscal year end for reporting purposes from
September 30 to December 31. The results of operations for the three months
ended December 31, 1996 have been included in the statement of stockholders'
equity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates

Cash

Cash is maintained at one bank. The balances, at times, may exceed federally
insured amounts, although management believes that risk of loss is minimal.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets.
Expenditures for improvements that extend the life of such assets are
capitalized while maintenance and repairs are charged to expense as incurred.
When property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and any
resulting gain or loss is included in the statement of income.

Revenue Recognition

The Company recognizes revenue as the documents or records are delivered to
its customers. An allowance is provided for anticipated bad debts, based
primarily on historical experience and current estimates.

Concentration of Credit Risk

Income Taxes

F-47
<PAGE>

KLEIN, BURY & ASSOCIATES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
USEFUL LIVES 1995 1996
------------ ------------- ------------
<S> <C> <C> <C>
Leasehold improvements.......... 5 years $26,085 $26,085
Furniture, fixtures and
equipment...................... 5 to 7 years 116,393 118,654
------- --------
142,478 144,739
Less accumulated depreciation... (81,200) (114,328)
------- --------
$61,278 $30,411
======= ========
</TABLE>

4. INCOME TAXES:

The provision for income taxes consisted of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1996
------------- ------------
<S> <C> <C>
Current........................................ $ -- $(37,463)
Deferred....................................... 76,901 92,528
------- --------
$76,901 $ 55,065
======= ========
</TABLE>

A reconciliation of the differences between income taxes computed at the
U.S. federal statutory rate of 34% and the Company's reported provision for
income taxes follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1996
------------- ------------
<S> <C> <C>
Income tax provision at statutory rate....... $62,920 $49,033
State tax provision, net of federal income
tax benefit................................. 6,847 5,336
Nondeductible expenses and other............. 7,134 696
------- -------
$76,901 $55,065
======= =======
</TABLE>

The components of deferred income tax assets and liabilities were as
follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1996
------------- ------------
<S> <C> <C>
Deferred tax liabilities:
Conversion from accrual to cash basis........ $425,407 $358,474
Property and equipment....................... 25,605 26,507
-------- --------
$451,012 $384,981
======== ========
</TABLE>

5. RELATED-PARTY TRANSACTIONS:

During the years ended September 30, 1995 and December 31, 1996, the Company
incurred rent expense of approximately $41,000 and $45,600, respectively, for
office space leased from a partnership in which an interest is held by the
Company's president and majority shareholder.

F-48
<PAGE>

KLEIN, BURY & ASSOCIATES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. COMMITMENTS AND CONTINGENCIES:

Independent Contractors

Operating Leases

Aggregate minimum rental commitments under noncancelable operating leases
with lease terms in excess of one year are as follows:

Rent expense for the years ended September 30, 1995 and December 31, 1996
totaled approximately $240,000 and $276,000, respectively. Certain rental
agreements provide for additional rent based on the lessors' operating
expenses.

Legal Proceedings

7. SALE OF THE COMPANY:

In January 1997, the Company's stock was acquired by U.S. Legal Support,
Inc.

F-49
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of G & G Court Reporters (a
Sole Proprietorship) as of December 31, 1995 and 1996, and the related
statements of income, owner's equity and cash flows for the years then ended.
These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of G & G Court Reporters as
of December 31, 1995 and 1996, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

Houston, Texas
September 4, 1997

F-50
<PAGE>

G & G COURT REPORTERS

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
ASSETS -------- --------
<S> <C> <C>
Current assets:
Accounts receivable, net of allowance of $15,500 in 1995
and 1996.................................................. $281,925 $251,103
-------- --------
Total current assets..................................... 281,925 251,103
Property and equipment, net.................................. 1,693 1,403
-------- --------
Total assets................................................. $283,618 $252,506
======== ========
<CAPTION>
LIABILITIES AND OWNER'S EQUITY
<S> <C> <C>
Current liabilities:
Cash overdraft............................................. $ 23,193 $ 709
Accounts payable........................................... 4,218 3,163
Accrued liabilities........................................ 4,451 11,754
-------- --------
Total current liabilities................................ 31,862 15,626
Commitments and contingencies
Owner's equity............................................... 251,756 236,880
-------- --------
Total liabilities and owner's equity......................... $283,618 $252,506
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-51
<PAGE>

G & G COURT REPORTERS

STATEMENT OF INCOME

<TABLE>
<CAPTION>
SIX
YEAR ENDED DECEMBER MONTHS JANUARY 1,
31, ENDED THROUGH
--------------------- JUNE 30, MAY 19,
1995 1996 1996 1997
---------- ---------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues............................ $1,544,379 $1,517,377 $745,412 $543,282
Cost of services.................... 813,646 837,774 412,850 321,716
---------- ---------- -------- --------
Gross profit........................ 730,733 679,603 332,562 221,566
Selling, general and administrative
expenses........................... 281,725 286,861 138,900 98,112
Depreciation........................ 318 290 145 145
---------- ---------- -------- --------
Net income.......................... $ 448,690 $ 392,452 $193,517 $123,309
========== ========== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-52
<PAGE>

G & G COURT REPORTERS

STATEMENT OF OWNER'S EQUITY

<TABLE>
<S> <C>
Balance, January 1, 1995.............................................. $265,153
Distributions......................................................... (462,087)
Net income............................................................ 448,690
--------
Balance, December 31, 1995............................................ 251,756
Distributions......................................................... (407,328)
Net income............................................................ 392,452
--------
Balance, December 31, 1996............................................ 236,880
Distributions (unaudited)............................................. (199,594)
Net income (unaudited)................................................ 123,309
--------
Balance, May 19, 1997 (unaudited)..................................... $160,595
========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-53
<PAGE>

G & G COURT REPORTERS

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
SIX JANUARY
YEAR ENDED MONTHS 1,
DECEMBER 31, ENDED THROUGH
------------------ JUNE 30, MAY 19,
1995 1996 1996 1997
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $448,690 $392,452 $193,517 $123,309
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation......................... 318 290 145 145
Changes in operating assets and
liabilities:
Accounts receivable................. 22,479 30,822 73,191 29,636
Accounts payable and accrued
liabilities........................ 4,203 6,248 4,619 45,795
-------- -------- -------- --------
Net cash provided by operating
activities...................... 475,690 429,812 271,472 198,885
-------- -------- -------- --------
Cash flows from financing activities:
Cash overdraft........................ (13,603) (22,484) 9,670 709
Distributions......................... (462,087) (407,328) (281,142) (199,594)
-------- -------- -------- --------
Net cash used in financing
activities...................... (475,690) (429,812) (271,472) (198,885)
-------- -------- -------- --------
Change in cash......................... -- -- -- --
Cash and cash equivalents at beginning
of period............................. -- -- -- --
-------- -------- -------- --------
Cash and cash equivalents at end of
period................................ $ -- $ -- $ -- $ --
======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-54
<PAGE>

G & G COURT REPORTERS

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

G & G Court Reporters, a Sole Proprietorship (the "Company"), operates in
California, providing litigation support services primarily for insurance
companies, law firms and large corporations. The Company's primary business is
court reporting, the transcription of spoken legal testimony into the written
word.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The unaudited financial statements for the periods ended June 30, 1996 and
May 19, 1997 reflect all adjustments that are, in the opinion of management,
necessary for a fair presentation of the results for the periods. Such
adjustments are considered to be of a normal recurring nature unless otherwise
identified.

Use of Estimates

Cash

Cash is maintained primarily in one bank. The balances, at times, may exceed
federally insured amounts, although management believes that risk of loss is
minimal.

Property and Equipment

Property and equipment is recorded at cost and depreciated on the straight-
line basis over the estimated useful lives of the assets. Expenditures for
improvements that extend the life of such assets are capitalized while
maintenance and repairs are charged to expense as incurred. When property and
equipment is retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the related accounts and any resulting gain or
loss is included in the statements of income.

Income Taxes

The Company is organized as a sole proprietorship. No provision for federal
income taxes is provided in these financial statements because the Company's
income is included in the owner's separate income tax return.

Revenue Recognition

Concentration of Credit Risk

F-55
<PAGE>

G & G COURT REPORTERS

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
USEFUL LIVES 1995 1996
------------ ------- -------
<S> <C> <C> <C>
Furniture, fixtures and equipment................ 5 to 7 years $55,700 $51,181
Less accumulated depreciation.................... (54,007) (49,778)
------- -------
$ 1,693 $ 1,403
======= =======
</TABLE>

4. COMMITMENTS AND CONTINGENCIES:

Independent Contractors

Operating Leases

Rent expense totalled approximately $59,000 and $56,000 for the years ended
December 31, 1995 and 1996, respectively. The Company's office lease expired
in June 1997. The Company entered a new office lease in June 1997 expiring
July 2002 with annual rent of approximately $44,000.

Legal Proceedings

5. SALE OF THE BUSINESS:

On May 19, 1997, certain of the Company's net assets were sold to U.S. Legal
Support, Inc.

F-56
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of San Francisco Reporting
Service (a California Partnership) as of December 31, 1996 and May 14, 1997,
and the related statements of income, partners' capital and cash flows for the
year ended December 31, 1996 and the period from January 1, 1997 through May
14, 1997. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of San Francisco Reporting
Service as of December 31, 1996 and May 14, 1997, and the results of its
operations and its cash flows for the year ended December 31, 1996 and the
period from January 1, 1997 through May 14, 1997 in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Houston, Texas
September 19, 1997

F-57
<PAGE>

SAN FRANCISCO REPORTING SERVICE

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31, MAY 14,
1996 1997
------------ --------
ASSETS
<S> <C> <C>
Current assets:
Cash.................................................... $ -- $19,309
Accounts receivable, net of allowance of $4,000 at 1996
and 1997............................................... 112,772 197,543
Prepaid expenses and other current assets............... 5,296 8,762
-------- --------
Total current assets.................................. 118,068 225,614
Property and equipment, net............................... 42,939 38,222
-------- --------
Total assets.............................................. $161,007 $263,836
======== ========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
<S> <C> <C>
Current liabilities:
Note payable to bank.................................... $21,195 $63,425
Accounts payable........................................ 65,703 144,166
Due to related parties.................................. 11,000 --
Cash overdraft.......................................... 28,709 --
Current maturities of capital lease obligation.......... 2,477 2,477
-------- --------
Total current liabilities............................. 129,084 210,068
Capital lease obligation.................................. 3,580 2,586
Commitments and contingencies
Partners' capital......................................... 28,343 51,182
-------- --------
Total liabilities and partners' capital................... $161,007 $263,836
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-58
<PAGE>

SAN FRANCISCO REPORTING SERVICE

STATEMENT OF INCOME

<TABLE>
<CAPTION>
SIX MONTHS PERIOD
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 30, MAY 14,
1996 1996 1997
------------ ----------- --------
(UNAUDITED)
<S> <C> <C> <C>
Revenues.................................... $1,139,538 $586,754 $467,424
Cost of services............................ 745,336 406,321 289,842
---------- -------- --------
Gross profit................................ 394,202 180,433 177,582
Selling, general and administrative
expenses................................... 356,284 168,696 141,682
Depreciation................................ 11,800 5,900 4,717
---------- -------- --------
Operating income.......................... 26,118 5,837 31,183
Interest expense............................ 4,993 3,571 2,344
---------- -------- --------
Net income................................ $ 21,125 $ 2,266 $ 28,839
========== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-59
<PAGE>

SAN FRANCISCO REPORTING SERVICE

STATEMENT OF PARTNERS' CAPITAL

<TABLE>
<S> <C>
Balance as of January 1, 1996.......................................... $26,218
Distributions.......................................................... (19,000)
Net income............................................................. 21,125
-------
Balance as of December 31, 1996........................................ 28,343
Distributions.......................................................... (6,000)
Net income............................................................. 28,839
-------
Balance as of May 14, 1997............................................. $51,182
=======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-60
<PAGE>

SAN FRANCISCO REPORTING SERVICE

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, ENDED JUNE MAY 14,
1996 30, 1996 1997
------------ ---------- -------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $21,125 $2,266 $28,839
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation................................ 11,800 5,900 4,717
Provision for doubtful accounts............. 2,000 -- --
Changes in operating assets and liabilities:
Accounts receivable........................ 63,171 19,543 (84,771)
Prepaid expenses and other current assets.. (176) (133) (3,466)
Accounts payable........................... (47,687) (12,903) 67,463
------- ------- -------
Net cash provided by operating
activities............................. 50,233 14,673 12,782
------- ------- -------
Cash flows from investing activities:
Capital expenditures......................... (18,573) (18,573) --
------- ------- -------
Net cash used in investing activities... (18,573) (18,573) --
------- ------- -------
Cash flows from financing activities:
Change in note payable to bank............... (39,412) 15,002 42,230
Payments on capital lease obligation......... (1,660) (536) (994)
Distributions to partners.................... (19,000) (14,000) (6,000)
Cash overdraft............................... 28,412 3,434 (28,709)
------- ------- -------
Net cash provided by (used in) financing
activities............................. (31,660) 3,900 6,527
------- ------- -------
Increase in cash.............................. -- -- 19,309
Cash and cash equivalents at beginning of
period....................................... -- -- --
------- ------- -------
Cash and cash equivalents at end of period.... $ -- $ -- $19,309
======= ======= =======
Cash paid for interest........................ $ 4,993 $3,571 $ 2,344
======= ======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-61
<PAGE>

SAN FRANCISCO REPORTING SERVICE

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

San Francisco Reporting Service (the "Company"), a California partnership,
operates in California, providing litigation support services primarily for
insurance companies, law firms and large corporations. The Company's primary
business is court reporting, the transcription of spoken legal testimony into
the written word. An additional component of the Company's litigation support
services is the retrieval of records used in conjunction with the
investigation and litigation of legal proceedings. The Company also provides
copying services. On May 14, 1997, certain of the Company's net assets were
sold to U.S. Legal Support, Inc.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The financial statements for the six month period ended June 30, 1996,
reflect all adjustments that are, in the opinion of management, necessary for
a fair presentation of the results for the periods. Such adjustments are
considered to be of a normal recurring nature unless otherwise identified.

Use of Estimates

Cash

Cash is maintained in one bank. The balances, at times, may exceed federally
insured amounts although management believes the risk of loss is minimal.

Property and Equipment

Property and equipment is recorded at cost and depreciated on the straight-
line basis over the estimated useful lives of the assets. Expenditures for
improvements that extend the life of such assets are capitalized, while
maintenance and repairs are charged to expense as incurred. When property and
equipment is retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the related accounts and any resulting gain or
loss is included in the statement of operations.

Revenue Recognition

Concentration of Credit Risk

Income Taxes

No provision for federal income taxes is provided in these financial
statements, because the Company's income or loss is included in the partners'
separate income tax returns.

F-62
<PAGE>

SAN FRANCISCO REPORTING SERVICE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MAY 14,
USEFUL LIVES 1996 1997
------------ ------------ -------
<S> <C> <C> <C>
Furniture, fixtures and equipment.... 5 to 7 years $60,603 $60,603
Less accumulated depreciation........ (17,664) (22,381)
------- -------
$42,939 $38,222
======= =======
</TABLE>

4. NOTE PAYABLE TO BANK:

At December 31, 1996, the note payable to bank represented amounts borrowed
under a $75,000 revolving line of credit agreement with interest at 3.75%
above the bank's prime rate (8.25% at December 31, 1996), maturing in December
1997. The note was guaranteed by the partners. The note was repaid in May
1997.

5. CAPITAL LEASE OBLIGATION:

In 1996, the Company acquired office equipment for $7,717 financed by a
long-term capital lease. Future minimum lease payments under the capital lease
are as follows:

<TABLE>
<S> <C>
May 15, 1997 through December 31, 1997............................ $1,818
1998.............................................................. 3,116
1999.............................................................. 779
------
5,713
Less: Amount representing interest................................ (650)
------
Present value of net minimum capital lease payments............... 5,063
Less: Current portion............................................. (2,477)
------
Long-term portion................................................. $2,586
======
</TABLE>

6. COMMITMENTS AND CONTINGENCIES:

Independent Contractors

F-63
<PAGE>

SAN FRANCISCO REPORTING SERVICE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Operating Leases

Aggregate minimum rental commitments under noncancelable operating leases
and negotiated renewal options with lease terms in excess of one year as of
December 31, 1996, are as follows:
<TABLE>
<S> <C>
May 15 through December 31, 1997................................. $17,043
1998............................................................. 36,156
1999............................................................. 37,326
2000............................................................. 28,602
--------
$119,127
========
</TABLE>

Rent expense totaled approximately $30,000 and $14,000 for the year ended
December 31, 1996 and for the period from January 1, 1997 through May 14,
1997, respectively.

7. RELATED PARTY TRANSACTIONS:

For the year ended December 31, 1996, the Company paid the partners
approximately $95,000 for court reporting services. The balance due to the
partners for court reporting services at December 31, 1996, of approximately
$11,000 was included in accounts payable. There were no payments due to
partners at May 14, 1997.

F-64
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of Legal Enterprise, Inc. as
of December 31, 1995 and 1996, and the related statements of income,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Legal Enterprise, Inc. as
of December 31, 1995 and 1996, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.

Coopers & Lybrand L.L.P.

Houston, Texas
September 5, 1997

F-65
<PAGE>

LEGAL ENTERPRISE, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash........................................... $ -- $27,958 $47,368
Accounts receivable, net of allowance of
$9,640, $20,960 and $18,086, respectively..... 339,414 513,365 528,039
Prepaid expenses and other current assets...... 11,808 15,536 13,860
-------- -------- --------
Total current assets......................... 351,222 556,859 589,267
Property and equipment, net...................... 161,386 193,559 252,301
Other assets..................................... 13,492 14,351 14,376
-------- -------- --------
Total assets..................................... $526,100 $764,769 $855,944
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $48,494 $68,193 $50,102
Accrued liabilities............................ 20,959 43,084 56,606
Notes payable--shareholder..................... 354,270 411,315 345,319
-------- -------- --------
Total current liabilities.................... 423,723 522,592 452,027
Notes payable--shareholder....................... -- -- 38,615
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value, 75,000 shares
authorized, 2,000 shares issued and
outstanding................................... 2,000 2,000 2,000
Paid-in-capital................................ 48,000 48,000 48,000
Retained earnings.............................. 52,377 192,177 315,302
-------- -------- --------
Total stockholders' equity................... 102,377 242,177 365,302
-------- -------- --------
Total liabilities and stockholders' equity....... $526,100 $764,769 $855,944
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-66
<PAGE>

LEGAL ENTERPRISE, INC.

STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS ENDED JUNE
31, 30,
--------------------- ---------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.......................... $2,756,466 $3,706,782 $1,718,985 $2,231,106
Cost of services.................. 1,785,906 2,292,138 1,076,707 1,508,737
---------- ---------- ---------- ----------
Gross profit...................... 970,560 1,414,644 642,278 722,369
Selling, general and
administrative expenses.......... 830,261 1,206,578 554,495 559,412
Depreciation...................... 39,826 40,579 16,487 25,000
---------- ---------- ---------- ----------
Operating income.............. 100,473 167,487 71,296 137,957
Interest expense.................. 10,767 27,687 14,888 14,832
---------- ---------- ---------- ----------
Net income.................... $ 89,706 $ 139,800 $ 56,408 $ 123,125
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-67
<PAGE>

LEGAL ENTERPRISE, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
PAID- TOTAL
COMMON IN- RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------ ------- -------- -------------
<S> <C> <C> <C> <C>
Balance as of January 1, 1994.......... $2,000 $48,000 $(37,329) $12,671
Net income............................. -- -- 89,706 89,706
------ ------- -------- --------
Balance as of December 31, 1995........ 2,000 48,000 52,377 102,377
Net income............................. -- -- 139,800 139,800
------ ------- -------- --------
Balance as of December 31, 1996........ 2,000 48,000 192,177 242,177
Net income (unaudited)................. -- -- 123,125 123,125
------ ------- -------- --------
Balance as of June 30, 1997
(unaudited)........................... $2,000 $48,000 $315,302 $365,302
====== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-68
<PAGE>

LEGAL ENTERPRISE, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS ENDED JUNE
DECEMBER 31, 30,
-------------------- ------------------
1995 1996 1996 1997
--------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income......................... $89,706 $139,800 $56,408 $123,125
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation..................... 39,826 40,579 16,487 25,000
Provision for doubtful accounts.. -- 11,320 11,320 (2,874)
Changes in operating assets and
liabilities:
Accounts receivable............ (166,197) (185,271) (93,382) (11,800)
Prepaid expenses and other
current assets................ (915) (3,728) (3,750) 1,676
Accounts payable and accrued
liabilities................... (4,460) 82,935 65,148 2,667
Other assets................... (13,392) (859) -- (25)
--------- --------- -------- --------
Net cash provided by (used
in) operating activities.... (55,432) 84,776 52,231 137,769
--------- --------- -------- --------
Cash flows from investing activities:
Capital expenditures............... (64,904) (72,752) (22,700) (83,742)
--------- --------- -------- --------
Net cash used in investing
activities.................. (64,904) (72,752) (22,700) (83,742)
--------- --------- -------- --------
Cash flows from financing activities:
Principal payments on notes
payable--shareholder.............. -- (62,037) (43,326) (81,002)
Proceeds from notes payable--
shareholder....................... 95,733 95,000 -- 46,385
Other.............................. 17,029 (17,029) 13,795 --
--------- --------- -------- --------
Net cash provided by (used
in) financing activities.... 112,762 15,934 (29,531) (34,617)
--------- --------- -------- --------
Increase (decrease) in cash.......... (7,574) 27,958 -- 19,410
Cash and cash equivalents at
beginning of period................. 7,574 -- -- 27,958
--------- --------- -------- --------
Cash and cash equivalents at end of
period.............................. $ -- $ 27,958 $ -- $ 47,368
========= ========= ======== ========
Cash paid for interest............... $10,767 $3,605 $2,847 $7,596
========= ========= ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-69
<PAGE>

LEGAL ENTERPRISE, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Legal Enterprise, Inc. (the "Company"), a California corporation, operates
in California offices, providing litigation support services primarily for
insurance companies, law firms and large corporations. The Company's primary
business is the retrieval of records used in conjunction with the
investigation and litigation of legal proceedings. The Company also provides
copying services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The financial statements for the six month periods ended June 30, 1996 and
1997 reflect all adjustments that are, in the opinion of management, necessary
for a fair presentation of the results for the periods. Such adjustments are
considered to be of a normal recurring nature unless otherwise identified.

Use of Estimates

Cash

Cash is maintained in one bank. The balances, at times, may exceed federally
insured amounts although management believes the risk of loss is minimal.

Property and Equipment

Revenue Recognition

Concentration of Credit Risk

Income Taxes

The Company is an S corporation under the Internal Revenue Code and thus for
federal tax purposes is not considered to be a tax paying entity but instead
taxes are paid at the shareholder level. The provision for income taxes
consists of California state income taxes.

F-70
<PAGE>

LEGAL ENTERPRISE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
USEFUL LIVES 1995 1996
------------ -------- --------
<S> <C> <C> <C>
Furniture, fixtures and equipment.............. 5 to 7 years $218,213 $283,592
Less accumulated depreciation.................. (56,827) (90,033)
-------- --------
$161,386 $193,559
======== ========
</TABLE>

4. NOTES PAYABLE--SHAREHOLDER:

At December 31, 1996, the note payable--shareholder is due on demand. The
interest rate on the loan is prime rate plus 1%.

In May 1997, the Company obtained an additional loan from a shareholder in
the amount of $46,385 related to the purchase of certain equipment which is
pledged as collateral for the loan. The loan bears interest at 9.5% and is
payable in monthly principal and interest installments to May 2002.

5. COMMITMENTS AND CONTINGENCIES:

Operating Leases

Aggregate minimum rental commitments under noncancelable operating leases
with lease terms in excess of one year are as follows:

Rent expense totaled approximately $100,000 for the years ended December 31,
1995 and 1996. Certain rental agreements provide for additional rent based on
the lessors' operating expenses.

6. EMPLOYEE BENEFITS:

The Company has adopted a contributory profit sharing plan pursuant to
Internal Revenue Code Section 401(k) covering substantially all employees.
Each year the Company determines, at its discretion, the amount of matching
contributions. Contributions charged to operations was $7,327 for the year
ended December 31, 1996. There were no contributions charged to operations for
the year ended December 31, 1995.

7. SALE OF THE BUSINESS:

On August 28, 1997, certain of the Company's net assets were sold to U.S.
Legal Support, Inc. Summary financial information pertaining to the Company's
operations from January 1, 1997 through the acquisition date is as follows:

<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Revenues............................................................ $3,050,086
Gross profit........................................................ 985,178
Operating income.................................................... 200,399
Income before income taxes.......................................... 180,426
</TABLE>

F-71
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of Elaine P. Dine, Inc. as of
March 31, 1996 and 1997, and the related statements of income, changes in
stockholder's equity and cash flows for the years then ended. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Elaine P. Dine, Inc. as of
March 31, 1996 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

Coopers & Lybrand L.L.P.

Houston, Texas
August 29, 1997

F-72
<PAGE>

ELAINE P. DINE, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31,
------------------- JUNE 30,
1996 1997 1997
-------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.................... $245,394 $336,321 $125,648
Accounts receivable.......................... 295,907 1,227,258 1,075,126
Prepaid expenses and other current assets.... 5,893 -- --
-------- ---------- ----------
Total current assets....................... 547,194 1,563,579 1,200,774
Property and equipment, net.................... 125,821 123,044 112,195
Other assets................................... 302 74,803 263,083
-------- ---------- ----------
Total assets................................... $673,317 $1,761,426 $1,576,052
======== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable............................. $165,383 $529,871 $550,846
Accrued liabilities.......................... 45,037 158,059 96,921
-------- ---------- ----------
Total current liabilities.................. 210,420 687,930 647,767
Commitments and contingencies
Stockholder's equity
Capital stock, no par value; 11,612 shares
authorized issued and outstanding........... 13,112 13,112 13,112
Retained earnings............................ 449,785 1,060,384 915,173
-------- ---------- ----------
Total stockholder's equity................. 462,897 1,073,496 928,285
-------- ---------- ----------
Total liabilities and stockholder's equity..... $673,317 $1,761,426 $1,576,052
======== ========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-73
<PAGE>

ELAINE P. DINE, INC.

STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS ENDED MONTHS ENDED JUNE
MARCH 31, 30,
--------------------- -------------------
1996 1997 1996 1997
---------- ---------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues............................ $3,503,580 $4,657,760 $694,650 $1,182,334
Cost of services.................... 2,030,058 2,640,374 357,959 635,942
---------- ---------- -------- ----------
Gross profit........................ 1,473,522 2,017,386 336,691 546,392
Selling, general and administrative
expenses........................... 1,210,636 1,120,540 153,380 210,923
Depreciation........................ 52,183 26,461 10,628 10,849
---------- ---------- -------- ----------
Income before income taxes.......... 210,703 870,385 172,683 324,620
State income taxes.................. 22,621 96,563 18,539 33,089
---------- ---------- -------- ----------
Net income...................... $ 188,082 $ 773,822 $154,144 $ 291,531
========== ========== ======== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-74
<PAGE>

ELAINE P. DINE, INC.

STATEMENT OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
TOTAL
CAPITAL RETAINED STOCKHOLDER'S
STOCK EARNINGS EQUITY
------- --------- -------------
<S> <C> <C> <C>
Balance on April 1, 1995...................... $13,112 $458,534 $471,646
Distributions to stockholder.................. -- (196,831) (196,831)
Net income.................................... -- 188,082 188,082
------- --------- ---------
Balance on March 31, 1996..................... 13,112 449,785 462,897
Distributions to stockholder.................. -- (163,223) (163,223)
Net income.................................... -- 773,822 773,822
------- --------- ---------
Balance on March 31, 1997..................... 13,112 1,060,384 1,073,496
Distributions to stockholder (unaudited)...... -- (436,742) (436,742)
Net income (unaudited)........................ -- 291,531 291,531
------- --------- ---------
Balance on June 30, 1997 (unaudited).......... $13,112 $915,173 $928,285
======= ========= =========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-75
<PAGE>

ELAINE P. DINE, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS ENDED MONTHS ENDED JUNE
MARCH 31, 30,
-------------------- --------------------
1996 1997 1996 1997
--------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income....................... $188,082 $773,822 $154,144 $291,531
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation................... 52,183 26,461 10,628 10,849
Change in operating assets and
liabilities:
Accounts receivable.......... 189,229 (931,351) 14,105 152,132
Other assets................. (5,195) (73,768) (73,468) (188,280)
Accounts payable............. 2,864 364,488 (165,383) 20,975
Accrued liabilities.......... 14,018 113,022 (28,180) (61,138)
--------- --------- --------- ---------
Net cash provided by (used
in) operating activities.. 441,181 272,674 (88,154) 226,069
Cash flows from investing
activities:
Capital expenditures............. (1,758) (18,524) (6,367) --
--------- --------- --------- ---------
Net cash used in investing
activities................ (1,758) (18,524) (6,367) --
--------- --------- --------- ---------
Cash flows from financing
activities:
Cash overdraft................... 20,385
Distributions to stockholder..... (196,831) (163,223) (171,258) (436,742)
--------- --------- --------- ---------
Net cash used in financing
activities................ (196,831) (163,223) (150,873) (436,742)
--------- --------- --------- ---------
Increase (decrease) in cash and
cash equivalents.................. 242,592 90,927 (245,394) (210,673)
Cash and cash equivalents at the
beginning of period............... 2,802 245,394 245,394 336,321
--------- --------- --------- ---------
Cash and cash equivalents at the
end of the period................. $245,394 $336,321 $ -- $125,648
========= ========= ========= =========
Cash paid for income taxes......... $ 26,860 $ 26,470 $ 6,615 $ 8,306
========= ========= ========= =========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-76
<PAGE>

ELAINE P. DINE, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Elaine P. Dine, Inc. (the "Company"), a New York corporation, founded in
1983, provides litigation recruitment services primarily to law firms and
large corporations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The unaudited financial statements for the periods ended June 30, 1996 and
1997 reflect all adjustments that are in the opinion of management, necessary
for a fair presentation of the results for the periods. Such adjustments are
considered to be of a normal recurring nature unless otherwise identified.

Use of Estimates

Cash and Cash Equivalents

Cash is maintained in one bank. The balance, at times, may exceed federally
insured amounts although management believes the risk of loss is minimal. Cash
equivalents are short-term highly liquid investments with maturities of 90
days or less.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets. Art work
which is included in property and equipment is not depreciated. Expenditures
for improvements that extend the life of such assets are capitalized, while
maintenance and repairs are charged to expense as incurred. When property and
equipment is retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the related accounts and any resulting gain or
loss is included in operations.

Revenue Recognition

The Company records revenue when candidates accept a job offer. An allowance
is provided for bad debts, based primarily on historical experience and
current estimates.

Concentration of Credit Risk

The Company grants credit to primarily law firms and large corporations
which may be affected by economic or other external conditions. The Company
maintains allowances for potential credit losses and such losses have been
within management's expectations.

Income Taxes

The Company is an S corporation under Internal Revenue Code and thus for
federal tax purposes is not considered to be a tax paying entity. Income taxes
are paid at the shareholder level. Section 7519 of the Internal Revenue Code
requires prepayment of taxes if a company elects to pay taxes for a period
other than the required taxable calendar year. As the Company has elected not
to pay taxes based on a calendar year, it has deposited $74,201 for related
prepayments as of March 31, 1997. No such deposits were made as of March 31,
1996.

Deferred state income taxes are provided for the accumulated temporary
differences in the bases of assets and liabilities for financial reporting and
income tax purposes using enacted tax rates and laws in effect in the years in
which the differences are expected to reverse.

F-77
<PAGE>

ELAINE P. DINE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Employee Benefit Plan

The Company has adopted a contributory profit sharing plan pursuant to
Internal Revenue Code Section 401(k) covering substantially all employees.
Each year the Company determines, at its discretion, the amount of matching
contributions. Contributions charged to operations for the years ended March
31, 1996 and 1997 were $5,253 and $6,494, respectively.

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
MARCH 31,
------------------
USEFUL LIVES 1996 1997
------------ -------- --------
<S> <C> <C> <C>
Furniture and fixtures......................... 5 to 7 years $289,076 $293,531
Art............................................ 46,925 52,085
Office equipment............................... 5 to 7 years 107,549 121,619
Leasehold improvements......................... 5 years 531,436 531,436
-------- --------
974,986 998,671
Less accumulated depreciation.................. (849,165) (875,627)
-------- --------
$125,821 $123,044
======== ========
</TABLE>

4. INCOME TAXES:

The provision for income taxes consisted of New York state income taxes as
follows:

<TABLE>
<CAPTION>
MARCH 31,
----------------
1996 1997
------- -------
<S> <C> <C>
Current........................................................ $28,514 $31,058
Deferred....................................................... (5,893) 65,505
------- -------
$22,621 $96,563
======= =======
</TABLE>

Temporary differences arise primarily from the conversion from accrual to
cash basis of accounting and depreciation.

5. COMMITMENTS AND CONTINGENCIES:

Operating Leases

At March 31, 1997, aggregate minimum rental commitments under noncancelable
operating leases with lease terms in excess of one year are as follows:

6. SALE OF THE BUSINESS:

On September 17, 1997, certain of the Company's net assets were sold to U.S.
Legal Support, Inc. Summary financial information pertaining to the Company's
operations from January 1, 1997 through the acquisition date is as follows:

<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Revenues................................... $4,553,763
Gross profit............................... 2,510,436
Operating income........................... 1,057,269
Income before income taxes................. 1,064,258
</TABLE>

F-78
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of Burton House, Inc., d.b.a.
Ziskind, Greene, Watanabe, & Nason, as of December 31, 1995 and 1996, and the
related statements of operations, stockholder's deficit and cash flows for the
years then ended. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Burton House, Inc., d.b.a.
Ziskind, Greene, Watanabe & Nason, as of December 31, 1995 and 1996 and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Houston, Texas
September 5, 1997

F-79
<PAGE>

BURTON HOUSE, INC., D.B.A. ZISKIND, GREENE, WATANABE, & NASON

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash......................................... $1,936 $22,901 $116,514
Accounts receivable, net of allowance of $0,
$27,500 and $27,500, respectively........... 92,000 18,750 240,792
Deferred income taxes........................ 16,170 3,941 2,730
Prepaid expenses and other current assets.... 800 800 800
-------- -------- --------
Total current assets....................... 110,906 46,392 360,836
Other assets................................... 9,360 9,735 9,735
-------- -------- --------
Total assets................................... $120,266 $56,127 $370,571
======== ======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable............................. $ 49,125 $19,698 $ 38,948
Accrued liabilities.......................... 111,973 89,354 209,644
Income taxes payable......................... -- 1,712 62,548
-------- -------- --------
Total current liabilities.................. 161,098 110,764 311,140
Note payable to bank........................... 100,000 100,000 100,000
Commitments and contingencies
Stockholder's deficit:
Common stock, no par value, 1,000,000 shares
authorized, 8,500 shares issued and
outstanding................................. 18,493 18,493 18,493
Accumulated deficit............................ (159,325) (173,130) (59,062)
-------- -------- --------
Total stockholder's deficit................ (140,832) (154,637) (40,569)
-------- -------- --------
Total liabilities and stockholder's deficit.... $120,266 $56,127 $370,571
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-80
<PAGE>

BURTON HOUSE, INC., D.B.A. ZISKIND, GREENE, WATANABE, & NASON

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
---------------------- ---------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues........................ $1,442,257 $1,841,309 $1,026,686 $1,178,643
Cost of services................ 964,069 1,125,329 654,674 636,005
---------- ---------- ---------- ----------
Gross profit.................... 478,188 715,980 372,012 542,638
Selling, general and
administrative expenses........ 588,039 704,785 348,282 357,393
---------- ---------- ---------- ----------
Operating income (loss)..... (109,851) 11,195 23,730 185,245
Interest expense................ 7,644 10,259 5,438 7,419
---------- ---------- ---------- ----------
Income (loss) before income
taxes.......................... (117,495) 936 18,292 177,826
Income tax expense (benefit).... (23,644) 14,741 7,317 63,758
---------- ---------- ---------- ----------
Net income (loss)........... $ (93,851) $ (13,805) $ 10,975 $ 114,068
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-81
<PAGE>

BURTON HOUSE, INC., D.B.A. ZISKIND, GREENE, WATANABE, & NASON

STATEMENT OF STOCKHOLDER'S DEFICIT

<TABLE>
<CAPTION>
TOTAL
COMMON STOCKHOLDER'S
STOCK DEFICIT DEFICIT
------- -------- -------------
<S> <C> <C> <C>
Balance as of January 1, 1995................... $18,493 $(65,474) $(46,981)
Net loss........................................ -- (93,851) (93,851)
------- -------- --------
Balance as of December 31, 1995................. 18,493 (159,325) (140,832)
Net loss........................................ -- (13,805) (13,805)
------- -------- --------
Balance as of December 31, 1996................. 18,493 (173,130) (154,637)
Net income (unaudited).......................... -- 114,068 114,068
------- -------- --------
Balance as of June 30, 1997 (unaudited)......... $18,493 $(59,062) $(40,569)
======= ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-82
<PAGE>

BURTON HOUSE, INC., D.B.A. ZISKIND, GREENE, WATANABE, & NASON

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------ -----------------
1995 1996 1996 1997
-------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................... $(93,851) $(13,805) $10,975 $114,068
Adjustments to reconcile net income to
net cash provided by operating
activities:
Provision for doubtful accounts...... -- 27,500 -- --
Changes in operating assets and
liabilities:
Accounts receivable................ 122,162 45,750 (50,000) (222,042)
Deferred income taxes.............. (16,170) 12,229 -- 1,211
Income taxes payable............... (9,340) 1,712 -- 60,836
Prepaid expenses and other current
assets............................ -- (375) -- --
Accounts payable and accrued
liabilities....................... (101,407) (52,046) 46,030 139,540
-------- -------- ------- --------
Net cash provided by (used in)
operating activities............ (98,606) 20,965 7,005 93,613
Cash flows from investing activities..... -- -- -- --
Cash flows from financing activities:
Proceeds from note payable............. 100,000 -- -- --
-------- -------- ------- --------
Increase in cash......................... 1,394 20,965 7,005 93,613
Cash at beginning of period.............. 542 1,936 1,936 22,901
-------- -------- ------- --------
Cash at end of period.................... $ 1,936 $ 22,901 $ 8,941 $116,514
======== ======== ======= ========
Cash paid for interest................... $ 7,644 $ 10,259 $ 5,438 $ 7,419
======== ======== ======= ========
Cash paid for taxes...................... -- $ 800 $ 800 $ 8,957
======== ======== ======= ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-83
<PAGE>

BURTON HOUSE, INC., D.B.A. ZISKIND, GREENE, WATANABE, & NASON

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Burton House, Inc., d.b.a. Ziskind, Greene, Watanabe, & Nason (the
"Company"), a California corporation, was founded in 1982 and operates in
California, providing placement services primarily for law firms and
corporations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The unaudited financial statements for six months ended June 30, 1996 and
1997 reflect all adjustments that, in the opinion of management, are necessary
for a fair presentation of the results for the periods. Such adjustments are
considered to be of a normal recurring nature unless otherwise identified.

Use of Estimates

Cash

Cash is maintained in one bank. The balance, at times, may exceed federally
insured amounts although management believes the risk of loss is minimal.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets which was 5
years. Expenditures for improvements that extend the life of such assets are
capitalized while maintenance and repairs are charged to expense as incurred.
When property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and any
resulting gain or loss is included in operations. All property and equipment
is fully depreciated.

Revenue Recognition

The Company recognizes revenue when candidates accept a job offer. An
allowance is provided for anticipated bad debts, based primarily on historical
experience and current estimates.

Concentration of Credit Risk

The Company grants credit primarily to law firms and major corporations
which may be affected by economic or other external conditions. The Company
maintains allowances for potential credit losses, and such losses have been
within management's expectations.

Federal Income Taxes

Deferred income taxes are provided for the accumulated temporary differences
in the bases of assets and liabilities for financial reporting and income tax
purposes using enacted tax rates and laws in effect in the years in which the
differences are expected to reverse. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.

F-84
<PAGE>

BURTON HOUSE, INC., D.B.A. ZISKIND, GREENE, WATANABE, & NASON

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
USEFUL LIVES 1995 1996
------------ -------- --------
<S> <C> <C> <C>
Furniture and fixtures......................... 5 years $47,429 $47,429
Office equipment............................... 5 years 33,734 34,234
Leasehold improvements......................... 5 years 7,576 7,576
-------- --------
88,739 89,239
Less accumulated depreciation.................. (88,739) (89,239)
-------- --------
$ -- $ --
======== ========
</TABLE>

4. ACCRUED LIABILITIES:

Accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1996
-------- -------
<S> <C> <C>
Commissions................................................... $ 89,075 $10,313
Compensation--stockholder..................................... 22,898 79,041
-------- -------
$111,973 $89,354
======== =======
</TABLE>

5. NOTE PAYABLE TO BANK:

The note payable to a bank under a line of credit provides borrowings up to
$100,000 with interest at the prime rate plus 1.50%, collateralized by the
assets of the Company. The line of credit has no set maturity date. Based on
the terms of the agreement, the principal balance of the line of credit must
be fully repaid in twenty-four equal consecutive monthly installments,
together with accrued monthly interest and any other charges, beginning
approximately 30 days after the bank terminates the Company's right to obtain
loans under the existing agreement. Until terminated, the Company is required
only to pay interest.

F-85
<PAGE>

BURTON HOUSE, INC., D.B.A. ZISKIND, GREENE, WATANABE, & NASON

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. INCOME TAXES:

The significant components of the Company's deferred tax assets and
liabilities were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1995 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Allowance for bad debts...................................... $ -- $ 9,625
Accounts payable............................................. 17,194 6,894
Accrued liabilities.......................................... 31,176 3,610
------- -------
Total deferred tax assets.................................. 48,370 20,129
------- -------
Deferred tax liabilities:
Accounts receivable.......................................... 32,200 16,188
------- -------
Total deferred tax liabilities............................. 32,200 16,188
------- -------
Net deferred income taxes.................................. $16,170 $ 3,941
======= =======
</TABLE>

The provision (benefit) for income taxes consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
-------- -------
<S> <C> <C>
Current....................................................... $1,866 $2,512
Deferred...................................................... (25,510) 12,229
-------- -------
Total....................................................... $(23,644) $14,741
======== =======
</TABLE>

The reconciliation of the provision (benefit) for income taxes to the income
tax expense (benefit) resulting from the application of the federal statutory
tax rate to pretax income is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
-------- -------
<S> <C> <C>
Tax at statutory rate........................................ $(41,123) $328
Nondeductible travel and entertainment....................... 6,341 13,893
State income taxes........................................... 800 520
Nondeductible life insurance premiums........................ 1,325 --
Other........................................................ 9,013 --
-------- -------
Total.................................................... $(23,644) $14,741
======== =======
</TABLE>

7. SALE OF THE BUSINESS:

On September 17, 1997, the Company sold certain of its net assets to U.S.
Legal Support, Inc. Summary financial information pertaining to the Company's
operations from January 1, 1997 through the acquisition date is as follows:

<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Revenues................................... $1,623,300
Gross profit............................... 690,005
Operating income........................... 223,936
Income before income taxes................. 214,439
</TABLE>

F-86
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders U.S. Legal Support, Inc.:

We have audited the accompanying combined balance sheet of the Johnson Court
Reporting Group as of December 31, 1995 and 1996, and the related combined
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of the Johnson Court
Reporting Group as of December 31, 1995 and 1996, and the combined results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

Houston, Texas
September 19, 1997

F-87
<PAGE>

JOHNSON COURT REPORTING GROUP

COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.......................................... $22,253 $38,905 $13,084
Accounts receivable........................... 246,636 252,480 383,399
Prepaid expenses and other current assets..... 17,789 10,100 20,431
-------- -------- --------
Total current assets........................ 286,678 301,485 416,914
Property and equipment, net..................... 185,821 169,140 168,119
Other assets.................................... 16,216 42,050 64,115
-------- -------- --------
Total assets.................................... $488,715 $512,675 $649,148
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................. $73,121 $94,558 $169,121
Income taxes payable.......................... 9,152 89,027 101,561
Accrued liabilities........................... 88,212 72,289 85,045
Deferred income taxes......................... 63,370 72,077 119,341
-------- -------- --------
Total current liabilities................... 233,855 327,951 475,068
Notes payable, including related parties of
$103,734, $28,995 and $15,911, respectively.... 133,099 68,265 77,113
Deferred income taxes........................... 14,866 13,531 13,450
Commitments and contingencies
Stockholders' equity:
Common stock.................................. 77,000 77,000 77,000
Retained earnings............................. 29,895 25,928 6,517
-------- -------- --------
Total stockholders' equity.................. 106,895 102,928 83,517
-------- -------- --------
Total liabilities and stockholders' equity...... $488,715 $512,675 $649,148
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-88
<PAGE>

JOHNSON COURT REPORTING GROUP

COMBINED STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
--------------------- ---------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.......................... $1,713,593 $2,154,933 $1,068,290 $1,227,628
Cost of services.................. 845,694 1,039,876 494,388 586,482
---------- ---------- ---------- ----------
Gross profit...................... 867,899 1,115,057 573,902 641,146
Selling, general and administra-
tive expenses.................... 642,756 835,786 469,596 426,558
Depreciation...................... 19,670 38,401 35,107 26,080
---------- ---------- ---------- ----------
Operating income.............. 205,473 240,870 69,199 188,508
Interest expense.................. 11,438 19,023 8,383 5,896
---------- ---------- ---------- ----------
Income before income taxes.... 194,035 221,847 60,816 182,612
Income taxes...................... 83,498 89,099 24,507 73,045
---------- ---------- ---------- ----------
Net income.................... $ 110,537 $ 132,748 $ 36,309 $ 109,567
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-89
<PAGE>

JOHNSON COURT REPORTING GROUP

COMBINED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------- -------- -------------
<S> <C> <C> <C>
Balance as of January 1, 1995................... $77,000 $22,923 $99,923
Dividends....................................... -- (103,565) (103,565)
Net income...................................... -- 110,537 110,537
------- -------- --------
Balance as of December 31, 1995................. 77,000 29,895 106,895
Dividends....................................... -- (136,715) (136,715)
Net income...................................... -- 132,748 132,748
------- -------- --------
Balance as of December 31, 1996................. 77,000 25,928 102,928
Dividends (unaudited)........................... -- (128,978) (128,978)
Net income (unaudited).......................... -- 109,567 109,567
------- -------- --------
Balance as of June 30, 1997 (unaudited)......... $77,000 $6,517 $83,517
======= ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-90
<PAGE>

JOHNSON COURT REPORTING GROUP

COMBINED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS FOR THE SIX
ENDED DECEMBER MONTHS ENDED JUNE
31, 30,
------------------ ------------------
1995 1996 1996 1997
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income........................... $110,537 $132,748 $36,309 $109,567
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation....................... 19,670 38,401 35,107 26,080
Deferred income taxes.............. 63,334 7,372 (7,280) 47,183
Changes in operating assets and
liabilities:
Accounts receivable.............. (142,112) (5,844) (16,062) (130,919)
Prepaid expenses and other....... (20,481) (18,145) 16,834 (32,396)
Accounts payable................. 35,071 21,437 (10,093) 50,381
Income taxes payable............. 16,400 79,875 3,406 12,534
Accrued liabilities.............. 65,525 (15,923) 29,398 12,756
-------- -------- -------- --------
Net cash provided by operating
activities.................... 147,944 239,921 87,619 95,186
-------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures................. (102,347) (21,720) (10,813) (25,059)
-------- -------- -------- --------
Net cash used in investing
activities.................... (102,347) (21,720) (10,813) (25,059)
-------- -------- -------- --------
Cash flows from financing activities:
Notes payable........................ 62,275 (64,834) (43,444) 8,848
Dividends............................ (103,565) (136,715) (67,661) (128,978)
Other................................ -- -- 27,872 24,182
-------- -------- -------- --------
Net cash used in financing
activities.................... (41,290) (201,549) (83,233) (95,948)
-------- -------- -------- --------
Increase (decrease) in cash............ 4,307 16,652 (6,427) (25,821)
Cash and cash equivalents at beginning
of period............................. 17,946 22,253 22,253 38,905
-------- -------- -------- --------
Cash and cash equivalents at end of
period................................ $ 22,253 $ 38,905 $ 15,826 $ 13,084
======== ======== ======== ========
Cash paid for interest................. $ 11,438 $ 19,023 $ 8,383 $ 5,896
======== ======== ======== ========
Cash paid for taxes.................... $ 3,764 $ 1,852 $ 1,369 $ 1,289
======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-91
<PAGE>

JOHNSON COURT REPORTING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Johnson Court Reporting Group (the "Company"), operating through Goren of
Newport, Inc., Rapidtext, Inc. and Medtext, Inc., provides litigation support
services, closed-captioning services for the hearing impaired, remote
classroom captioning services, medical transcription services, and scanning
and imaging services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

The accompanying combined financial statements include the accounts of Goren
of Newport, Inc., Rapidtext, Inc. and Medtext, Inc. all of which are operated
under common management. All intercompany amounts have been eliminated.

Preparation of Interim Financial Statements

Management Estimates

Cash

Cash is maintained in two banks. The balances, at times, may exceed
federally insured amounts although management believes that risk of loss is
minimal.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets.
Expenditures for improvements that extend the life of such assets are
capitalized while maintenance and repairs are charged to expense as incurred.
When property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and any
resulting gain or loss is included in the statement of income.

Income Taxes

The Company provides for deferred income taxes utilizing the liability
method whereby deferred income taxes are recognized for the tax consequences
in future years of differences in the tax bases of assets and liabilities and
their financial reporting amounts based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.

Revenue Recognition

The Company recognizes revenue after the documents or records have been
prepared for shipment or the services have been provided. An allowance is
provided for anticipated bad debts based primarily on historical experience
and current estimates.

Concentration of Credit Risk

The Company grants credit to various companies primarily in the legal,
medical and insurance industries which may be affected by economic or other
external conditions. The Company maintains allowances for potential credit
losses, and such losses have been within management's expectations. During the
six-month period ended June 30, 1997, approximately 16% of revenues was from
one company.

F-92
<PAGE>

JOHNSON COURT REPORTING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
USEFUL LIVES 1995 1996
------------ -------- --------
<S> <C> <C> <C>
Property and equipment:
Furniture and fixtures....................... 5 to 7 years $8,098 $9,542
Office equipment and computers............... 5 years 258,852 277,265
-------- --------
266,950 286,807
Less accumulated depreciation.................. (81,129) (117,667)
-------- --------
Total...................................... $185,821 $169,140
======== ========
</TABLE>

4. INCOME TAXES:

The components of deferred income tax assets and liabilities consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1995 1996
------- -------
<S> <C> <C>
Deferred income tax assets
Accrued liabilities........................................... $35,284 $28,916
------- -------
Total deferred income tax assets............................ 35,284 28,916
------- -------
Deferred income tax liabilities
Accounts receivable........................................... 98,654 100,993
Property and equipment........................................ 14,866 13,531
------- -------
Total deferred income tax liabilities....................... 113,520 114,524
------- -------
Net deferred income tax liability........................... $78,236 $85,608
======= =======
</TABLE>

The provision for income taxes consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1995 1996
------- -------
<S> <C> <C>
Current....................................................... $20,164 $81,727
Deferred...................................................... 63,334 7,372
------- -------
$83,498 $89,099
======= =======
</TABLE>

The difference between the Company's provision for income taxes and the
amount that would have been derived by applying the federal statutory tax rate
to pretax income for the years ended December 31, 1995 and 1996 is summarized
as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1995 1996
------- -------
<S> <C> <C>
Tax at federal statutory rate.................................. $65,972 $75,427
State income taxes, net of federal tax benefit................. 9,702 11,092
Other.......................................................... 7,824 2,580
------- -------
$83,498 $89,099
======= =======
</TABLE>

F-93
<PAGE>

JOHNSON COURT REPORTING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

5. COMMITMENTS AND CONTINGENCIES:

Independent Contractors

The Company provides court reporting, captioning, transcription, and
scanning and imaging services through the use of independent contractors, who
are not employees of the Company. The Company does not pay or withhold federal
or state employment taxes with respect to these independent contractors.
Independent contractors are responsible for acquiring and operating their
equipment. The use of independent contractors is consistent with industry
practice and allows the Company to control costs. In the event the Company
were required to treat these independent contractors as its employees, the
Company could become responsible for the taxes required to be withheld and
could incur additional costs associated with employee benefits and other
employee costs.

Operating Leases

Aggregate minimum rental commitments under noncancelable operating leases
with lease terms in excess of one year are as follows:

Rent expense in 1995 and 1996 totaled $57,030 and $68,967, respectively.
Certain rental agreements provide for additional rent based on the lessors'
operating expenses.

Legal Proceedings

6. NOTES PAYABLE:

The Company has lines of credit with two financial institutions for up to
$225,000 at an interest rate of 13%, collateralized by the Company's accounts
receivable. These lines are drawn on when needed and are normally repaid
within the fiscal year. As of December 31, 1995 and 1996, the Company had
$29,365 and $39,270 borrowed under the lines of credit.

The Company has notes payable of $103,734 and $28,995 to shareholders at
December 31, 1995 and 1996.

7. SALE OF COMMON STOCK:

On August 19, 1997, the Company's common stock was acquired by U.S. Legal
Support, Inc. Summary financial information pertaining to the Company's
operations from January 1, 1997 through the acquisition date is as follows:

<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Revenues................................... $1,471,072
Gross profit............................... 766,808
Operating income........................... 161,028
Income before income taxes................. 154,482
</TABLE>

F-94
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of Amicus One Legal Support
Services, Inc. as of December 31, 1996 and September 5, 1997 and the related
statements of income, stockholders' equity and cash flows for the year ended
December 31, 1996 and the period from January 1, 1997 through September 5,
1997. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Amicus One Legal Support
Services, Inc. as of December 31, 1996 and September 5, 1997, and the results
of its operations and its cash flows for the year ended December 31, 1996 and
the period from January 1, 1997 through September 5, 1997 in conformity with
generally accepted accounting principles.

Coopers & Lybrand l.l.p.

Houston, Texas October 21, 1997

F-95
<PAGE>

AMICUS ONE LEGAL SUPPORT SERVICES, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
COMBINED
PREDECESSORS COMPANY
DECEMBER 31, SEPTEMBER 5,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash............................................... $1,626 $249,058
Accounts receivable, net of allowance of $48,240
and $100,000, respectively........................ 513,608 321,991
Prepaid expenses and other current assets.......... 11,398 1,467
-------- --------
Total current assets............................. 526,632 572,516
Property and equipment, net.......................... 65,334 96,998
Other assets......................................... 34,014 15,032
-------- --------
Total assets......................................... $625,980 $684,546
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations........ $24,400 $253,978
Advance from U.S. Legal Support, Inc. ............. -- 277,043
Accounts payable................................... 30,945 53,988
Accrued liabilities................................ 52,467 33,742
-------- --------
Total current liabilities........................ 107,812 618,751
Long-term obligations................................ 10,423 2,774
Commitments and contingencies
Stockholders' equity:
Common stock....................................... 11,750 49,499
Retained earnings.................................. 495,995 13,522
-------- --------
Total stockholders' equity....................... 507,745 63,021
-------- --------
Total liabilities and stockholders' equity........... $625,980 $684,546
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-96
<PAGE>

AMICUS ONE LEGAL SUPPORT SERVICES, INC.

STATEMENT OF INCOME

<TABLE>
<CAPTION>
COMBINED
COMBINED PREDECESSORS
PREDECESSORS NINE MONTHS COMPANY
YEAR ENDED ENDED PERIOD ENDED
------------ ------------- ------------
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 5,
1996 1996 1997
------------ ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Revenues.............................. $1,882,380 $1,394,243 $1,384,613
Cost of services...................... 890,098 695,302 723,252
---------- ---------- ----------
Gross profit.......................... 992,282 698,941 661,361
Selling, general and administrative
expenses............................. 796,744 562,027 598,918
Depreciation.......................... 39,580 22,323 23,607
---------- ---------- ----------
Operating income.................. 155,958 114,591 38,836
Interest expense...................... 6,613 5,730 12,689
---------- ---------- ----------
Income before income taxes............ 149,345 108,861 26,147
Income taxes.......................... 9,879 244 625
---------- ---------- ----------
Net income........................ $ 139,466 $ 108,617 $ 25,522
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-97
<PAGE>

AMICUS ONE LEGAL SUPPORT SERVICES, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------- --------- -------------
<S> <C> <C> <C>
Combined Predecessors:
Balance as of January 1, 1996................ $11,750 $ 391,137 $ 402,887
Distributions................................ -- (34,608) (34,608)
Net income................................... -- 139,466 139,466
------- --------- ---------
Balance as of December 31, 1996.............. 11,750 495,995 507,745
Company:
Reorganization to form new entity and
distribution of certain net assets to
owners...................................... 37,749 (495,995) (458,246)
Net income................................... -- 25,522 25,522
Distributions................................ -- (12,000) (12,000)
------- --------- ---------
Balance as of September 5, 1997.............. $49,499 $ 13,522 $ 63,021
======= ========= =========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-98
<PAGE>

AMICUS ONE LEGAL SUPPORT SERVICES, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
COMBINED
COMBINED PREDECESSORS
PREDECESSORS NINE MONTHS COMPANY
YEAR ENDED ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 5,
1996 1996 1997
------------ ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................... $139,466 $108,617 $25,522
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation....................... 39,580 22,323 23,607
Provision for doubtful accounts.... 24,152 24,152 90,160
Changes in operating assets and
liabilities:
Accounts receivable.............. (81,766) (30,565) (325,334)
Prepaid expenses and other
current assets.................. 1,661 1,562 (69)
Other assets..................... 17,366 (250) (11,893)
Accounts payable................. 866 26,036 31,678
Accrued liabilities.............. 17,339 14,747 (27,123)
-------- -------- --------
Net cash provided by (used in)
operating activities.......... 158,664 166,622 (193,452)
-------- -------- --------
Cash flows from investing activities:
Capital expenditures................. (85,272) (65,058) (55,271)
Investment in note receivable from
officer............................. -- (4,927) --
-------- -------- --------
Net cash used in investing
activities.................... (85,272) (69,985) (55,271)
-------- -------- --------
Cash flows from financing activities:
Distributions........................ (34,608) (33,928) (12,000)
Proceeds from borrowings............. 820,898
Repayment of borrowings.............. (38,647) (23,789) (311,926)
-------- -------- --------
Net cash (used in) provided by
financing activities.......... (73,255) (57,717) 496,972
-------- -------- --------
Increase in cash....................... 137 38,920 248,249
Cash and cash equivalents at beginning
of period............................. 1,489 1,489 809
-------- -------- --------
Cash and cash equivalents at end of pe-
riod.................................. $ 1,626 $ 40,409 $249,058
======== ======== ========
Cash paid for interest................. $ 6,613 $ 5,730 $ 12,689
======== ======== ========
Cash paid for income taxes............. $ 9,040 $ 244 $ 825
======== ======== ========
Issuance of common stock for non-cash
assets................................ $157,906
========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-99
<PAGE>

AMICUS ONE LEGAL SUPPORT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Amicus One Legal Support Services, Inc. (the "Company"), a New York
Subchapter S Corporation, was formed on January 1, 1997 through the
contribution of certain assets at predecessor cost by three shareholders who
together owned two court reporting businesses known as Cardinal Reporting Co.,
Inc. ("Cardinal") and AM Court Reporting, Ltd. ("AM"). The owners of the
"combined predecessors" have presented combined financial statements of the
combined predecessor for 1996 to reflect the financial position and results of
operations for the periods on a comparable basis. The Company operates in New
York providing litigation support services primarily for insurance companies
and law firms. The Company's primary business is court reporting, the
transcription of spoken legal testimony into written word.

The Company has 200 shares of no par value capital stock authorized, issued
and outstanding at September 5, 1997. At December 31, 1996, Cardinal and AM
were organized as a C Corporation and a S Corporation, respectively. Cardinal
and AM had 2,500 and 200 shares, respectively, of no par value capital stock
authorized, issued and outstanding at December 31, 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The financial statements for the periods ended September 30, 1996 and
January 5, 1997 reflect all adjustments that are, in the opinion of
management, necessary for a fair presentation of the results for the period.
Such adjustments are considered to be of a normal recurring nature unless
otherwise identified.

Use of Estimates

Cash

Cash is maintained in several banks. The balance, at times, may exceed
federally insured amounts although management believes that risk of loss is
minimal.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets.
Expenditures for improvements that extend the life of such assets are
capitalized while maintenance and repairs are charged to expense as incurred.
When property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and any
resulting gain or loss is included in the statements of operations.

Revenue Recognition

The Company recognizes revenue as the documents or records are delivered to
customers. An allowance is provided for anticipated bad debts, based primarily
on historical experience and current estimates.

Income Taxes

The Company is and AM was an S Corporation under the Internal Revenue Code
and thus, for federal tax purposes, are not considered to be tax paying
entities. Cardinal provided for deferred income taxes utilizing the liability
method whereby deferred income taxes are recognized for the tax consequences
in future years of

F-100
<PAGE>

AMICUS ONE LEGAL SUPPORT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

differences in the tax bases of assets and liabilities and their financial
reporting amounts based on enacted tax laws and statutory tax rates applicable
to the periods in which differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be utilized.

Concentration of Credit Risk

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 5,
USEFUL LIVES 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Furniture and fixtures................... 5 to 7 years $112,812 $142,627
Office equipment and computers........... 5 years 19,274 44,730
-------- --------
132,086 187,357
Less accumulated depreciation............ (66,752) (90,359)
-------- --------
Total................................ $ 65,334 $ 96,998
======== ========
</TABLE>

4. COMMITMENTS AND CONTINGENCIES:

Independent Contractors

Operating Leases

Aggregate minimum rental commitments under noncancelable operating leases
with lease terms in excess of one year are as follows:

<TABLE>
<CAPTION>
<S> <C>
September 6, 1997 through December 31, 1997......................... $31,612
1998................................................................ 96,221
1999................................................................ 89,719
2000................................................................ 67,144
2001................................................................ 68,838
Thereafter.......................................................... 59,933
--------
$413,467
========
</TABLE>

Rent expense totaled approximately $103,000 and $68,000 for the year ended
December 31, 1996 and the period ended September 5, 1997. Certain rental
agreements provide for additional rent based on the lessors' operating
expenses.

F-101
<PAGE>

AMICUS ONE LEGAL SUPPORT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. LONG-TERM OBLIGATIONS:

Long-term obligations consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 5,
1996 1997
------------ ------------
<S> <C> <C>
Line of credit with a bank for up to $50,000 with
interest at prime plus .25%. The line has no set
maturity date.................................... $14,888 $ --
Line of credit with a financial institution for up
to $300,000 with interest of 30-day commercial
paper rate plus 3.15% which was 8.77% at June 30,
1997, collateralized by accounts receivable. The
line has no set maturity date.................... -- 243,677
Capital lease obligations......................... 19,935 13,075
------- --------
34,823 256,752
Less current portion.............................. (24,400) (253,978)
------- --------
$10,423 $2,774
======= ========
</TABLE>

The $300,000 line of credit was repaid in September 1997 with funds advanced
by U.S. Legal Support Inc. (See Note 1).

6. SALE OF NET ASSETS:

On September 6, 1997, the Company's net assets were sold to U.S. Legal
Support, Inc.

F-102
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
U.S. Legal Support, Inc.:

We have audited the accompanying balance sheet of Block Court Reporting,
Inc. as of December 31, 1995 and 1996, and the related statements of
operations, stockholder's equity (deficit) and cash flows for the years then
ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Block Court Reporting,
Inc. as of December 31, 1995 and 1996, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

Coopers & Lybrand L.L.P.

Houston, Texas
September 19, 1997

F-103
<PAGE>

BLOCK COURT REPORTING, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash........................................... $994 $1,852 $4,437
Accounts receivable, net of allowance of
$10,000, $15,000 and $15,000, respectively.... 141,279 207,911 142,214
Deferred income taxes.......................... 6,074
-------- -------- --------
Total current assets......................... 142,273 209,763 152,725
Property and equipment, net...................... 125,271 89,830 84,489
Other assets..................................... 6,568 6,568 6,568
-------- -------- --------
Total assets..................................... $274,112 $306,161 $243,782
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable............................... $7,640 $164,213 $149,921
Accrued liabilities............................ 6,332 17,129 56,228
Long-term obligations, current portion......... 109,905 68,218 62,990
Deferred income taxes.......................... 45,910 14,107 --
-------- -------- --------
Total current liabilities.................... 169,787 263,667 269,139
Long-term obligations............................ 12,329 15,125 --
Stockholder's equity (deficit):
Common stock, $.01 par value, 1,000 shares
authorized, issued, and outstanding........... 10 10 10
Additional paid in capital..................... 990 990 990
Retained earnings (accumulated deficit)........ 90,996 26,369 (26,357)
-------- -------- --------
Total stockholder's equity (deficit)......... 91,996 27,369 (25,357)
-------- -------- --------
Total liabilities and stockholder's equity
(deficit)....................................... $274,112 $306,161 $243,782
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-104
<PAGE>

BLOCK COURT REPORTING, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------- ------------------
1995 1996 1996 1997
---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.......................... $1,024,931 $1,316,782 $693,458 $517,838
Cost of services.................. 496,301 661,838 376,756 262,455
---------- ---------- -------- --------
Gross profit...................... 528,630 654,944 316,702 255,383
Selling, general and
administrative expenses.......... 524,864 740,279 339,110 331,936
---------- ---------- -------- --------
Operating income (loss)....... 3,766 (85,335) (22,408) (76,553)
Interest expense.................. 14,197 13,302 8,833 4,306
---------- ---------- -------- --------
Loss before income taxes.......... (10,431) (98,637) (31,241) (80,859)
Income tax benefit................ (3,575) (34,010) (11,055) (28,133)
---------- ---------- -------- --------
Net loss...................... $ (6,856) $ (64,627) $(20,186) $(52,726)
========== ========== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-105
<PAGE>

BLOCK COURT REPORTING, INC.

STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)

<TABLE>
<CAPTION>
RETAINED TOTAL
ADDITIONAL EARNINGS STOCKHOLDER'S
COMMON PAID-IN (ACCUMULATED EQUITY
STOCK CAPITAL DEFICIT) (DEFICIT)
------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
January 1, 1995.................. $ 100 $ 2,790 $ 97,852 $100,742
Issuance of common stock......... 10 990 -- 1,000
Retirement of common stock....... (100) (2,790) -- (2,890)
Net loss......................... -- -- (6,856) (6,856)
----- ------- -------- --------
December 31, 1995................ 10 990 90,996 91,996
Net loss......................... -- -- (64,627) (64,627)
----- ------- -------- --------
December 31, 1996................ 10 990 26,369 27,369
Net loss (Unaudited)............. -- -- (52,726) (52,726)
----- ------- -------- --------
June 30, 1997 (Unaudited)........ $ 10 $ 990 $(26,357) $(25,357)
===== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-106
<PAGE>

BLOCK COURT REPORTING, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS FOR THE SIX
ENDED DECEMBER MONTHS ENDED
31, JUNE 30,
----------------- ------------------
1995 1996 1996 1997
------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $(6,856) $(64,627) $(20,186) $(52,726)
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Depreciation........................ 36,464 35,441 11,271 9,388
Changes in operating assets and
liabilities:
Accounts receivable............... (88,025) (66,632) (16,843) 65,697
Accounts payable.................. 33,555 156,573 152,600 (14,292)
Accrued liabilities............... (56,414) 10,797 9,920 39,099
Deferred income taxes............. 45,910 (31,803) -- (20,181)
Due from shareholder.............. -- -- (48,934) --
Income taxes payable.............. -- -- (30,157) --
Other assets...................... (6,568) -- 37,879 --
------- -------- -------- --------
Net cash (used in) provided by
operating activities........... (41,934) 39,749 95,550 26,985
------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures.................. (21,483) -- -- (4,047)
------- -------- -------- --------
Net cash used in investing
activities..................... (21,483) -- -- (4,047)
------- -------- -------- --------
Cash flows from financing activities:
Net payments of long-term
obligations.......................... (414) (38,891) (26,554) (20,353)
------- -------- -------- --------
Net cash used in financing
activities..................... (414) (38,891) (26,554) (20,353)
------- -------- -------- --------
Net (decrease) increase in cash......... (63,831) 858 68,996 2,585
Cash and cash equivalents at beginning
of year................................ 64,825 994 994 1,852
------- -------- -------- --------
Cash and cash equivalents at end of
year................................... $ 994 $ 1,852 $ 69,990 $ 4,437
======= ======== ======== ========
Cash paid for interest.................. $14,197 $ 13,302 $ 8,833 $ 4,306
======= ======== ======== ========
Cash paid for income taxes.............. $ 1,000
=======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-107
<PAGE>

BLOCK COURT REPORTING, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Block Court Reporting, Inc. (the "Company"), a District of Columbia
corporation, is a court reporting business based in Washington, D.C. The
Company provides general court reporting services, the transcription of spoken
legal testimony into the written word as well as video captioning services to
the Washington, D.C., Northern Virginia, and Baltimore, Maryland markets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Preparation of Interim Financial Statements

The financial statements for the six month periods ended June 30, 1996 and
1997 reflect all adjustments that are, in the opinion of management, necessary
for a fair presentation of the results for the period. Such adjustments are
considered to be of a normal recurring nature unless otherwise identified.

Management Estimates

Cash

Cash is maintained primarily in one bank. The balance, at times, may exceed
federally insured amounts although management believes that risk of loss is
minimal.

Property and Equipment

Property and equipment is recorded at cost and is depreciated on the
straight-line basis over the estimated useful lives of the assets.
Expenditures for improvements that extend the life of such assets are
capitalized while maintenance and repairs are charged to expense as incurred.
When property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and any
resulting gain or loss is included in the statements of operations.

Revenue Recognition

Concentration of Credit Risk

The Company grants credit to various companies primarily in the legal
industry which may be affected by economic or other external conditions. The
Company maintains allowance for potential credit losses, and such losses have
been within management's expectations.

F-108
<PAGE>

BLOCK COURT REPORTING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
USEFUL LIVES 1995 1996
------------ -------- -------
<S> <C> <C> <C>
Property and equipment:
Vehicles...................................... 5 years $60,538 $60,538
Furniture and fixtures........................ 7 years 26,063 23,425
Office equipment, computers and software...... 3 to 5 years 75,134 75,905
-------- -------
161,735 159,868
Less accumulated depreciation................... (36,464) (70,038)
-------- -------
Total....................................... $125,271 $89,830
======== =======
</TABLE>

The Company had fully depreciated assets totaling approximately $19,000 at
December 31, 1996.

4. COMMITMENTS AND CONTINGENCIES:

Independent Contractors

Operating Lease

The Company leases office space under a noncancelable operating lease which
expires on July 31, 1997. The remaining rental commitment under this lease at
December 31, 1996 was approximately $50,000. Subsequent to year-end, the
Company entered into new noncancelable operating lease for office space
commencing on October 1, 1997 and ending on September 30, 2000. The minimum
rental commitment under this lease for each of the next four years
approximates $10,000, $42,000, $42,000, and $32,000. Both agreements provide
for additional rent based on increases determined from indices specified
within the lease agreements. Additionally, the Company is required to pay its
pro rata share of increases in real estate taxes.

Rent expense in both 1995 and 1996 totalled approximately $97,000.

5. INCOME TAXES:

The benefit for income taxes consisted of the following:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER
31,
------------------
1995 1996
-------- --------
<S> <C> <C>
Current..................................................... $(49,485) $ (2,207)
Deferred.................................................... 45,910 (31,803)
-------- --------
Total................................................... $ (3,575) $(34,010)
======== ========
</TABLE>

F-109
<PAGE>

BLOCK COURT REPORTING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The components of deferred income tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Accounts payable......................................... $2,600 $ 55,832
Deferred tax liabilities:
Accounts receivable...................................... 48,510 69,939
-------- --------
Net deferred income taxes.............................. $(45,910) $(14,107)
======== ========
</TABLE>

6. LONG-TERM OBLIGATIONS:

The Company has a line of credit with a bank for up to $25,000 at an
interest rate equal to the prime lending rate plus two percentage points. As
of December 31, 1996 and June 30, 1997, there was $18,000 and $23,000 drawn on
this line of credit, respectively. These borrowings have been classified as
current.

The Company has a promissory note with a bank at an interest rate equal to
the prime lending rate plus one percentage point. At December 31, 1996, the
maturities of the promissory note for each of the next two years approximated
$38,000 and $15,000.

The Company leases vehicles under long-term capital leases which expire
during 1997. At December 31, 1996, future minimum payments under these leases
approximated $13,000.

7. RELATED PARTY TRANSACTIONS:

The Company subleases certain office space to an affiliate for approximately
$2,000 per month.

8. SALE OF THE COMPANY:

On September 5th 1997, the Company's stock was acquired by U.S. Legal
Support, Inc. Summary financial information pertaining to the Company's
operations from January 1, 1997 through the acquisition date is as follows:

<TABLE>
<CAPTION>
(UNUADITED)
<S> <C>
Revenues.................................................... $701,401
Gross profit................................................ 426,178
Operating loss.............................................. (90,940)
Income before income taxes.................................. (93,448)
</TABLE>

F-110
<PAGE>

[Logo of U.S. Legal Support, Inc. appears here]

A leading provider of court reporting,
certified record retrieval and legal
placement and staffing services

Court Reporting
[Photo of court reporter transcribing]

Certified Record Retrieval
[Photo of certified records retrieval]

Legal Placement and Staffing
[Photo of attorney working]
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

No dealer, salesman or other
person has been authorized to
give any information or to make
any representations other than
those contained in this
Prospectus and, if given or
made, such information or
representations must not be
relied upon as having been
authorized by the Company or the
Underwriters. This Prospectus
does not constitute an offer to
sell or the solicitation of an
offer to buy to any person in
any jurisdiction in which such
offer or solicitation would be
unlawful or to any person to
whom it is unlawful. Neither the
delivery of this Prospectus nor
any offer or sale made hereunder
shall, under any circumstances,
create any implication that
there has been no change in the
affairs of the Company or that
the information contained herein
is correct as of any time
subsequent to the date hereof.

-----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
The Company.............................................................. 12
Use of Proceeds.......................................................... 14
Dividend Policy.......................................................... 14
Capitalization........................................................... 15
Dilution................................................................. 16
Selected Financial Data.................................................. 17
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 30
Management............................................................... 39
Certain Transactions..................................................... 45
Principal Shareholders................................................... 48
Description of Capital Stock............................................. 50
Shares Eligible for Future Sale.......................................... 52
Underwriting............................................................. 54
Legal Matters............................................................ 55
Experts.................................................................. 55
Available Information.................................................... 56
Index to Financial Statements............................................ F-1
</TABLE>

---------------

Until , 1998 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Common Stock, whether or not participating in
this distribution, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.

3,100,000 SHARES

[LOGO OF U.S. LEGAL SUPPORT APPEARS HERE]

COMMON STOCK

---------------

PROSPECTUS

---------------

HAMBRECHT & QUIST

ING BARING FURMAN SELZ LLC

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of the securities being registered. All amounts are estimates
except for the fees payable to the Commission and the NASD and the listing
fee.

<TABLE>
<CAPTION>
AMOUNT
-----------
<S> <C>
Securities and Exchange Commission registration fee......... $ 15,950.00
National Association of Securities Dealers, Inc. filing
fee........................................................ 5,732.50
NASDAQ listing fee.......................................... 50,000.00
Printing and engraving expenses............................. 193,000.00
Legal fees and expenses..................................... 65,000.00
Accounting fees and expenses................................ 50,000.00
Blue sky fees and expenses.................................. 1,500.00
Transfer Agent fees......................................... 10,000.00
Miscellaneous............................................... 1,817.50
-----------
TOTAL................................................... $393,000.00
===========
</TABLE>

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

The Registrant's Articles of Incorporation, as amended (the "Articles of
Incorporation") and Bylaws require the Registrant to indemnify officers and
directors of the Registrant to the fullest extent permitted by Article 2.02-1
of the Business Corporation Act of the State of Texas (the "TBCA"). The
Articles of Incorporation and Bylaws are filed as Exhibits 3.1 and 3.2 to the
Registration Statement. Generally, Article 2.02-1 of the TBCA permits a
corporation to indemnify a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding because the person was or is a
director or officer if it is determined that such person (i) conducted himself
in good faith; (ii) reasonably believed (a) in the case of conduct in his
official capacity as a director or officer of the corporation, that his
conduct was in the corporation's best interests, or (b) in other cases, that
his conduct was at least not opposed to the corporation's best interests; and
(iii) in the case of any criminal proceedings, had no reasonable cause to
believe that his conduct was unlawful. In addition, the TBCA requires a
corporation to indemnify a director or officer for any action that such
director or officer is wholly successful in defending on the merits.

The Articles of Incorporation provide that a director of the Registrant will
not be liable to the corporation for monetary damages for an act or omission
in the director's capacity as a director, except to the extent not permitted
by law. Texas law does not permit exculpation of liability in the case of (i)
a breach of the director's duty of loyalty to the corporation or its
shareholders; (ii) an act or omission not in good faith that involves
intentional misconduct or a knowing violation of the law; (iii) a transaction
from which a director received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the director's office; (iv)
an act or omission for which the liability of the director is expressly
provided by statute; or (v) an act related to an unlawful stock repurchase or
payment of dividend.

The Form of Underwriting Agreement filed herewith as Exhibit 1.1, under
certain circumstances, provides for indemnification by the Underwriters of the
directors, officers and controlling persons of the Company.

The Company has purchased liability insurance policies covering the
directors and officers of the Company, including, to provide protection where
the Company cannot legally indemnify a director or officer

II-1
<PAGE>

and where a claim arises under the Employee Retirement Income Security Act of
1974 against a director or officer based on an alleged breach of fiduciary
duty or other wrongful act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

All information set forth in this Item 15 gives effect to a 100-for-one
stock split with respect to the Common Stock and Preferred Stock of the
Company effected on December 16, 1996.

On August , 1998, the Board of Directors declared a five for eight reverse
common stock split to shareholders of record on , 1998. All financial
information has been retroactively adjusted to reflect the impact of the
reverse common stock split, inclusive of all share per share data and stock
option information.

In connection with the initial capitalization of the Company, on October 2,
1996, the Company issued 93,750 shares of Common Stock to GulfStar
Investments, Ltd. for services rendered valued at $1,500 and 527,400 shares of
Common Stock to Richard O. Looney for services rendered valued at $8,438.40.
On January 17, 1997, the Company issued: (i) 135,000 shares of Series A
Convertible Preferred Stock to the Trust for Defined Benefit Plans of Zeneca
Holdings Inc. at a price of $1.00 per share for an aggregate sales price of
$135,000; (ii) 670,000 shares of Series A Convertible Preferred Stock to the
Delaware State Employees' Retirement Fund at a price of $1.00 per share for an
aggregate sales price of $670,000; and (iii) 195,000 shares of Series A
Convertible Preferred Stock to the Trust for Defined Benefit Plans of ICI
American Holdings Inc. at a price of $1.00 per share for an aggregate sales
price of $195,000. On July 22, 1997, the Company issued 15,625 shares to David
W. Pfleghar for an aggregate sales price of $250.00. All of such sales were
completed without registration under the Securities Act in reliance upon the
exemption provided by Section 4(2) of the Securities Act, no public offering
being involved.

On January 17, 1997, the Company acquired all the issued and outstanding
capital stock of Looney & Company in exchange for cash and the issuance of
2,000,000 (2,046,667 as a result of a post-closing adjustment on June 23,
1997) shares of Series B Convertible Preferred to Richard O. Looney. On that
date, the Company also acquired all the issued and outstanding capital stock
of Klein, Bury & Associates in exchange for cash and the issuance of 106,625
shares of Common Stock to Michael Klein. On April 3, 1997, the Company
acquired all the assets of Cindi Rogers & Associates, Inc. in exchange for the
payment of cash and the issuance of 3,125 shares of Common Stock to Cynthia A.
Rogers. In connection with its acquisition of all the assets of San Francisco
Reporting Service, the Company paid cash and issued 9,565 shares of Common
Stock each to Jay Harbidge and Richard Posner on May 14, 1997, and 115,625
shares of Series C Convertible Preferred Stock each to Jay Harbidge and
Richard Posner on June 23, 1997. On May 19, 1997, the Company acquired all the
assets of G&G Court Reporters in exchange for cash and the issuance of a
$345,750 Convertible Subordinated Promissory Note and a $691,750 Convertible
Subordinated Promissory Note to the Giammanco Family Trust. On August 19,
1997, the Company acquired all the issued and outstanding capital stock of
Goren of Newport, Inc. d/b/a/ Johnson Court Reporting in exchange for cash and
the issuance of a $78,401 Subordinated Promissory Note and 46,118.117 shares
of Common Stock to Glory Johnson. On that date the Company also acquired all
the issued and outstanding capital stock of RapidText, Inc. in exchange for
cash and the issuance of a $22,738 Subordinated Promissory Note and 8,359.706
shares of Common Stock to Glory Johnson and a $37,598 Subordinated Promissory
Note and 13,822.794 shares of Common Stock to Seaquestor Trust. On that date
the Company also acquired all the issued and outstanding capital stock of
MedText, Inc. in exchange for cash and the issuance of a $107,023 Subordinated
Promissory Note and 38,041.103 shares of Common Stock to Seaquestor Trust. On
August 28, 1997, the Company acquired all the assets of Encore Court Reporting
in exchange for cash and the issuance of 1,838 shares of Common Stock to Jan
Coldren. On August 29, 1997, the Company acquired all the assets of Legal
Enterprise, Inc. in exchange for cash and the issuance of a $319,340
Subordinated Promissory Note and a $821,160 Convertible Subordinated
Promissory Note to Legal Enterprise, Inc. On September 4, 1997, the Company
acquired all the capital stock of Block Court Reporting, Inc. in exchange for
cash and the issuance of a $240,000 Subordinated Promissory Note and a
$360,000 Convertible Subordinated Promissory Note to Martin H. Block. On that
date, the Company also acquired all the assets of Amicus One Legal Support
Services, Inc. in exchange for cash and the issuance of a $560,000
Subordinated Promissory Note and 72,794 shares of Common Stock to

II-2
<PAGE>

Amicus One. On September 17, 1997, the Company acquired all the issued and
outstanding capital stock of Burton House, Inc. d.b.a. Ziskind, Greene,
Watanabe & Nason in exchange for cash and the issuance of 99,265 shares of
Common Stock to Gregg M. Ziskind and Susan L. Ziskind. On that date the
Company also acquired all the assets of Elaine P. Dine, Inc. and Elaine P.
Dine Temporary Attorneys, L.L.C. in exchange for cash and the issuance of a
$2,000,000 Junior Subordinated Promissory Note and 47,794 shares of Common
Stock to such companies. All of such sales were completed without registration
under the Securities Act in reliance upon the exemption provided by Section
4(2) of the Securities Act, no public offering being involved.

On January 17, 1997, the Company granted options to purchase 60,100 shares
of Common Stock to certain employees or other optionees of Looney & Company
and Klein Bury at exercise prices ranging from $.016 to $.160 in exchange for
options previously granted to such employees and optionees by such companies.
On September 17, 1997, the Company granted options to purchase 25,735 shares
of Common Stock to certain employees of Elaine P. Dine, Inc. at an exercise
price of $.016 per share in exchange for options previously granted to such
employees by such company. On September 25, 1997, options to purchase 7,800
shares of Common Stock were exercised at a price of $.016 per share. The
Company received $124.80 in aggregate consideration upon the exercise of such
options. All of such sales were completed without registration under the
Securities Act in reliance upon the exemption provided by Section 4(2) of the
Securities Act, no public offering being involved. In addition, the Company
believes that the exemption provided by Rule 701 promulgated under the
Securities Act is applicable to such sales.

On September 8, 1997, the Company sold a number of shares of Common Stock
equal to $1,072,604 divided by 90% of the initial public offering price per
share to Kirby A. Kennedy & Associates in connection with a definitive
agreement in which the Company will acquire all of the assets of Kirby A.
Kennedy & Associates in exchange for cash and the issuance of such shares.
Certain of the conditions to closing of the definitive agreement to purchase
Kirby A. Kennedy & Associates were never satisfied and the agreement was
terminated. Consequently, the shares of Common Stock sold to Kirby A. Kennedy
& Associates were never issued and delivered. On September 15, 1997, the
Company sold a number of shares of Common Stock equal to $2,400,000 divided by
90% of the initial public offering price per share to Colleen Jilio in
connection with a definitive agreement in which the Company will acquire all
of the assets of Jilio & Associates in exchange for cash and the issuance of
such shares. Certain of the conditions to closing of the definitive agreement
to purchase Jilio & Associates were never satisfied and the agreement was
terminated. Consequently, the shares of Common Stock sold to Colleen Jilio
were never issued and delivered. On September 25, 1997, the Company sold a
number of shares of Common Stock equal to $2,500,000 divided by 90% of the
initial public offering price per share to Reporting Services Associates, Inc.
in connection with a definitive agreement in which the Company will acquire
all of the assets of Reporting Service Associates in exchange for cash and the
issuance of such shares. Certain of the conditions to closing of the
definitive agreement to purchase Reporting Service Associates were never
satisfied and the agreement was terminated. Consequently, the shares of Common
Stock sold to Reporting Service Associates, Inc. were never issued and
delivered. On that date the Company also sold a number of shares of Common
Stock equal to $607,500 divided by 90% of the initial public offering price
per share to James M. Wilson in connection with a definitive agreement in
which the Company will acquire all of the assets of Commander Wilson
Incorporated in exchange for cash and the issuance of such shares. Certain of
the conditions to closing of the definitive agreement to purchase Commander
Wilson Incorporated were never satisfied and the agreement was terminated.
Consequently, the shares of Common Stock sold to James M. Wilson were never
issued and delivered. All of such sales were completed without registration
under the Securities Act in reliance upon the exemption provided by Section
4(2) of the Securities Act, no public offering being involved.

On February 12, 1998, in connection with the issuance of Senior Subordinated
Notes in lieu of the cash interest payment owing at September 30, 1997
("Interest Notes"), the Company issued (i) 18,090 shares of Series A
Convertible Preferred Stock to the Delaware State Employees' Retirement Fund;
(ii) 3,754 shares of Series A Convertible Preferred Stock to the Trust for
Defined Benefit Plans of Zeneca Holdings, Inc. and (iii) 5,265 shares of
Series A Convertible Preferred Stock to the Trust for Defined Benefit Plans of
ICI American Holdings, Inc. On February 12, 1998, in connection with the
issuance of Interest Notes for interest payments owing at December 31, 1997,
the Company issued (i) 18,632 shares of Series A Convertible Preferred Stock
to

II-3
<PAGE>

the Delaware State Employees' Retirement Fund; (ii) 3,645 shares of Series A
Convertible Preferred Stock to the Trust for Defined Benefit Plans of Zeneca
Holdings, Inc.; and (iii) 5,422 shares of Series A Convertible Preferred Stock
to the Trust for Defined Benefit Plans of ICI American Holdings, Inc. On
February 12, 1998, in connection with the issuance of Interest Notes for
interest payments owing at March 31, 1998, the Company issued (i) 20,532
shares of Series A Convertible Preferred Stock to the Delaware State
Employees' Retirement Fund; (ii) 4,137 shares of Series A Convertible
Preferred Stock to the Trust for Defined Benefit Plans of Zeneca Holdings,
Inc.; and (iii) 5,976 shares of Series A Convertible Preferred Stock to the
Trust for Defined Benefit Plans of ICI American Holdings, Inc. On February 26,
1998, the Company issued: (i) 101,444 shares of Series A Convertible Preferred
Stock to the Delaware State Employees' Retirement Fund at a price of $1.00 per
share for an aggregate price of $101,444; (ii) 20,440 shares of Series A
Convertible Preferred Stock to the Trust for Defined Benefit Plans of Zeneca
Holdings, Inc. at a price of $1.00 per share for an aggregate price of
$20,440; and (iii) 29,524 shares of Series A Convertible Preferred Stock to
the Trust for Defined Benefit Plans of ICI American Holdings, Inc. at a price
of $1.00 per share for an aggregate sales price of $29,524. In connection with
the issuance of Interest Notes for interest payments owing at June 30, 1998,
the Company issued (i) 23,833 shares of Series A Convertible Preferred Stock
to the Delaware State Employees' Retirement Fund; (ii) 6,936 shares of Series
A Convertible Preferred Stock to the Trust for Defined Benefit Plans of ICI
American Holdings, Inc.; and (iii) 4,802 shares of Series A Convertible
Preferred Stock to the Trust for Defined Benefit Plans of Zeneca Holdings,
Inc. All of such issuances were completed without registration under the
Securities Act in reliance upon the exemption provided by Section 4(2) of the
Securities Act, no public offering being involved.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement between the Company and the
Underwriters named therein.
2.1 Stock Purchase Agreement by and between Litigation Resources of
America, Inc. and Richard O. Looney, dated as of January 17, 1997.
2.2 Stock Purchase Agreement by and between Litigation Resources of
America, Inc. and Michael Klein, dated as of January 17, 1997.
2.3 Securities Purchase Agreement by and among Litigation Resources of
America, Inc. (the "Company"), the Subsidiaries of the Company
listed on the signature pages thereto and the Investors listed on
the signature pages thereto, dated as of January 17, 1997, as
amended.
2.4 Agreement of Purchase and Sale of Assets by and between Litigation
Resources of America--California, Inc. and San Francisco Reporting
Service, dated May 14, 1997.
2.5 Agreement of Purchase and Sale of Assets by and between Litigation
Resources of America--California, Inc., Litigation Resources of
America, Inc., Peter Giammanco and Leslie Giammanco, individuals
d/b/a G&G Court Reporters, and Peter Giammanco and Leslie
Giammanco as Trustees of the Giammanco Family Trust, dated as of
May 19, 1997.
2.6 Letter Agreement by and between Sandra Rocca and Litigation
Resources of America--Midwest, Inc., dated August 15, 1997
2.7 Plan and Agreement of Reorganization and Merger by and among
Litigation Resources of America--California, Inc., Goren of
Newport, Inc. d/b/a Johnson Court Reporting, Glory Johnson and
Litigation Resources of America, dated as of August 19, 1997.
2.8 Plan and Agreement of Reorganization and Merger by and among
Litigation Resources of America--California, Inc., RapidText,
Inc., Seaquestor Trust, Glory Johnson and Litigation Resources of
America, dated as of August 19, 1997.
2.9 Plan and Agreement of Reorganization and Merger by and among
Litigation Resources of America--California, Inc., MedText, Inc.,
Seaquestor Trust and Litigation Resources of America, dated as of
August 19, 1997.
2.10 Agreement of Purchase and Sale of Assets by and among Litigation
Resources of America--California, Inc., Litigation Resources of
America, Inc., Legal Enterprise, Inc., Tony L. Maddocks and Alan
Simon, dated as of August 29, 1997.
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.11 Agreement of Purchase and Sale of Assets by and among Litigation
Resources of America--Northeast, Inc., Litigation Resources of
America, Inc., Amicus One Legal Support Services, Inc., Richard A.
Portas, Joseph N. Spinozzi, Carl Anderson and Howard Breshin,
dated as of September 4, 1997.
2.12 Stock Purchase Agreement by and between Litigation Resources of
America, Inc., Litigation Resources of America--Northeast, Inc.,
and Martin H. Block, dated as of September 4, 1997.
2.13 Agreement of Purchase and Sale of Assets by and among Litigation
Resources of America--Midwest, Inc., Litigation Resources of
America, Inc., Kirby A. Kennedy & Associates, Kirby A. Kennedy and
Jeanne M. Kennedy, dated as of September 8, 1997.
2.14 Agreement of Purchase and Sale of Assets by and among Litigation
Resources of America--California, Inc., Litigation Resources of
America, Inc., and Colleen Jilio, a resident of California d.b.a.
Jilio & Associates, dated as of September 15, 1997; including the
letter dated March 4, 1998, terminating such Agreement of Purchase
and Sale of Assets.
2.15 Agreement of Purchase and Sale of Assets by and among Litigation
Resources of America--Northeast, Inc., Litigation Resources of
America, Inc., Elaine P. Dine, Inc., Elaine P. Dine Temporary
Attorneys, L.L.C., Elaine P. Siegel and Laurie Becker, dated as of
September 17, 1997.
2.16 Stock Purchase Agreement by and between Litigation Resources of
America, Inc., Litigation Resources of America--California, Inc.,
Gregg M. Ziskind and Susan L. Ziskind, dated as of September 17,
1997.
2.17 Agreement of Purchase and Sale of Assets by and among Looney &
Company, U.S. Legal Support, Inc. and James M. Wilson, a resident
of Houston, Texas d.b.a. Commander Wilson, Incorporated, dated as
of September 25, 1997; including the letter dated March 9, 1998,
terminating such Agreement of Purchase and Sale of Assets.
2.18 Agreement of Purchase and Sale of Assets by and among Litigation
Resources of America--Northeast, Inc., Litigation Resources of
America, Inc., Reporting Services Associates, Inc. and Lee
Goldstein, dated as of September 25, 1997; including the letter
dated April 1, 1998, terminating such Agreement of Purchase and
Sale of Assets.
3.1 Articles of Incorporation, as amended, of the Company.
3.2 Bylaws of the Company, as amended.
4.1 Registration Rights Agreement between the Company and Richard O.
Looney, dated
January 17, 1997.
4.2 Registration Rights Agreement between the Company and Michael
Klein, dated
January 17, 1997.
4.3 Registration Rights Agreement between the Company and certain
purchasers, dated
January 17, 1997.
4.4 Form of Registration Rights Agreement among the Company and
certain holders of the Common Stock.
4.5 Securityholders Agreement among Litigation Resources of America,
Inc., the Investors named therein and the Shareholders named
therein, dated January 17, 1997, as amended.
4.6 Registration Rights Agreement between the Company and Gregg M.
Ziskind and Susan L. Ziskind, dated September 17, 1997.
5.1 Opinion of Bracewell & Patterson, L.L.P. as to the validity of the
Common Stock being offered.
10.1 U.S. Legal Support, Inc. 1997 Stock Incentive Plan.
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.2 Form of Option Agreement for 1997 Stock Incentive Plan.
10.3 U.S. Legal Support, Inc. 1997 Non-Employee Directors Stock Option
Plan.
10.4 Form of Option Agreement for Non-Employee Directors Stock Option
Plan.
10.5 Employment Agreement by and among the Company, Looney & Company
and Richard O. Looney, dated January 17, 1997.
10.6 Employment Agreement by and among the Company, Klein, Bury &
Associates and Michael Klein, dated January 17, 1997.
10.7 Employment Agreement by and among the Company, Litigation
Resources of America--California, Inc. and Tony L. Maddocks, dated
August 29, 1997.
10.8 Employment Agreement dated September 25, 1997 by and among the
Company and James M. Wilson dated September 25, 1997.
10.9 Letter Agreement dated May 7, 1997 by and between James M. Wilson
d.b.a. Commander Wilson, Inc. and the Company.
10.10 Termination of Letter Agreement dated May 7, 1997, between James
M. Wilson d.b.a. Commander Wilson, Inc. and the Company, dated
September 25, 1997.
10.11 Letter Agreement dated April 24, 1997 by and between the Company
and The GulfStar Group, Inc.
10.12 Fourth Amended and Restated Bank Credit Agreement among the
Company, its subsidiaries and Texas Commerce Bank, National
Association.
10.13 First Amendment to Employment Agreement dated October 1, 1997 by
and among the Company, Looney & Company and Richard O. Looney.
10.14 First Amendment to Employment Agreement dated October 1, 1997 by
and among Klein, Bury and Associates, Inc., Michael A. Klein and
the Company.
10.15 Letter Agreement dated March 4, 1996 by and between The GulfStar
Group, Inc. and Looney & Company.
10.16 Employment Agreement dated October 14, 1997 by and between the
Company and David P. Tusa.
10.17 Letter Agreement dated May 8, 1998, between The GulfStar Group and
the Company.
11.2 Computation of Pro Forma Earnings Per Share.
21.1 Subsidiaries of the Company.
23.1 Consent of Bracewell & Patterson, L.L.P. (included in its opinion
filed as Exhibit 5 hereto).
23.2+ Consent of PricewaterhouseCoopers LLP
23.3 Consent of Fentress Bracewell.
24.1 Powers of Attorney (See page II-8).
27+ Financial Data Schedule
</TABLE>
- --------
+Filed herewith.

II-6
<PAGE>

(b) Financial Statement Schedules

The following financial statement schedules are included herein.

Schedule II--Valuation and Qualifying Accounts.

All other schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions,
are inapplicable, or the information is included in the consolidated financial
statements, and therefore have been omitted.

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes to provide to the
Underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required
by the Underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the provisions described in Item 14, or
otherwise, the Company has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than payment by
the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(1) For purposes of determining any liability under the Securities
Act of 1933 the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was
declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.

II-7
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, U.S. LEGAL
SUPPORT, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT THERETO
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
THE CITY OF HOUSTON, STATE OF TEXAS, ON JULY 22, 1998.

U.S. Legal Support, Inc.

/s/ Richard O. Looney
By: _________________________________
Richard O. Looney
President and Chief Executive
Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby revokes the Power of
Attorney dated September 25, 1997 and constitutes and appoints Richard O.
Looney and David P. Tusa, or either of them, the undersigned's true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the undersigned's name, place and
stead, in any and all capacities (until revoked in writing), to sign this
Registration Statement, any Registration Statement filed pursuant to Rule
462(b), and any and all amendments (including post-effective amendments)
thereto, to file the same, together with all exhibits thereto and documents in
connection therewith, with the Securities and Exchange Commission, to sign any
and all applications, registration statements, notices and other documents
necessary or advisable to comply with the applicable state securities
authorities, granting unto said attorney-in-fact and agent, or their
substitute or substitutes, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as the undersigned might or could do if personally present, thereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE INDICATED CAPACITIES ON JULY 22, 1998.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ Richard O. Looney
------------------------------------
Richard O. Looney Director, President and Chief Executive Officer
(principal executive officer)
/s/ David P. Tusa
------------------------------------
David P. Tusa Executive Vice President and Chief Financial
Officer
(principal financial and accounting officer)
/s/ Michael A. Klein
------------------------------------
Michael A. Klein Director
/s/ Robert J. Cresci
------------------------------------
Robert J. Cresci Director
/s/ G. Kent Kahle
------------------------------------
G. Kent Kahle Director
</TABLE>

II-8
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
U.S. Legal Support, Inc.:

In connection with our audits of the financial statements of Looney &
Company as of December 31, 1995 and 1996, and for each of the three years in
the period December 31, 1996, and the financial statements of U.S. Legal
Support, Inc. as of December 31, 1997 and for the year then ended, which
financial statements are included in the Prospectus, we have also audited the
financial statement schedule listed on S-2 herein.

In our opinion, the financial statement schedule, when considered in
relation to the basic financial statements taken as whole, presents fairly, in
all material respects, the information required to be included herein.

COOPERS & LYBRAND L.L.P.

Houston, Texas
May 20, 1998

S-1
<PAGE>

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE CHARGED BALANCE
BEGINNING TO AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OTHER (1) OF PERIOD
----------- --------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
LOONEY & COMPANY
Year ended December 31, 1994:
Allowance for uncollectible
accounts................... $ 32 $ 28 $ -- $ -- $ 60
==== ==== ==== ==== ====
Year ended December 31, 1995:
Allowance for uncollectible
accounts................... $ 60 $ 83 $ -- $ -- $143
==== ==== ==== ==== ====
Year ended December 31, 1996:
Allowance for uncollectible
accounts................... $143 $ 80 $ -- $ -- $223
==== ==== ==== ==== ====
U.S. LEGAL SUPPORT, INC.
Year ended December 31, 1997
Allowance for uncollectible
accounts................... $223 $133 $(36) $436 $756
==== ==== ==== ==== ====
</TABLE>
- --------
(1) Acquired allowances for uncollectible accounts in acquisitions.

S-2

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 (File
No. 333-36575) (i) of our report dated May 20, 1998, except for Note 13 as to
which the date is July 22, 1998 which includes an explanatory paragraph
regarding the Company's ability to continue as a going concern, on our audit
of the consolidated financial statements and financial statement schedules of
U.S. Legal Support, Inc., (ii) of our report dated September 5, 1997, on our
audits of the financial statements and financial statement schedule of Looney
& Company, (iii) of our report dated August 15, 1997 on our audits of the
financial statements of Klein, Bury & Associates, (iv) of our report dated
September 4, 1997, on our audits of the financial statements of G&G Court
Reporters, (v) of our report dated September 19, 1997, on our audits of the
financial statements of San Francisco Reporting Service, (vi) of our report
dated September 5, 1997, on our audits of the financial statements of Legal
Enterprise, Inc., (vii) of our report dated August 29, 1997, on our audits of
the financial statements of Elaine P. Dine, Inc., (viii) of our report dated
September 5, 1997, on our audits of the financial statements of Burton House,
Inc. d.b.a. Ziskind, Greene, Watanabe, & Nason, (ix) of our report dated
September 19, 1997 on our audits of the financial statements of Johnson Court
Reporting Group, (x) of our report dated October 21, 1997, on our audits of
the financial statements of Amicus One Legal Support Services, Inc., and (xi)
of our report dated September 19, 1997 on our audits of the financial
statements of Block Court Reporting, Inc. We also consent to the references to
our firm under the caption "Experts."

PricewaterhouseCoopers LLP

Houston, Texas

July 22, 1998

<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> JUN-30-1998 DEC-31-1997
<CASH> 1,234,327 437,368
<SECURITIES> 0 0
<RECEIVABLES> 10,036,611 9,122,265
<ALLOWANCES> 768,185 755,657
<INVENTORY> 0 0
<CURRENT-ASSETS> 11,000,678 9,008,384
<PP&E> 2,508,374 2,399,340
<DEPRECIATION> 1,387,833 1,235,144
<TOTAL-ASSETS> 42,572,486 39,967,692
<CURRENT-LIABILITIES> 16,604,961 16,160,474
<BONDS> 0 0
0 0
8,973,344 4,370,917
<COMMON> 10,841 10,841
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 42,572,486 39,967,692
<SALES> 20,698,523 24,291,354
<TOTAL-REVENUES> 20,698,523 24,291,354
<CGS> 12,554,107 15,382,264
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,857,511 1,971,275
<INCOME-PRETAX> (1,718,090) (3,868,732)
<INCOME-TAX> 0 (155,875)
<INCOME-CONTINUING> (1,718,090) (3,712,857)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> (1,265,426) (1,093,000)
<NET-INCOME> (2,983,516) (4,805,857)
<EPS-PRIMARY> (2.75) (4.43)
<EPS-DILUTED> (2.75) (4.43)

</TABLE>