LECG INC, POS AM, 1997-12-18

LECG INC
POS AM, 1997-12-18
MANAGEMENT CONSULTING SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1997
REGISTRATION NO. 333-37989
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

POST-EFFECTIVE

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

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

LECG, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
CALIFORNIA 8742 94-3063119
(TATE OR OTHER JURISDICTION OFS (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>

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2000 POWELL STREET
EMERYVILLE, CALIFORNIA 94608
(510) 653-9800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

THOMAS M. JORDE
PRESIDENT
LECG, INC.
2000 POWELL STREET
EMERYVILLE, CALIFORNIA 94608
(510) 653-9800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

COPIES TO:

MICHAEL J. DANAHER HERBERT S. WANDER
SELIM DAY KATTEN MUCHIN & ZAVIS
WILSON SONSINI GOODRICH & ROSATI, 525 WEST MONROE STREET, SUITE 1600
PROFESSIONAL CORPORATION CHICAGO, ILLINOIS 60661
650 PAGE MILL ROAD (312) 902-5200
PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300

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

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 DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [_]

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 THE 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>

PROSPECTUS

DECEMBER 18, 1997

4,500,000 SHARES

[LOGO OF LECG]

COMMON STOCK

Of the 4,500,000 Shares of Common Stock offered hereby, 3,060,000 shares are
being sold by LECG, Inc. ("LECG" or the "Company") and 1,440,000 shares are
being sold by the Selling Shareholders. See "Principal and Selling
Shareholders." The Company will not receive any part of the proceeds from the
sale of shares by the Selling Shareholders. Certain Experts (as defined below)
of the Company are acquiring shares in this offering at the initial public
offering price.

Prior to this offering, there has been no public market for the Common Stock
of the Company. See "Underwriting" for information relating to the factors to
be considered in determining the initial public offering price.

The Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "XPT," subject to official notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

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.

<TABLE>
<CAPTION>
================================================================================
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share................... $9.00 $0.63 $8.37 $8.37
Total(3).................... $40,500,000 $2,835,000 $25,612,200 $12,052,800
================================================================================
</TABLE>

(1) See "Underwriting" for indemnification agreements with the Underwriters.

(2) Before deducting expenses estimated at $800,000, which will be paid by the
Company.

(3) Certain Selling Shareholders have granted to the Underwriters a 30-day
option to purchase up to 675,000 additional shares of Common Stock at the
Price to the Public, less Underwriting Discounts and Commissions, solely
to cover over-allotments, if any. If such option is exercised in full, the
total Price to the Public, Underwriting Discounts and Commissions and
Proceeds to Selling Shareholders will be $46,575,000, $3,260,250 and
$17,702,550, respectively. The Company will not receive any of the
proceeds of the sale of shares by the Selling Shareholders pursuant to the
Underwriters' over-allotment option, if exercised. See "Principal and
Selling Shareholders" and "Underwriting."

The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters and subject to
various prior conditions, including their right to reject orders in whole or
in part. It is expected that delivery of share certificates will be made in
New York, New York on or about December 23, 1997.

DONALDSON, LUFKIN & JENRETTE LEGG MASON WOOD WALKER
SECURITIES CORPORATION INCORPORATED
<PAGE>

ADDITIONAL INFORMATION

LECG, Inc. has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 under the 1933 Act with
respect to the shares of Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. Certain items are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to LECG, Inc. and the Common Stock offered hereby, reference is made
to the Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus as to the contents of any contract,
agreement or any other document are summaries of the material terms of such
contract, agreement or other document. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibits for a more complete description of the
matter involved. A copy of the Registration Statement, and the exhibits and
schedules thereto, may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at Seven World Trade Center, Suite 1300, New York, New York 10048 and
500 West Madison Street, Chicago, Illinois 60661. Copies of such materials may
be obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549, and its
principal reference facilities in New York, New York and Chicago, Illinois, at
a prescribed rate. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of the site is http://www.sec.gov.

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

This Prospectus contains forward-looking statements that involve substantial
risks and uncertainties. When used in this Prospectus, the words "anticipate,"
"believe," "estimate," "expect" and similar expressions as they relate to the
Company or its management are intended to identify such forward-looking
statements. The Company's actual results, performance or achievements could
differ materially from the results expressed in, or implied by, these forward-
looking statements. Factors that could cause or contribute to such differences
include those discussed in "Risk Factors."

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME. SEE "UNDERWRITING."

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus. Unless otherwise indicated, the information in this
Prospectus assumes no exercise of the Underwriters' over-allotment option. The
shares of Common Stock offered hereby include a high degree of risk.
Prospective investors should carefully consider the information set forth under
the heading "Risk Factors."

THE COMPANY

LECG, Inc. ("LECG" or the "Company") is an economic consulting services firm
that provides sophisticated economic and financial analysis, expert testimony,
litigation support and strategic management consulting to a broad range of
public and private enterprises. The Company's areas of expertise include
antitrust, industry deregulation, damages analyses, economic and financial
modeling, intellectual property valuation, environmental economics and public
policy. Services are provided by renowned academics, recognized industry
leaders and former high-level government officials ("Experts") who are
supported by a highly educated professional staff, most of whom have Ph.D.s or
advanced degrees in economics, finance or related disciplines ("Professional
Staff"). The Experts include those who provide services to the Company on an
exclusive basis ("Principals") and on a non-exclusive basis ("Affiliates"). The
role of the Professional Staff is critical as it enables the Experts to
leverage their expertise allowing the Company to deliver high quality work
product to its clients. The Company believes that its structure enables its
Experts to provide sophisticated economic consulting services efficiently and
effectively to clients throughout the world. In 1996 alone, the Company
performed over 500 assignments for more than 300 clients in eight countries.

The Company provides its clients with insightful and original studies that
are authored, articulated and ultimately defended by independent, leading
Experts, and which are capable of commanding the attention of regulators,
legislators, judges and juries. The studies and related testimony incorporate
in-depth economic analysis on complex issues, such as the competitive effects
of mergers and acquisitions, restructuring of regulated industries, auction
design and implementation, the efficiency properties of complex contracts, the
impact of regulatory structures on technological innovation, the causes of
financial misfortunes and the cost of environmental damages.

The Company is retained by public and private companies, government agencies,
national and state governments and by major law firms on behalf of their
clients. The Company has provided consulting services to a diverse client base
including (i) leading corporations, such as Abbott Laboratories, Chevron Corp.,
Dow Chemical Co., Intel Corporation, Southern Pacific and Time Warner, Inc.,
(ii) large telecommunication and utility companies, such as Ameritech, Bell
Atlantic Corp., New England Power Co., Northern States Power Co., Pacific Gas
and Electric Co. and Potomac Electric Power Co., (iii) leading financial
services firms such as Bankers Trust New York Corp., Kemper Financial Services,
Inc. and Transamerica Life Insurance and Annuity Co., (iv) United States
government and regulatory agencies, such as the Department of Justice, the
Department of Labor, the Federal Communications Commission, the Federal Deposit
Insurance Corporation, the Federal Trade Commission and the Resolution Trust
Corporation and (v) national governments and government agencies, such as the
governments of Argentina, Colombia, El Salvador, Guatemala, Japan, New Zealand
and South Korea.

The Company's Principals include faculty and former faculty from leading
universities including Brigham Young University, Cambridge University, Harvard
University, the London Business School, New York University, Northwestern
University, Princeton University, Stanford University, Tel Aviv University,
Texas A&M University, the University of California at Berkeley, the University
of California at Davis, the University of California at Los Angeles, the
University of Chicago, the University of Illinois, the University of Maryland,
the University of Pennsylvania, the University of Southern California, the
University of Toronto, the University of Virginia, Vanderbilt University and
Yale University. The Experts' relationships with credentialed, internationally
renowned scholars enables the Company to serve as a "switchboard" to access
talent in the world's great universities.

3
<PAGE>

The Company believes that the business environment is favorable to the
continued application of economic analysis to complex business and policy
problems. The Company believes that there are additional growth opportunities
through (i) increasing engagements performed by the Company's current Experts,
(ii) attracting additional Experts, (iii) expanding geographically in the
United States and abroad and (iv) acquiring economic consulting organizations
on a selective basis.

Since its inception in 1988, the Company has expanded its operations from one
office in Berkeley/Emeryville, California to an aggregate of eleven offices in
Washington, D.C.; New York, New York; Evanston, Illinois; Salt Lake City, Utah;
College Station, Texas; Sacramento, California; Toronto, Canada; Wellington,
New Zealand; London, England; and Brussels, Belgium.

Prior to this offering, the Company was known as The Law and Economics
Consulting Group, Inc. The Company changed its name in October of 1997. The
Company's executive offices are located at 2000 Powell Street, Emeryville,
California 94608 and its telephone number is (510) 653-9800.

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the Company................ 3,060,000 shares
Common Stock offered by the Selling Shareholders... 1,440,000 shares
Common Stock to be outstanding after the offering.. 13,060,000 shares
Use of proceeds.................................... For general corporate
purposes, including
working capital and
capital expenditures, and
for payment of
undistributed S
Corporation earnings. See
"Use of Proceeds."
New York Stock Exchange Symbol..................... "XPT"
</TABLE>

4
<PAGE>

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF INCOME DATA:
Revenues............... $14,858 $ 20,317 $ 24,548 $ 24,835 $ 31,392 $ 22,731 $ 31,994
Cost of services....... 10,281 13,614 16,772 16,465 20,881 15,262 20,352
------- -------- -------- -------- -------- -------- --------
Gross profit........... 4,577 6,703 7,776 8,370 10,511 7,469 11,642
General and administra-
tive.................. 2,138 3,537 3,639 4,048 5,258 3,554 5,834
Other expense (in-
come)................. 0 0 0 0 0 0 (852)
------- -------- -------- -------- -------- -------- --------
Income before income
taxes ................ 2,439 3,166 4,137 4,322 5,253 3,915 6,660
Income taxes........... 113 183 90 83 189 139 271
------- -------- -------- -------- -------- -------- --------
Net income(1)(3)....... $ 2,326 $ 2,983 $ 4,047 $ 4,239 $ 5,064 $ 3,776 $ 6,389
======= ======== ======== ======== ======== ======== ========
Pro forma net in-
come(2)............... $ 3,099 $ 3,929
Pro forma net income
per share(2).......... $ 0.31 $ 0.39
Weighted average shares
outstanding(4)........ 10,006 10,161
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
------------------------------------
ACTUAL PRO FORMA(5) PRO FORMA
(UNAUDITED) AS ADJUSTED (6)
(IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash...................................... $ 1,299 $ 1,299 $26,111
Working capital........................... 5,468 732 25,544
Total assets.............................. 20,478 20,478 45,290
Total liabilities......................... 11,882 16,618 16,618
Total shareholders' equity................ 8,596 3,860 28,672
</TABLE>
- --------------------
(1) The Company is currently taxed under subchapter S of the Internal Revenue
Code. As an S Corporation, the Company is not subject to federal and some
state income taxes.
(2) The pro forma consolidated statement of income data for the year ended
December 31, 1996 and the nine months ended September 30, 1997 has been
computed by adjusting the Company's net income, as reported, to record
income tax expense assuming an effective tax rate of 41% that would have
been recorded had the Company been a C Corporation. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 2 and 10 of Notes to Consolidated Financial Statements.
(3) Included in income before taxes for the nine months ended September 30,
1997 is other income of $851,862 ($817,778 net of estimated income taxes of
$34,084) resulting from the expiration of an option to purchase the assets
of the Company by an unrelated third party. This income is not expected to
be recurring. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes 10 and 11 of Notes to
Consolidated Financial Statements. If this non-recurring item had not
occurred, pro forma net income and pro forma net income per share would be
$3,426,669 and $0.34, respectively.
(4) See Note 10 of Notes to Consolidated Financial Statements for a description
of the computation of the number of shares used in per share calculations
and net income per share.
(5) Pro forma balance sheet data has been adjusted to reflect (i) an estimated
deferred tax liability of $2,554,000 as of September 30, 1997 which would
exist if the Company were treated as a C Corporation and (ii) an estimated
distribution payable of approximately $3,512,000, of which $1,330,000 will
be used to reduce notes receivable from shareholders based upon actual cash
basis earnings through September 30, 1997 which the Company intends to
distribute. The estimated deferred tax liability will change and may
increase based upon changes between cash and accrual basis income. The
estimated distribution payable will change and will significantly increase
based upon actual cash basis earnings between September 30, 1997 and the
date of this Prospectus. See "Use of Proceeds," "S Corporation Termination"
and Notes 2 and 10 of Notes to Consolidated Financial Statements.

(6) Adjusted to reflect (i) the sale of 3,060,000 shares of Common Stock
offered by the Company and the application of the estimated net proceeds
therefrom and (ii) the pro forma balance sheet adjustments discussed in (4)
above. See "Use of Proceeds" and "Capitalization."

5
<PAGE>

RISK FACTORS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the following risk factors
as well as those discussed elsewhere in this Prospectus.

Dependence on Certain Principals. The success of the Company is highly
dependent upon the business generation capabilities of certain of the
Principals who are also directors or officers of the Company. In particular,
Messrs. Gilbert, Harris, Jorde, Rausser and Teece have had general oversight
and responsibility for over 67% of the Professional Staff's billings during
1996. There can be no assurance that these individuals will perform at
previous levels, or that they will remain with the Company. The engagement
agreements between the Company and Principals are terminable at will and, upon
termination, do not restrict the Principals from competing with the Company.
In the event that these individuals do not perform at previous levels or do
not remain with the Company, the Company's business, operating results and
financial condition would be materially and adversely affected. These
Principals who are shareholders of the Company are party to a Shareholders'
Agreement which provides, in part, that the Company has the right to purchase
a Shareholder's shares of Common Stock at one-half the market price of such
shares if such shareholder ceases to provide services to the Company on a
regular basis. These limits on transfer lapse ratably over a period of five
years starting on the date of the offering. See "Certain Transactions--
Shareholders' Agreement."

Dependence on Experts. Although the Company does not derive a significant
portion of its net income from Expert billings, the Company's ability to
retain current business and to attract new business is highly dependent on the
academic and consulting reputation of its Experts and on the quality of their
work performed for the Company. In the event the Company's reputation for
academic excellence is tarnished or the quality of its work product is
diminished, the Company's business, operating results and financial condition
could be materially adversely affected. The ability of the Experts to perform
economic consulting services also is often limited by the policies of
universities with which they are affiliated. Any change in the policies of
these universities, or loss of the services of any of these Experts for any
reason could have a material adverse effect upon the Company's business,
operating results and financial condition, including its ability to secure and
complete engagements. See "Business-Human Resources."

Dependence on Professional Staff. The Company derives its net income almost
exclusively from consulting services performed by its Professional Staff. As
of December 31, 1996 and September 30, 1997, the Company employed 104 and 133
Professional Staff, respectively. The portion of the Company's revenues for
the year ended December 31, 1996 and the nine months ended September 30, 1997
attributable to Professional Staff billings was approximately 66% and 70% of
total revenues, respectively. If existing or new Professional Staff are unable
to achieve anticipated billing rates, engagement quality, utilization levels
or other performance measures, the Company's net income could be materially
adversely affected and to the extent that the fixed costs associated with
Professional Staff (including costs associated with salaries and benefits)
exceeds the Professional Staff's billing rates, the Company's business,
operating results and financial condition could be materially and adversely
affected. See "Business-Human Resources."

Attraction, Retention and Management of Professional Staff and
Administrative Staff. The Company's business involves the delivery of
professional services and is labor-intensive. The Company's future performance
depends in large part upon its ability to attract, develop, motivate and
retain highly-skilled experts, staff economists, associates and administrative
staff, particularly senior academics with superior professional reputations.
Qualified professionals are in great demand and there is significant
competition for staff economists from other consulting and investment banking
firms, research firms, governments and government agencies and other related
enterprises. There can be no assurance that the Company will be able to
attract and retain sufficient numbers of highly skilled economists in the
future. The loss of the services of, or the failure to recruit a significant
number of Experts, staff economists, associates or administrative personnel
could have a material adverse effect on the Company's business, operating
results and financial condition, including its ability to secure and complete
engagements.

6
<PAGE>

Management of Growth. The Company is currently experiencing significant
operational and geographic growth that could strain the Company's managerial
and other resources. The Company's ability to manage the growth of its
operations will require it to continue to improve its operational, financial
and other internal systems and to attract, develop, motivate and retain its
Experts and Professional Staff. There can be no assurance that the Company's
business model can be successfully scaled up in existing markets or replicated
in new geographic areas. The Company's success will depend in large part on
its ability to maintain high levels of consultant utilization, maintain
billing rates, maintain quality and accurately set and meet schedules. If the
Company's management is unable to manage growth or new employees are unable to
achieve anticipated performance or utilization levels, the Company's business,
operating results and financial condition could be materially and adversely
affected. See "Business-Growth Strategy."

Dependence on Major Practice Areas. Of the several major practice areas,
antitrust (including mergers and acquisitions review) and
regulation/deregulation, each accounted for approximately one-fourth of the
Company's revenue for the year ended December 31, 1996. Changes in the
politics, economics and guiding philosophy with respect to these areas, or any
area in which the Company conducts business, could significantly reduce the
need for economic consulting services in these areas, which would have a
material adverse effect on the Company's business, financial condition and
results of operations.

Project Risks. Many of the Company's engagements involve projects that could
have a significant financial impact on its clients' businesses. The Company's
failure or inability to meet a client's expectations in the performance of its
services could have a material adverse effect on the Company's reputation,
thereby adversely affecting its business, operating results and financial
condition. Some of the projects for which the Company's services have been
retained may be terminated prior to completion because clients are under no
contractual obligation to continue to use the Company's consulting services.
Other projects could terminate because of the settlement of litigation or the
abandonment of a merger. The premature termination of existing or future
engagements by the Company's clients could have a material adverse effect on
its business, operating results and financial condition. Even when a project
is successfully completed, the Company could incur redeployment expenses in
locating a new project for its Professional Staff. In addition, the Company
could incur substantial costs and expend significant resources correcting
errors if any were found in the Company's work, and could possibly become
liable for damage caused by such errors.

Professional and Other Liability. The Company's services involve risks of
professional and other liability. If the Company were found to have been
negligent or to have breached its obligations to its clients, the Company
could be exposed to significant liabilities and its reputation could be
adversely affected. In connection with most of its assignments, the Company
engages experts who are independent contractors. Negligent acts by these
independent contractors could adversely affect the Company. The Company
maintains professional liability insurance in an aggregate amount of
$10 million.

Competition. The market for economic consulting services is intensely
competitive, highly fragmented and subject to rapid change. The market
includes a large number of participants from a variety of market segments,
including economic consulting firms, general management consulting firms, the
consulting practices of the "Big Six" accounting firms, technical and economic
advisory firms, regional and specialty consulting firms, small "niche"
consulting companies and individual academics. Many of these companies are
national and international in scope and have significantly greater personnel,
financial, technical and marketing resources than the Company, generate
greater revenues and have greater name recognition than the Company. There are
relatively low barriers to entry into the Company's markets and the Company
has faced and expects to continue to face additional competition from new
entrants into the economic consulting industry. There can be no assurance that
the Company will compete successfully with its existing competitors or with
any new competitors. See "Business--Competition."

Control of Principal Shareholders. After completion of this offering, the
Company's executive officers and certain directors will beneficially own
approximately 54.1% of the Company's outstanding shares of Common Stock.
Messrs. Teece, Rausser, Jorde, Harris, and Gilbert will own approximately
18.4%, 9.8%, 9.7%, 7.7% and 7.6% of the Company's stock, respectively. As a
result, these officers and directors will be able to

7
<PAGE>

influence the outcome of matters requiring a shareholder vote, including the
election of the members of the Board of Directors, thereby controlling the
affairs and management of the Company. This control could adversely affect the
market price of the Common Stock or delay or prevent a change in control of
the Company. See "Principal and Selling Shareholders."

Significant Unallocated Net Proceeds. A substantial majority of the
anticipated net proceeds of this offering has not been designated for specific
uses. Therefore, the Board of Directors of the Company will have broad
discretion with respect to the use of the net proceeds of this offering. See
"Use of Proceeds."

Absence of Prior Public Market and Possible Volatility of Stock Price. Prior
to this offering, there has been no public market for the Common Stock and
there can be no assurance that an active trading market will develop or be
sustained. The initial public offering price for Common Stock to be sold by
the Company and the Selling Shareholders will be determined by negotiations
among the Company, the Selling Shareholders and the Underwriters and may bear
no relationship to the price at which the Common Stock will trade after
completion of this offering. See "Underwriting" for factors considered in
determining such offering price. The market price of the Common Stock could be
subject to significant fluctuations in response to quarter to quarter
variations in the Company's anticipated or actual operating results, changes
in estimates of the Company's performance or recommendations by securities
analysts, performance of consulting service firms and other events or factors.
These fluctuations, as well as general economic and market conditions, may
adversely affect the market price of the Common Stock. There can be no
assurance that an active trading market for the Common Stock of the Company
will develop or be sustained after this offering.

Shares Eligible for Future Sale. Sales of a substantial number of shares of
Common Stock in the public market following this offering could adversely
affect the market price for the Common Stock. These sales could also make it
more difficult for the Company to sell its equity or equity-related securities
in the future at a time and price that the Company deems appropriate. Upon
completion of this offering, the Company will have approximately 13,060,000
shares of Common Stock outstanding. The 4,500,000 shares offered hereby will
be immediately tradeable without restriction. As a result of lock-up
agreements between certain shareholders and the Underwriters, 8,560,000 shares
will not become available for sale in the public market until 180 days after
the effectiveness of this offering, subject in some cases to the volume and
other restrictions of Rule 144 and Rule 701 under the Securities Act of 1933,
as amended (the "Securities Act"). However, the Underwriters may, in their
sole discretion and at any time without notice, release all or any portion of
the securities subject to lock-up agreements. Shares eligible to be sold by
affiliates pursuant to Rule 144 are subject to volume and other restrictions.
Subsequent to the closing of this offering, the Company intends to register
2,000,000 shares of Common Stock reserved for issuance under the Company's
stock plans. See "Shares Eligible for Future Sale."

Potential Issuance of Undesignated Preferred Stock; Anti-Takeover
Effects. The Company's Board of Directors can, without obtaining shareholder
approval, issue shares of Preferred Stock having rights, preferences,
privileges and restrictions, including voting rights, that could adversely
affect the voting power and other rights of holders of the Common Stock. The
issuance of the Preferred Stock could have the effect of making it more
difficult for a person to acquire a majority of the outstanding voting stock
of the Company, thereby delaying, deferring or preventing a change in control
of the Company. Furthermore, such Preferred Stock may have other rights,
including economic rights, senior to the Common Stock, and, as a result, the
issuance of such stock could have a material adverse effect on the market
value of the Common Stock. The Company has no current plans to issue shares of
Preferred Stock. The Company may in the future adopt other measures that may
have the effect of delaying, deferring or preventing a change in control of
the Company, even though at a premium price or favored by a majority of
unaffiliated shareholders. Certain of such measures may be adopted without any
further vote or action by the shareholders. The Company has no current plans
to adopt any such measures. See "Description of Capital Stock."

Dilution. Purchasers of the Common Stock in this offering will suffer
immediate and substantial dilution of $6.84 per share in the net tangible book
value of the Common Stock from the initial public offering price.

8
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of 3,060,000 shares of Common
Stock being offered hereby (after deducting underwriting discounts and
commissions and estimated offering expenses) are estimated to be approximately
$24,812,200. The principal purposes of this offering are to obtain additional
capital, create a public market for the Common Stock, facilitate future access
by the Company to public equity markets and enhance the Company's ability to
use its equity securities as a means of attracting, retaining and providing
incentives to employees. The Company expects to use the net proceeds from this
offering for general corporate purposes, including working capital, capital
expenditures and payment of cash basis undistributed S Corporation earnings
(estimated to be $6.8 million as of the date of this offering). Pending use of
the net proceeds for the above purposes, the Company intends to invest such
funds in short-term, interest-bearing, investment grade obligations. The
Company will not receive any proceeds from the sale of Common Stock by the
Selling Shareholders. See "Risk Factors--Significant Unallocated Net Proceeds"
and "S Corporation Termination."

S CORPORATION TERMINATION

Since its founding in 1988, the Company has been treated as a subchapter S
Corporation ("S Corporation") for federal income tax purposes under subchapter
S of the Internal Revenue Code of 1986, as amended (the "Code"), and for
certain state income tax purposes. As a result, substantially all of the
income of the Company has been taxed directly to its shareholders rather than
to the Company. Following the completion of this offering, the Company will be
subject to corporate income taxation as a subchapter C corporation ("C
Corporation") under the Code.

In connection with the termination of the Company's S Corporation status,
the Company has deferred income taxes of approximately $2.6 million as of
September 30, 1997 in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." This amount is expected to
increase significantly as of the date of this Prospectus. This income tax
expense will be in addition to income tax expense otherwise incurred in such
quarter and will be incurred upon termination of the Company's S Corporation
status, estimated to occur in December 1997. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 2 to Notes
to Consolidated Financial Statements.

DIVIDEND POLICY

The Company currently anticipates that it will retain all of its future
earnings for use in the expansion and operation of its business and does not
anticipate paying any cash dividends in the foreseeable future. Future cash
dividends, if any, will be at the discretion of the Company's Board of
Directors and will depend upon, among other things, the Company's future
operations and earnings, capital requirements and surplus, general financial
condition, contractual restrictions and such other factors as the Board of
Directors may deem relevant.

9
<PAGE>

CAPITALIZATION

The following table sets forth the borrowings and capitalization of the
Company as of September 30, 1997: (i) on an actual basis, (ii) on a pro forma
basis terminating the Company's S Corporation status and (iii) on an as
adjusted basis giving effect to the sale and issuance of Common Stock offered
hereby. See "S Corporation Termination", Note 10 to Notes to Consolidated
Financial Statements and "Use of Proceeds." This table should be reviewed in
conjunction with the Consolidated Financial Statements and Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA (2) AS ADJUSTED(3)
(IN THOUSANDS)
<S> <C> <C> <C>
Borrowings under line of credit.......... $ 1,227 $ 1,227 $ 1,227
------- ------- -------
Shareholders' equity:
Common Stock, $.001 par value,
40,000,000 shares authorized,
10,186,375 shares issued and
outstanding, actual and pro forma;
13,060,000 shares issued and
outstanding, as adjusted(1)........... 10 10 13
Additional paid-in capital............. 5,620 5,187 29,996
Notes receivable from shareholders..... (2,734) (1,404) (1,404)
Retained earnings...................... 5,700 67 67
------- ------- -------
Total shareholders' equity........... 8,596 3,860 28,672
------- ------- -------
Total capitalization................. $ 9,823 $ 5,087 $29,899
======= ======= =======
</TABLE>
- ---------------------

(1) Excludes 2,000,000 shares of Common Stock reserved for future grant under
the Company's stock plans. See "Management--Employee Benefit Plans" and
Note 12 of Notes to Consolidated Financial Statements.

(2) Pro forma to reflect the declaration of the S Corporation distribution
(which is estimated to be approximately $3,512,000 as of September 30,
1997 of which $1,330,000 will be used to reduce notes receivable from
shareholders) and the establishment of a deferred tax liability of
$2,554,000 upon termination of the Company's S Corporation status. See
"S Corporation Termination."

(3) Pro forma as adjusted to reflect the sale of 3,060,000 shares of Common
Stock offered by the Company and the application of the estimated net
proceeds therefrom.

10
<PAGE>

DILUTION

The net tangible book value of the Company as of September 30, 1997 was
approximately $8.6 million or approximately $0.84 per share of Common Stock.
Net tangible book value per share represents the Company's total tangible
assets less the Company's total liabilities, divided by the aggregate number
of shares of Common Stock outstanding. After giving effect to (i) the sale by
the Company of the 3,060,000 shares of Common Stock offered and the
application of the estimated net proceeds therefrom, (ii) the S Corporation
distribution, and (iii) the recording of deferred income taxes upon
termination of the Company's S Corporation status, the pro forma net tangible
book value of the Company at September 30, 1997 would have been $28.7 million
or $2.16 per share. This amount represents an immediate increase in net
tangible book value of $1.32 per share to existing shareholders and an
immediate dilution of $6.84 per share to purchasers of Common Stock in this
offering. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share............................ $9.00
Net tangible book value per share as of September 30, 1997....... $0.84
Increase in net tangible book value per share attributable to new
investors....................................................... 1.32
-----
Net tangible book value per share after this offering.............. 2.16
-----
Dilution per share to new public investors......................... $6.84
=====
</TABLE>

The following table summarizes, on a pro forma basis as of September 30,
1997, the number of shares of Common Stock purchased from the Company, the
total consideration paid to the Company and the average price per share paid
by the existing shareholders and by the new investors purchasing shares of
Common Stock in this offering:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Existing sharehold-
ers(1)................. 10,186 76.9% $ 5,197 15.9% $0.51
New investors(1)........ 3,060 23.1 27,540 84.1 $9.00
------ ----- ------- -----
Total................. 13,246 100.0% $32,737 100.0%
====== ===== ======= =====
</TABLE>
- ---------------------

(1) Sales by the Selling Shareholders in this offering will reduce the number
of shares held by existing shareholders of the Company to 8,746,375 shares
or 66.0% of the total number of shares outstanding after this offering
(8,071,375 shares or 60.9% if the Underwriters' over-allotment option is
exercised in full) and will increase the number of shares held by new
investors to 4,500,000 shares or 34.0% of the total number of shares of
Common Stock outstanding after this offering (5,175,000 shares or 39.1% if
the Underwriters' over-allotment option is exercised in full). See
"Principal and Selling Shareholders."

11
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the
Company's consolidated financial statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus. The consolidated statements
of income data set forth below with respect to the fiscal years ended December
31, 1994, 1995 and 1996 and the nine months ended September 30, 1997 and the
consolidated balance sheet data as of December 31, 1995 and 1996 and September
30, 1997 are derived from, and are qualified by reference to, the consolidated
financial statements of the Company included elsewhere in this Prospectus. The
Consolidated Statements of Income data with respect to the fiscal years ended
December 31, 1992 and 1993 and the nine months ended September 30, 1996 and
the consolidated balance sheet data as of December 31, 1992, 1993 and 1994 are
derived from the unaudited financial statements not included herein.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF INCOME
DATA:
Revenues................ $14,858 $20,317 $ 24,548 $24,835 $31,392 $22,731 $31,994
Costs of services....... 10,281 13,614 16,772 16,465 20,881 15,262 20,352
------- ------- -------- ------- ------- ------- -------
Gross profit........... 4,577 6,703 7,776 8,370 10,511 7,469 11,642
General and
administrative......... 2,138 3,537 3,639 4,048 5,258 3,554 5,834
Other expense (income).. 0 0 0 0 0 0 (852)
------- ------- -------- ------- ------- ------- -------
Income before income
taxes................. 2,439 3,166 4,137 4,322 5,253 3,915 6,660
Income taxes............ 113 183 90 83 189 139 271
------- ------- -------- ------- ------- ------- -------
Net income(1)(3)....... $ 2,326 $ 2,983 $ 4,047 $ 4,239 $ 5,064 $ 3,776 $ 6,389
======= ======= ======== ======= ======= ======= =======
Pro forma net
income(2).............. $ 3,099 $ 3,929
Pro forma net income per
share(2)............... $ 0.31 $ 0.39
Weighted average shares
outstanding(4)......... 10,006 10,161
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------- -----------------------
PRO FORMA
1992 1993 1994 1995 1996 1997 1997(5)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Cash................... $ 428 $ 721 $ 407 $ 598 $ 3 $ 1,299 $ 1,299
Working capital........ 2,434 3,611 5,319 5,934 4,342 5,468 732
Total assets........... 6,095 8,469 11,348 11,566 13,198 20,478 20,478
Total liabilities...... 3,013 4,599 5,808 5,218 6,934 11,882 16,618
Total shareholders'
equity................ 3,082 3,869 5,539 6,348 6,264 8,596 3,860
</TABLE>
- ---------------------
(1) The Company is currently taxed under subchapter S of the Internal Revenue
Code. As an S Corporation, the Company is not subject to federal and some
state income taxes.
(2) The pro forma consolidated statement of income data for the year ended
December 31, 1996 and the nine months ended September 30, 1997 has been
computed by adjusting net income, as reported, to record income tax
expense assuming an effective tax rate of 41% that would have been
recorded had the Company been a C Corporation. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 2 and 10 of Notes to Consolidated Financial Statements.
(3) Included in income before taxes for the nine months ended September 30,
1997 is other income of $851,862 ($817,778 net of estimated income taxes
of $34,084) resulting from the expiration of an option to purchase the
assets of the Company by an unrelated third party. This income is not
expected to be recurring. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Notes 10 and 11 of
Notes to Consolidated Financial Statements. If this non-recurring item had
not occurred, pro forma net income and pro forma net income per share
would be $3,426,669 and $0.34, respectively.
(4) See Note 10 of Notes to Consolidated Financial Statements for a
description of the computation of the number of shares used in per share
calculations and net income per share.
(5) Pro forma balance sheet data has been adjusted to reflect (i) an estimated
deferred tax liability of $2,554,000 as of September 30, 1997 which would
exist if the Company were treated as a C Corporation and (ii) an estimated
distribution payable of approximately $3,512,000, of which $1,330,000 will
be used to reduce notes receivable from shareholders based upon actual
cash basis earnings through September 30, 1997 which the Company intends
to distribute. The estimated deferred tax liability will change and may
increase based upon changes between cash and accrual basis income. The
estimated distribution payable will change and will significantly increase
based upon actual cash basis earnings between September 30, 1997 and the
date of this Prospectus. See "Use of Proceeds,""S Corporation Termination"
and Notes 2 and 10 of Notes to Consolidated Financial Statements.

12
<PAGE>

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

This Management's Discussion and Analysis of Financial Condition and Results
of Operations and other parts of this Prospectus contain forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed in "Risk Factors" and "Business," as well as those discussed
elsewhere in this Prospectus.

OVERVIEW

The Company is an economic consulting services firm that provides
sophisticated economic and financial analysis, expert testimony, litigation
support and strategic management consulting to a broad range of public and
private enterprises. The Company's areas of expertise include antitrust,
industry deregulation, damages analyses, economic and financial modeling,
intellectual property valuation, environmental economics and public policy.
Services are provided by Experts who are supported by Professional Staff. The
Experts include Principals and Affiliates. The role of the Professional Staff
is critical as it enables the Experts to leverage their expertise allowing the
Company to deliver high quality work product to its clients. The Company
believes that its structure enables its Experts to provide sophisticated
economic consulting services efficiently and effectively to clients throughout
the world. In 1996 alone, the Company performed over 500 assignments for more
than 300 clients in eight countries.

The Company derives revenues almost exclusively from professional service
fees which are billed at standard hourly rates. Projects are generally billed
monthly on a time and expense basis. Professional Staff compensation ranges
from about 70% of billing rates for senior Professional Staff to about 25% for
junior Professional Staff. Professional Staff are compensated on a salary plus
bonus basis or based on an hourly rate plus overtime. Experts are generally
paid 100% of their collected fees and receive project origination fees for
projects they secure or manage. Project origination fees average approximately
15% but can be up to 19.5% of collected revenues on non-Expert professional
fees.

The Company's most significant expense is personnel costs, which consist of
fees paid to Experts and salaries and benefits for Professional Staff and
other employees. The number of professionals assigned to a project will vary
depending on the size and duration of each engagement. Project terminations,
completion and scheduling delays may result in periods where personnel are not
assigned to active projects. The Company manages its personnel costs by
closely monitoring client needs and utilization of the Professional Staff.

Since its organization in 1988, the Company has been treated as an S
Corporation for tax purposes. As an S Corporation, the net income of the
Company is taxable for federal (and some state) income tax purposes directly
to the Company's shareholders. Accordingly, the statements of income presented
do not include a provision for federal or certain state income taxes. All of
the Company's tax basis net income has been (or will be, as described in "S
Corporation Distribution") distributed to its shareholders and included in
their personal taxable income. The Company's S Corporation status will
terminate upon the date of this Prospectus.

During the quarter in which this offering is completed, the Company will
recognize a significant charge against income resulting from the termination
of the Company's S Corporation status. As a result, the Company will record a
one-time charge to operations estimated at $2.6 million based on the deferred
tax liabilities as of September 30, 1997. This amount is expected to increase
between September 30, 1997 and the date of this Prospectus.

13
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected
consolidated statements of income data as a percentage of revenues:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- ------------------
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
Revenues........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of services................ 68.3 66.3 66.5 67.1 63.6
------- ------- ------- -------- --------
Gross profit.................... 31.7 33.7 33.5 32.9 36.4
General and administrative ..... 14.8 16.3 16.8 15.7 18.2
Other expense (income).......... -- -- -- -- (2.6)
------- ------- ------- -------- --------
Income before income taxes...... 16.9 17.4 16.7 17.2 20.8
Income taxes.................... 0.4 0.3 0.6 0.6 0.8
------- ------- ------- -------- --------
Net income ..................... 16.5% 17.1% 16.1% 16.6% 20.0%
======= ======= ======= ======== ========
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996

Revenues. Revenues increased 40.7% to $32.0 million in the nine months ended
September 30, 1997, from $22.7 million in the nine months ended September 30,
1996. This growth in revenues was primarily attributable to additional
services provided to existing clients and engagements with new clients. The
Company expanded the number of projects billed from 423 through the first nine
months of 1996 to 470 through the same period in 1997. Additionally, revenues
increased due to an increased number of senior Professional Staff relative to
junior Professional Staff.

Gross Profit. Gross profit consists of revenues less cost of services, which
includes Expert fees, Professional Staff salaries and benefits, project
origination fees and other direct project expenses. Gross profit increased
55.9% to $11.6 million in the first nine months of 1997 from $7.5 million in
the comparable period of 1996. Gross profit as a percentage of revenues was
36.4% in the first nine months of 1997 compared to 32.9% in 1996. To service
additional client projects, the Company increased the number of Principals and
employees, including Professional Staff, to 218 at September 30, 1997 from 168
at September 30, 1996. Increases in utilization rates resulted in a 8.5%
increase in average billings per Professional Staff member in the 1997 period.
LECG's Experts leveraged Professional Staff resources more effectively which
resulted in a higher contribution to Company margins.

General and Administrative. General and administrative includes salaries and
benefits of management and the administrative staff, facilities costs,
supplies, outside professional fees not billed to clients and all other
corporate costs. General and administrative increased 64.1% to $5.8 million in
the nine month period ended September 30, 1997 from $3.6 million in the prior
year period. As a percentage of revenues, general and administrative increased
to 18.2% in the first nine months of 1997 from 15.7% in the first nine months
of 1996. This expense is due to additional facilities charges for moving an
existing office, expanding three existing offices and opening three new
offices to accommodate planned growth.

Other Expense (Income). The Company recognized other income of $851,862 in
the first nine months of 1997 related to the expiration of an option agreement
entered into in 1993. The agreement called for the purchase of all the
Company's assets or outstanding Common Stock. The income recognized represents
a $1,000,000 payment for the asset option net of applicable expenses to
arrange the transaction.

Income before Income Taxes. Income before income taxes for the nine months
ended September 30, 1997 was $6.7 million, compared with $3.9 million for the
nine months ended September 30, 1996. The improvement is attributable to
increased revenues while maintaining profit margins as well as the gain on the
expiration of the option as discussed above.

14
<PAGE>

Pro Forma Results. The pro forma presentation in Selected Consolidated
Financial Data for the nine months ended September 30, 1997 assumes the
Company had been operating as a C Corporation and reflects an effective tax
rate of 41.0%.

1996 COMPARED TO 1995

Revenues. Revenues increased 26.4% to $31.4 million in 1996 from $24.8
million in 1995. The increase in revenues was attributable to increasing the
number of projects billed by 8.6% while increasing the average billings per
project by 16.3%. The Company worked on several large projects for existing
clients.

Gross Profit. Gross profit increased 25.6% to $10.5 million in 1996 from
$8.4 million in 1995. Gross profit as a percentage of revenues decreased
slightly to 33.5% in 1996 from 33.7% in 1995. This decrease is attributable to
increased expenses for project origination fees earned by certain Experts
eligible for a higher percent of such fees. This is offset by an increase in
staff utilization rates of 7% over the prior year.

General and Administrative. General and administrative increased 29.9% to
$5.3 million in 1996 from $4.0 million in 1995. This is attributable to
expenses proportionately increasing in relation to revenues as well as
increased recruiting and business development costs associated with expanding
the Company. General and administrative, as a percentage of revenues,
increased to 16.8% in 1996 from 16.3% in 1995.

1995 COMPARED TO 1994

Revenues. Revenues for 1995 were $24.8 million compared to 1994 revenues of
$24.5 million in 1994. Revenues increased by 1.2%, as the Company's management
focused on establishing a plan for future growth which included hiring a Chief
Operating Officer and increasing recruiting efforts for Experts and
Professional Staff.

Gross Profit. Gross profit increased 7.6% to $8.4 million in 1995 from $7.8
million in 1994. Gross profit as a percentage of revenues increased to 33.7%
in 1995 from 31.7% in 1994. This increase was a result of the Company's
reducing expenses by reducing the percentage paid, on an ongoing basis, for
project origination fees. Experts and Professional Staff increased to 136 at
the end of 1995 from 111 at the end of 1994.

General and Administrative. General and administrative increased 11.2% to
$4.0 million in 1995 from $3.6 million in 1994. As a percentage of revenues,
general and administrative increased to 16.3% in 1995 from 14.8% in 1994. The
increase is attributable to additional facilities charges for opening one new
office and the expansion of two existing offices to accommodate planned
growth.

15
<PAGE>

UNAUDITED QUARTERLY RESULTS AND SEASONALITY

The following table sets forth certain unaudited quarterly operating
information for each of the seven quarters ended September 30, 1997. This
information has been prepared on the same basis as the audited financial
statements contained elsewhere in this Prospectus and include all normal
recurring adjustments necessary for the fair presentation of the information
for the periods presented, when read in conjunction with the Company's
Consolidated Financial Statements and related Notes thereto. Results for any
previous fiscal quarter are not necessarily indicative of results for the full
year or for any future quarter.

<TABLE>
<CAPTION>
QUARTER ENDED (IN THOUSANDS)
---------------------------------------------------------------
MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30, SEP. 30,
1996 1996 1996 1996 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $6,617 $7,781 $8,332 $8,662 $9,901 $10,885 $11,208
Cost of services........ 4,397 5,208 5,656 5,620 6,646 7,094 6,612
------ ------ ------ ------ ------ ------- -------
Gross profit............ 2,220 2,573 2,676 3,042 3,255 3,791 4,596
General and
administrative......... 1,013 1,228 1,313 1,704 1,415 1,887 2,532
Other expense (income).. -- -- -- -- -- (852) --
------ ------ ------ ------ ------ ------- -------
Income before income
taxes.................. 1,207 1,345 1,363 1,338 1,840 2,756 2,064
Income taxes............ 43 48 48 50 64 115 92
------ ------ ------ ------ ------ ------- -------
Net income.............. $1,164 $1,297 $1,315 $1,288 $1,776 $ 2,641 $ 1,972
</TABLE>

Revenues and operating results fluctuate from quarter to quarter as a result
of a number of factors, such as the significance of client engagements
commenced and completed during a quarter, the number of business days in a
quarter and employee hiring and utilization rates. The timing of revenues
varies from quarter to quarter because of the Company's revenue cycle, the
ability of clients to terminate engagements without penalty, the size and
scope of assignments and general economic conditions. Because a significant
percentage of the Company's expenses are relatively fixed, a variation in the
number of client assignments or the timing of the initiation or the completion
of client assignments can cause significant variations in operating results
from quarter to quarter. Furthermore, the Company has on occasion experienced
a seasonal pattern in its operating results, with a smaller proportion of the
Company's revenues and lower operating income occurring in the third quarter
of the year or a smaller sequential growth rate than in other quarters.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of liquidity has been cash flow from
operations, periodically supplemented by borrowings under a bank line of
credit and by loans from shareholders. Operations provided funds of
$5.8 million for the nine months ended September 30, 1997 as compared to $5.2
million in the nine months ended September 30, 1996. Cash flow from operations
amounted to $2.3 million, $4.2 million and $5.6 million for 1994, 1995 and
1996, respectively. Net income before taxes and net income increased each year
during this three year period.

Investing activities historically have not required significant cash flows.

Cash flow used in financing activities was $2.8 million for the nine months
ended September 30, 1997. During this period, the Company paid $4.1 million in
S Corporation Distributions which was partially funded by the Company's line
of credit. The line expires on May 31, 2000 and provides for maximum
borrowings of $3.0 million. The Company is currently negotiating to increase
the line to $10.0 million. Borrowings are limited to working capital
requirements and bear interest at the bank's prime rate (8.5% at September 30,
1997). There was $1.2 million outstanding borrowings under the line of credit
as of September 30, 1997. Borrowings are secured by accounts receivable and
fixed assets.

Cash flow used in financing activities amounted to $2.4 million, $3.4
million and $5.1 million for 1994, 1995 and 1996, respectively.

16
<PAGE>

The Company believes the net proceeds from the sale of Common Stock offered
hereby, together with funds generated by operations, will provide adequate
cash to fund its anticipated cash needs, at least through the next twelve
months. Thereafter, the Company anticipates that its cash requirements related
to future operations will be funded with cash generated from operations and
short-term borrowings. Pending such uses, the net proceeds will be invested in
short-term, interest-bearing investment grade securities. The Company
currently anticipates that it will retain all of its earnings for development
of the Company's business and does not anticipate paying any cash dividends in
the foreseeable future.

RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 128 ("Statement 128"),
issued in February 1997, simplifies the standards for computing and presenting
earnings per share ("EPS"). It replaces the presentation of primary EPS with
basic EPS and requires a reconciliation of the basic EPS computation to the
diluted EPS computation. Basic EPS excludes dilution and is computed by
dividing income available to common shareholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that would occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Adoption of this statement is effective for financial statements issued for
periods ending after December 15, 1997, and earlier application is not
permitted. The Company does not expect the effects of Statement 128 to be
material.

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<PAGE>

BUSINESS

The Company is retained by public and private companies, government
agencies, national and state governments and by major law firms on behalf of
their clients. The Company has provided consulting services to a diverse
client base including (i) leading corporations, such as Abbott Laboratories,
Chevron Corp., Dow Chemical Co., Intel Corporation, Southern Pacific and Time
Warner, Inc., (ii) large telecommunication and utility companies, such as
Ameritech, Bell Atlantic Corp., New England Power Co., Northern States Power
Co., Pacific Gas and Electric and Potomac Electric Power Co., (iii) leading
financial services firms such as Bankers Trust New York Corp., Kemper
Financial Services, Inc. and Transamerica Life Insurance and Annuity Co., (iv)
United States government and regulatory agencies, such as the Department of
Justice, the Department of Labor, the Federal Communications Commission, the
Federal Deposit Insurance Corporation, the Federal Trade Commission and the
Resolution Trust Corporation and (v) national governments and government
agencies, including the governments of Argentina, Colombia, El Salvador,
Guatemala, Japan, New Zealand and South Korea.

Since its inception in 1988, the Company has expanded its operations from
one office in Berkeley/Emeryville, California to a current aggregate of eleven
offices in Washington, D.C.; New York, New York; Evanston, Illinois; Salt Lake
City, Utah; College Station, Texas; Sacramento, California; Toronto, Canada;
Wellington, New Zealand; London, England; and Brussels, Belgium.

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BUSINESS ENVIRONMENT FOR COMPLEX ECONOMIC ANALYSIS

Micro-economic thinking and modeling have gained wide acceptance. The
application of advanced micro-economic analysis to complex decision-making has
been made increasingly possible by the development of economic models and
model estimation techniques, the advent of low cost computing capacity and the
development of large public and private databases, which enable statistical
relationships to be explored and modeled. The increased use of economic
analysis is reflected in the frequency with which government agencies in the
United States and abroad are engaging economists to assist in evaluating
mergers and acquisitions, establishing deregulatory principles, designing
complex auctions and implementing transfer pricing rules. In turn, affected
private sector parties are compelled to commission similar economic studies to
represent their interests in the shaping of regulatory and deregulatory
processes, privatization outcomes and legislative changes. In addition,
economic analysis is increasingly used to help determine liability and damages
in private litigation or alternative dispute resolution forums.

The Company believes that micro-economic analysis directed by leading
experts is especially useful where there is considerable complexity or
contention as a result of profound change due to technological innovation or
major legal or policy shifts. This complexity and contention have affected
organizations (i) in those industries undergoing fundamental transition, (ii)
directly affected by competition policy and antitrust laws, (iii) confronted
with complex valuation problems, (iv) requiring damage analysis and (v)
formulating corporate strategy.

Industries in Fundamental Transition. Regulatory initiatives typically lead
governments and affected parties to engage consultants to perform economic
analyses. Cost benefit, comparative cost, cost allocation and price impact
studies are frequently commissioned and can yield important findings which can
shape policy. Economic analysis is especially important where governments or
regulators are endeavoring to deregulate industries. Deregulation begets
further regulations as governments increasingly rely on competition policy
rather than price, entry and rates of return regulation.

Recent deregulation in the telecommunications, electric and gas utility and
agribusiness industries as well as the legislative and market turmoil
affecting the United States healthcare system have led to greater use and
application of economic analyses in those industries.

. Telecommunications. The telecommunications industries are undergoing
fundamental restructuring as they move from public control to more
market based methods of governance or control. These developments are
already substantially accomplished in New Zealand and Chile, in progress
in the United States, the United Kingdom and Australia and being
initiated or contemplated in many other countries including continental
European countries. Greater reliance on competition rather than
regulation requires detailed market, cost and financial analyses by the
major industry participants as well as by potential new entrants.

. Electric and Gas Utilities. Deregulation and industry consolidation
often requires sophisticated economic analysis. Where vertical
divestiture has occurred, pricing issues are especially important with
respect to intermediate "products" including wholesale electricity and
transmission/pipeline services, particularly if control of the basic
infrastructure (e.g., transmission/pipelines) remains concentrated.
Also, when integrated providers compete with new entrants that are not
integrated, complex competition policy issues arise with respect to the
terms and conditions under which the integrated provider can self
supply. Organizational design and access issues frequently need to be
analyzed from an economic perspective.

. Agribusiness. With deregulation and the phased reduction of government
subsidies occurring in industrialized countries as a result of the GATT
Uruguay round, and the forthcoming negotiation rounds under the auspices
of the World Trade Organization, greater flexibility and market
sensitivity are being introduced to the agricultural sectors of many
countries. Moreover, environmental issues, water rights and
technological innovation in agricultural machinery, hybrid seeds,
engineered plants and species raise important policy issues requiring
economic analyses.

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<PAGE>

. Healthcare. Policy issues arise in many contexts, including hospital
mergers, physician/hospital relations and pharmaceutical pricing.
Because the sale of pharmaceutical products and medical devices are
often heavily regulated, and involve significant levels of intellectual
property, they too involve complex issues which frequently require
economic analysis. Furthermore, pharmaceutical and medical products are
frequently supplied on a global basis, raising important intercountry
pricing issues.

Competition Policy and Antitrust Analysis. Competition policy issues
frequently involve detailed analysis of markets, market entry conditions and
the market positions of incumbents. Such analyses are required not only in
mature markets, but also in the new high technology sectors where the role of
innovation, network externalities, installed base effects and standards are of
great importance. The role of pricing policies and licensing strategies must
frequently be assessed. Antitrust analysis is frequently required before
merging firms can achieve clearance from antitrust and other regulatory bodies
in the United States, Europe and elsewhere. In addition, private antitrust
litigation frequently requires analysis of markets, firm behavior and damages.

Complex Valuation Problems. The growth and expansion of markets has led to
increases in the variety of assets which are traded and the frequency with
which restructuring occurs. In many cases, there may not be organized markets
where the prices of certain assets are readily ascertained. Yet there is often
a need for value to be determined or for asset sales to be organized. Economic
analysis and advanced statistics and econometrics can assist in valuation,
including:

. Financial Securities. Valuation engines and sophisticated mathematical
modeling are frequently needed to value complex derivatives and exotic
securities. These advanced techniques are employed in litigation, as
well as by companies assessing their exposure to risk and seeking to
value their portfolios.

. Intellectual Property and Intangible Assets. Many firms recognize the
need to build and protect brand equity, intangible assets and
intellectual property. Patents, trade secrets, copyrights and trademarks
frequently need to be valued for managerial, licensing, transfer pricing
and litigation purposes. Economic and market analysis is frequently
fundamental to such valuations.
. Auction of Public Assets and Stranded Assets. Governments have recently
auctioned assets in the electromagnetic spectrum, railroad, oil and gas,
forestry and mineral industries. Private parties wishing to sell large
fixed investments have likewise been attracted to the notion of
designing complex auctions. The architecture of market design principles
depends heavily on modern game theory, which is an important analytical
tool in modern micro-economic analysis.

. Contract Rights. Complex contract rights are often analyzed and valued
in the context of litigation, insurance coverage, mergers and
acquisitions and joint ventures.

Damages Analysis. Damages analysis often requires, or benefits from, the
analysis of large data sets and the construction of economic models. Damages
analysis frequently forms the foundation for understandable expert testimony
for litigation and alternative dispute resolution.

. Environmental Damages. Sophisticated economic analysis is frequently
required to quantify damages from hazardous waste contamination,
including estimation of loss of prospective economic gain, diminution in
property value and residual price risk attached to remediated
properties. Economics also is used to analyze hedonic and economic
damages resulting from loss of life.

. Intellectual Property Damages. Intellectual property is increasing in
value, in part because of the new patent regime caused by the
centralization of the Court of Appeals in Washington, D.C. Accordingly,
the stakes involved in patent disputes have also increased. Infringement
damages frequently require the exploration of the cost of non-infringing
alternatives or "invent around" opportunities as well as future market
and alternative technologies calculations.

. Mass Torts. The United States has witnessed a growing number of class
action product liability cases, including cases involving silicone
breast implants, cigarettes, dangerous chemicals and pharmaceuticals
producing unintended side effects. Both plaintiffs and defendants
increasingly rely on sophisticated economic analysis to quantify
exposure, adverse health effects and damages and to allocate damages
among defendants.

20
<PAGE>

. Securities Fraud. Securities products have become increasingly complex
with the growth of sophisticated derivative products. As securities
products have become more complex, the calculation of damages in
securities fraud cases has also become more complex, often requiring
sophisticated computer modeling and analysis of extensive data sets.

Corporate Strategy. Economic analytic techniques are also used to examine
the interplay between asset structure, organizational structure and processes
and competitive advantage. Areas where economic analysis is useful include the
analysis of difficult to replicate intangible assets used in supporting
competitive advantage, the choice of organizational structure, decisions
regarding outsourcing, transfer pricing and technology acquisitions.

THE LECG BUSINESS MODEL

The Company's business model attracts and motivates renowned experts who
provide high quality economic analyses and testimony on behalf of companies
and government agencies. The Company believes that several factors distinguish
it from other industry participants. These factors include the following:

Renowned Experts. The Company has the ability to access and productively
utilize renowned scholars and experts from government and the private sector
able to conduct, present and defend authoritative studies. The Experts who
perform these services include nationally recognized and highly credentialed
faculty and former faculty from many top universities. Many of these Experts
have valuable hands-on industry experience or experience in working in or with
government agencies such as the Department of Justice, the Federal Trade
Commission and the Federal Communications Commission. The Experts and
Professional Staff are major contributors to the academic and professional
literature in economics and finance, public policy and intellectual capital
management.

Highly Educated Professional Staff. The Company employs a staff of highly
credentialed and experienced economists and other analysts to support the
Experts. Over one-half of the Company's 133 Professional Staff have advanced
degrees in economics, finance or related disciplines. The Company believes
that its highly educated Professional Staff enables the Experts to leverage
their expertise allowing the Company to deliver high quality work product to
its clients. In addition, many of the Professional Staff have become experts
in their own right, testifying, authoring studies and designing sophisticated
models.

Attractive Support Infrastructure. The Company believes that Experts desire
to associate with the Company in part because of its support infrastructure
which (i) relieves the Experts of administrative tasks and enables them to
focus on their analytic work, (ii) allows them to retain their autonomy and
intellectual freedom and (iii) provides a collegial environment that advances
creativity and cooperation. The Company has designed its infrastructure to
maximize Expert efficiency. As part of this strategy, the Company opens
offices in proximity to the universities at which its Experts are faculty in
order to provide convenient support. Marketing, contract negotiation,
accounting, billing and collecting receivables are handled at the Company's
executive offices. This support infrastructure ensures the Expert focuses on
analysis rather than project administration.

Focused Project Management. The Company treats each client engagement as a
separate project, assigning one or more Experts and a Professional Staff team
consisting of one or more senior economists and analysts. Once assembled,
these teams become virtual organizations using inside and outside resources to
achieve performance in exacting time frames. The Company makes extensive use
of advanced computer hardware and software in executing its projects.

Authoritative Studies. The Company is committed to providing the most
sophisticated and authoritative studies and expert testimony based upon
advanced economic and statistical analysis. The Experts' credentials command
the attention of decision makers, thereby enabling analytical and
authoritative approaches to problems to receive proper recognition.

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<PAGE>

Investment in Databases, Models and Methodologies. The Company has developed
proprietary data bases consisting of economic data and studies. In addition,
the Company has developed proprietary computer models used in cost modeling,
auctions and the valuation of complex derivatives. The Company's Experts and
Professional Staff are further aided by access to the Company's network of
contacts and affiliations, internal databases and prior non-confidential
studies.

AREAS OF EXPERTISE

The Company offers its clients leading economic expertise in a number of
industries across a variety of service areas including the following:

Agribusiness Electric Utilities

. Merger analysis . Rate design and cost of service
. "Fair" pricing of agricultural . Market-based rates and contracts
products . Promotional practices
. Intellectual property . Transmission rates and access
. Valuation of biotechnology . Performance-based regulation
. Strategy and complementary asset . Retail wheeling/industry
ownership vs. control assessments restructuring
. Market surveys . Competitive strategies/stranded
. Price forecasting investment
. Application of information . Qualified facility
technology bidding/contract renegotiation

Antitrust Financial Industries

. Market definition . Insurance
. Analysis of market power . Banking/savings and loan
. Assessment of business practices . Real estate
. Mergers and acquisitions . Financial networks
. Cooperative activities
Futures Markets
Auctions
. CFTC regulations
. Auction design . Futures contracts and markets
. Auction execution/software . Computerized hedging models
implementation . Decision support systems
. Bidding strategies . Statistical analysis of trading
and investment strategies
Environmental and Natural
Resource Economics Health Care

. CERCLA and state superfund . Antitrust analysis
. Cost allocation modeling and . Cost benefit analysis
dispute resolution . Merger analysis
. Natural resource damages and . Damages analysis
diminution of value . Intellectual property
. Air and water quality . Market surveys
. Toxic substances and pesticides
. Land and water use Intellectual Property
. Forestry, mining and public lands
. Deregulation and water market . Patent and copyright infringement
pricing . Trade secrets and trademarks
. Management of technology
Damages Analysis . Patent misuse
. Licensing
. Compensatory and punitive . Competitive analysis of high
theories technology industry
. Lost profits and unjust
enrichment
. Patent and copyright infringement
. Valuation
. Breach of contract/fiduciary duty
. Product liability
. Business torts

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<TABLE>
<S> <C>
International Strategy and Policy Railroads

. Negotiations . Merger analysis and competitive
. Country studies conditions
. Industry studies . Maximum rate reasonableness
. European community regulations . Shipper contract negotiations
. Asian market analysis . Train derailments and health risk
. Eastern Europe and NIS market hazards
analysis
. NAFTA and World Trade Risk Management
Organization dispute settlement
panels . Derivatives
. Portfolio valuation
International Trade
Securities Fraud
. International Trade Commission
injury and causation analysis . Class actions
. Commerce Department margins . Limited partnerships
analysis . Valuation
. Trade pricing . Damage estimation
. Trade policy
. Customs valuations Strategic Management
. Export controls
. Environmental regulation trade . Management of technology and
effects intellectual property
. National security issues . Corporate strategy and structure
. Defense reconversion
Legal and Regulatory Infrastructure
Taxation
. Design of property rights
. Judicial reform . International transfer pricing
. Regulatory policies . Advanced pricing agreements
. Anti-monopolization policies . Economics of transaction costs
. Tax, trade and foreign investment . Depreciation policy
policies . Optimal organization of
. Sequencing of reforms multinational enterprises
. Public policy analysis
Natural Gas and Oil
Telecommunications
. Market-based rates
. Bypass issues . Telephone, cellular, CATV, and
. Pipeline expansion pricing broadcast
. Performance-based regulation . State and federal rate design and
. Take or pay contracts price regulation
. Pricing and energy modeling . Interconnection and competition
. Refinery economics policy
. Oil product supply and demand . Pricing of new services
. Mergers and acquisitions . Cost allocation
. International privatization and
Privatization liberalization
. R&D and technology policy and
. Government strategy management
. Benefits/cost analysis
. Deregulation
. Decentralized process design
. Investment feasibility studies
</TABLE>

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<PAGE>

PRINCIPAL CLIENTS AND REPRESENTATIVE ENGAGEMENTS

Since its inception in 1988, the Company has advised over 900 clients and
conducted more than 1,400 engagements in 13 countries. In 1996, the Company
performed over 500 assignments for more than 300 clients in eight countries.
No single client has represented more than ten percent of the Company's
revenues in any year, and the ten largest clients typically represent
approximately one-third of the Company's revenues in any year. Although in
many cases the Company's work for a client must be kept confidential, set
forth below is a partial list of those clients for whom the Company's
engagement was publicly disclosed:

Agribusiness Pharmaceuticals

. Conagra, Inc. . Abbott Laboratories
. Dow Chemical Co. . Ciba-Geigy Corp.
. E.I. DuPont de Nemours . Glaxo Wellcome P.L.C.
. E&J Gallo Winery, Inc. . Johnson & Johnson
. Georgia-Pacific Corp. . Merck & Co., Inc.
. H. J. Heinz Co. . Pfizer Inc.
. Kraft General Foods, Inc. . Rhone-Poulenc Rorer Inc.
. Monsanto Company . Sandoz Corp.
. Tri-Valley Corp. . SmithKline Beecham Corp.
. Well-Pict. Inc.
Technology
Financial Services and Insurance
. Advanced Fiber Communications
. Bankers Trust New York Corp. . Advanced Micro Devices, Inc.
. Commercial Union Insurance Co. . Analog Devices, Inc.
. Kemper Financial Services, Inc. . Apple Computer, Inc.
. Steinhardt Management Co. . Ascend Communications
. Transamerica Life Insurance & . Atari Corp. (acquired by JTS
Annuity Co. Corp.)
. DSC Communications Corp.
Government Related . IBM
. Intel Corporation
. Department of Justice . Northern Telecom Ltd.
. Federal Communications Commission . Novell, Inc.
. Federal Deposit Insurance . Packard Bell NEC, Inc.
Corporation . Texas Instruments, Inc.
. Federal Trade Commission . W. L. Gore & Associates, Inc.
. Resolution Trust Corporation
. Governments of Argentina, Telecommunications
Colombia, El Salvador, Guatemala,
Japan, South Korea, New Zealand . Ameritech Corp.
. Bell Atlantic Corp.
Manufacturing . Bellsouth Corp.
. Grupo Iusacell, S.A. de C.V.
. Hansen Industries, Ltd. . Indiana Bell Telephone Co.
. Siemens Nixdorf Information . Nevada Bell
Systeme AG . NYNEX Corp.
. Ssangyong Cement Industrial Co., . Pacific Bell
Ltd. . Pacific Telesis Group
. Teledyne, Inc. . SBC Technologies, Inc.
. Southern New England Telephone
Oil and Gas Co.
. Stentor Communications
. Amoco Corporation . TCI International, Inc.
. Chevron Corp. . Time Warner Inc.
. Conoco Inc. . United States Telephone
. Exxon Corp. Association
. Humboldt Petroleum, Inc. . U.S. West Communications Group,
. Liquid Carbonic Inc.
. Mobil Corp.
. Shell Oil Co.
. Texaco Inc.
. Unocal Corp.

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<PAGE>

Transportation Other

. American Airlines, Inc.
. APL Limited . DHL Corp.
. Continental Airlines, Inc. . Good Guys, Inc.
. Northwest Airlines, Inc. . Hughes Aircraft Company Inc.
. Southern Pacific Rail Corp. . Moviefone, Inc.
. Union Pacific Corp. . Toyota Motor Sales USA, Inc.
. United Parcel Service of America,
Utilities Inc.

. Edison Electric Institute Inc.
. New England Power Co.
. Niagara Mohawk Power Corp.
. Northern States Power Co.
. Pacific Gas and Electric Co.
. Potomac Electric Power Co.
. Wisconsin Electric Power Co.

Law Firms. In the last three years, the Company has worked with the following
60 of the largest 100 U.S. law firms (ranked by revenue in 1996 by The American
Lawyer):

. Akin, Gump, Strauss, Hauer & . Kaye, Scholer, Fierman, Hays &
Feld, L.L.P. Handler, LLP
. Alston & Bird LLP . Kelley Drye & Warren LLP
. Arnold & Porter . King & Spalding
. Baker & Hostetler LLP . Kirkland & Ellis
. Baker & McKenzie . Latham & Watkins
. Baker & Botts L.L.P. . Mayer, Brown & Platt
. Brobeck, Phleger & Harrison LLP . McDermott, Will & Emery
. Cahill Gordon & Reindel . Morgan, Lewis & Bockius LLP
. Chadbourne & Parke LLP . Morrison & Foerster LLP
. Cooley Godward LLP . O'Melveny & Myers LLP
. Coudert Brothers . Orrick, Herrington & Sutcliffe
. Covington & Burling LLP
. Cravath, Swaine & Moore . Paul, Weiss, Rifkind, Wharton &
. Davis Polk & Wardwell Garrison
. Debevoise & Plimpton . Perkins Coie
. Dechert Price & Rhoads . Pillsbury Madison & Sutro LLP
. Dewey Ballantine . Rogers & Wells
. Dorsey & Whitney LLP . Schulte Roth & Zabel LLP
. Fried, Frank, Harris, Shriver & . Shearman & Sterling
Jacobson . Sheppard, Mullin, Richter &
. Fulbright & Jaworski L.L.P. Hampton LLP
. Gibson, Dunn & Crutcher LLP . Sidley & Austin
. Graham & James LLP . Skadden, Arps, Slate, Meagher &
. Gray Cary Ware & Freidenrich, A Flom LLP
Professional Corporation . Sonnenschein Nath & Rosenthal
. Hale and Dorr LLP . Steptoe & Johnson LLP
. Heller Ehrman White & McAuliffe . Stroock & Stroock & Lavan LLP
. Hogan & Hartson L.L.P. . Vinson & Elkins L.L.P.
. Howrey & Simon . Wachtell, Lipton, Rosen & Katz
. Hunton & Williams . Weil, Gotshal & Manges LLP
. Jenner & Block . White & Case
. Jones, Day, Reavis & Pogue . Wilmer, Cutler & Pickering
.Wilson Sonsini Goodrich & Rosati,
Professional Corporation
. Winston & Strawn

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<PAGE>

Representative Engagements. Examples of the Company's engagements, which the
Company believes are representative of the nature of its services, are set
forth below:

. Mergers and Acquisitions. The Company provides sophisticated economic
analysis to support and advise clients who are pursuing major mergers,
acquisitions or joint ventures, which often require approval by
antitrust authorities in the United States and abroad. This analysis
entails detailed evaluations of the competitive conditions in the
markets in which the firms operate, the potential for new entry into
those markets, and the environment for technological change that can
alter the boundaries of competition in those markets. Examples include:

The mergers of SBC Technologies, Inc. and Pacific Telesis Group and
of Bell Atlantic Corp. and NYNEX Corp.: The Company was engaged in
connection with the mergers of these regional bell operating companies.
The Company conducted detailed analyses of the extent of competition in
telecommunications services in each company's home territory, and the
prospects for future competition in local telephone, long distance and
other telecommunications services. The regulatory authorities allowed
both mergers to proceed.

Monsanto's acquisition of Holden, Corp., a manufacturer of germ
plasma: The Company evaluated the extent to which the assets of the two
firms were complementary and promoted the development of innovative
products.

Freightliner's acquisition of Ford's heavy truck division: The
Company's analysis helped the merging partners negotiate a favorable
termination of the Department of Justice's review.

. Complex Antitrust Litigation. The Company has been jointly engaged by
manufacturers of branded pharmaceutical products in connection with
nationwide antitrust litigation challenging industry pricing and
distribution practices. For this project, the Company is analyzing the
state of competition in markets for the manufacture and sale of
pharmaceutical products, including the effects of managed care on the
performance of the health care industry and specifically on the prices
of pharmaceutical products. The analysis is national in scope,
encompassing most of the manufacturers of branded pharmaceutical
products.

. Deregulation and Competition Policy. The largest twelve local United
States exchange telecommunications companies ("LECs") engaged the
Company to analyze the possible financial impacts of policy alternatives
under consideration by the Federal Communications Commission ("FCC").
The Company's financial simulation model enabled these companies to
assess effects of revenues, operating incomes, cash flow and equity
values under current market expectations and alternate scenarios that
depicted possible FCC policy decisions. The Company was also engaged by
one of the largest LECs to build a model to simulate entry by multiple
competitors to assess the financial viability of multiple local exchange
entrants and determine the impact that this might have on local
exchanges service prices.

. Intellectual Property Valuation. In the context of an international tax
case, the Company was asked to evaluate a complex license agreement
between a United States company and its joint venture subsidiary in
Japan. The firm was asked to analyze the nature of the bargaining
environment in which the license agreement was formulated, the nature of
corporate control in Japan and the value of the technology which was
transferred to the United States company under the grant back provision
of the license agreement. The Company's analysis and presentation
enabled the Company's position to prevail on this important tax matter.

. Environmental. The Company has pioneered the use of economic analysis as
the basis for the equitable allocation of clean up costs at multi-party
superfund sites. The traditional approach to cost allocation at these
sites has been based on the volume of waste that each party generated.
However, at many sites there is only one generator of waste and the
responsible parties are defined by their economic or contractual
relationship to one another. For instance, at a single site there may be
an owner

26
<PAGE>

and an operator as well as one or more parties who arranged for the
waste generating activities to be undertaken. All are responsible for
clean up costs under the superfund laws. Recognizing that these
contracts are merely a means for joint risk and reward sharing, the
Company has advocated the allocation of clean up costs among the parties
according to the economic benefits that each party received under the
relevant contracts or economic relationship. This approach fits with
mainstream economic thinking on efficient contract information and
enforcement, as well as commonly accepted notions of fairness. The
Company has been able to apply this benefits-based approach to cost
allocation to several superfund sites.

. Corporate Strategy. The Company was engaged by a major manufacturer of
computer equipment and supplier of software services to explore the
impact of the Internet, and network computing more generally, on
business processes and business organization in the insurance industry
worldwide. The Experts and Professional Staff advised the client over a
four month period. The Company mapped the conceptual issues, sought
relevant data, and conducted interviews of information technology
managers on four continents. The study produced insights into the
business opportunities presented by the Internet, and identified the new
business models which may be possible in the life insurance industry in
the near future.

GROWTH STRATEGY

In addition to growth through additional engagements performed by the
Company's current Experts, the Company believes that there are additional
growth opportunities through (i) attracting additional Experts, (ii) expanding
geographically in the United States and abroad, and (iii) acquiring economic
consulting organizations on a select basis.

Expand Base of Experts. The Company believes that its continued success and
growth will require it to expand its base of Experts. The Company will
continue its efforts to attract renowned academics from universities
throughout the world and from the government agencies and the private sector
and to train and promote its own Professional Staff. The Company offers
Experts the support of the Professional Staff, an intellectual environment,
the opportunity to work with other leading experts and an attractive
compensation structure. The Company also believes that operating as a public
company will aid in recruiting, retaining and incenting current and future
employees.

Geographic Expansion. The Company intends to expand geographically by
establishing offices in proximity to major universities, think tanks,
financial markets and government centers in additional United States locations
and abroad. The Company believes that offices will need to be established in
various continental European countries, Latin America and the Asia Pacific
region. The Company recently opened offices in London, England; Wellington,
New Zealand; and Brussels, Belgium.

Selective Acquisitions. Given the highly fragmented nature of the economic
consulting industry, the Company believes that smaller consulting
organizations are potential acquisition opportunities. The Company expects to
continue to evaluate and meet with potential acquisition candidates that have
the potential to increase capacity or add complementary capabilities. At the
date of this Prospectus, the Company has no specific acquisition plans.

HUMAN RESOURCES

The Company believes that is has developed a unique model for a professional
services firm. The Company believes that the model is capable of attracting
and incenting the best and the brightest thought leaders and experts from
universities, think tanks and corporations. As a firm, the Company offers high
compensation to its Experts, a collegial atmosphere, high autonomy, and
transparency of rewards. High compensation is, however, coupled with high
accountability because the Experts' compensation on each project is linked to
the Company's collections on that project. To its Professional Staff, the
Company offers a learning environment, the opportunity to work with highly
credentialed Experts, competitive compensation and entrepreneurial
opportunities.

27
<PAGE>

As of September 30, 1997, the Company had 35 Principals and 98 Affiliates.
In most cases, the Principals and Affiliates execute agreements with the
Company. The agreements with the Principals provide for the Principal to
consult exclusively for the Company in consideration for consulting fees
determined by the time billed by the Principal and actually collected by the
Company as well as project origination fees for work secured or managed by the
Principal. The agreements with the Affiliates are substantially the same as
the agreements with the Principals except they do not include an exclusivity
provision and provide slightly reduced fees to the Affiliates. The agreements
with the Principals are terminable at will and do not restrict competition
with the Company following termination. From time to time, the Company also
engages experts not otherwise associated with the Company to work on a
particular matter. As of September 30, 1997, the Professional Staff consisted
of 133 employees of whom 68 held advanced degrees in economics, finance or
related disciplines.

The Company has experienced low turnover with respect to its Principals.
Since the Company was founded in 1988, only four Principals have ceased
providing services to the Company.

The ability to draw on relevant expertise either within the Company or
through its connections with leading universities enables the Company to
assign a project to an Expert who is a leader in the particular field and who
does not require additional time to learn the fundamentals of the relevant
area. The Expert can rely on competent Professional Staff to organize and
analyze large quantities of data and institutional details to support its
thorough analysis. The Company believes that clients see value in having
studies performed by independent experts with recognized credentials and
communication capabilities likely to be able to author studies and provide
testimony that informs regulators, legislators, judges and juries.

Experts. The Company endeavors to attract renowned scholars who are faculty
or former faculty members at leading universities as well as experts from the
private sector and former government officials. The Company believes that
these highly credentialed individuals seek work environments different from
traditional corporate environments and which allow them to retain their
autonomy and intellectual freedom. In order to attract such individuals, the
Company has created a business environment characterized by high autonomy
within the corporate structure, high incentive compensation and a superior
support system.

Professional Staff. As of September 30, 1997, the Company's Professional
Staff consisted of 66 senior level staff, 13 associates and 54 research
analysts located in eleven offices. This represents a 29% increase in
Professional Staff from September 30, 1996.

The Company's goal is to provide multiple and diverse career opportunities
that merge the interests, abilities and aspirations of each individual with
the objectives and interests of the Company. The Company's program offers
structure to the career development process including (i) wide flexibility for
professional growth, (ii) defined responsibilities, consistency and
opportunities for advancement, (iii) recognition of individual contributions
to the Company and (iv) participation in national and international projects.

The Company is committed to hiring the necessary senior economists,
associates and research analysts each year to staff the Company's growth. The
Company seeks the brightest graduates from the top national and international
economics programs as well as individuals with substantial experience. Of the
Company's 66 senior level staff, all have advanced degrees or professional
certificates, and the majority have a Ph.D. in either economics or finance. On
average, the Company's new hires have five to six years of relevant
experience. As a group, the Company's senior level Professional Staff average
about ten years of experience.

The Company encourages the professional growth of its staff and has
established a mentor program to facilitate this growth process. The aim of the
mentor program is to ensure excellence and consistency throughout the entire
organization while increasing individual and team productivity and
facilitating professional advancement. The Company conducts training sessions
that emphasize its consulting core values, development of consulting products
and business development techniques.

28
<PAGE>

The Company's Professional Staff play significant roles in client case work.
Their management responsibilities include involvement with clients, Experts,
other staff, budgets and the quality and content of work product. Professional
Staff work closely with the Experts to conceptualize practical approaches to
clients' economic issues, and then direct professional resources to complete
necessary analyses in support of the Experts' report or testimony.

Administrative Staff. The rapid growth of the Company has increased the need
for sound management principles and programs. Recognizing this need, the
Company has strengthened its administrative management team by attracting
experienced personnel in several functional disciplines and encouraging
internal growth in many others. Members of the Company's administrative team
encompass all offices and work very closely with one another. The Company
believes that its management style enables individuals to grow professionally
and offers great autonomy for individuals to focus on the needs of clients.

Compensation. The Company believes that its success depends in large part on
attracting, retaining and motivating talented, creative and experienced
professionals at all levels. The Company attracts and motivates its
professional and administrative staff by a variable compensation system based
on attractive incentives and strong accountability. Experts are paid in
relation to their hours worked and fees collected and also receive additional
compensation based on projects they secure and manage. Although Experts are
well compensated, they do not receive any remuneration until the Company
collects the fees associated with the Expert's work. Professional Staff
receive salaries, options and bonuses commensurate with their performance,
skills and degrees. Bonuses provide a significant portion of the Professional
Staff's compensation and are paid at the end of the year.

MARKETING

The Company markets its services directly through corporate efforts and
through the individual efforts of its Principals. The Company relies heavily
on its externally recognized expertise and credentials and publications by its
Experts and Professional Staff in academic and professional journals and in
the trade and business press.

The reputation for academic and professional excellence and independence of
the Experts are the most important factors in the Company's business
development efforts. The Company maintains and enhances its name and
reputation through speeches, presentations, articles in industry, business,
economic, legal and scientific journals and through other publications by the
Experts. The Company also organizes conferences on current issues in economics
at which the Experts lecture, present studies, lead seminars and meet with
invitees. In the Company's experience, these conferences have been well
attended by decision makers from a wide range of industries who, the Company
believes, are particularly interested in listening to and retaining the
Experts.

The Company also maintains relationships with law firms whose clients need
economic analyses across the broad range of services provided by the Company.
In the last three years, the Company has worked with 60 of the 100 largest
U.S. law firms (ranked by revenue in 1996 by The American Lawyer).

The Company is selective in its client development targets and as to the
engagements it accepts. The pursuit of specific markets, clients and bids on
specific requests for proposals are carefully considered. As part of this
process, a conflict check is performed against an up-to-date internal client
data base and verified by the Company's administrative staff prior to
accepting an engagement in order to avoid a conflict of interest. In addition,
the Company declines projects which conflict with its ethical or professional
standards.

29
<PAGE>

COMPETITION

The market for economic consulting services is intensely competitive, highly
fragmented and subject to rapid change. The market includes a large number of
participants from a variety of market segments, including economic consulting
firms, general management consulting firms, the consulting practices of the
"Big Six" accounting firms, technical and economic advisory firms, regional
and specialty consulting firms, small "niche" consulting companies and
individual academics. Many of these companies are national and international
in scope and have significantly greater personnel, financial, technical and
marketing resources than the Company, generate greater revenues and have
greater name recognition than the Company. There are relatively low barriers
to entry into the Company's markets and the Company has faced and expects to
continue to face additional competition from new entrants into the economic
consulting industry.

FACILITIES

The Company's executive offices are located in Emeryville, California where
the Company leases 47,883 square feet of office space. The Company's other
current offices are located in Washington, D.C.; New York, New York; Evanston,
Illinois; College Station, Texas; Sacramento, California; Salt Lake City,
Utah; Toronto, Canada; Wellington, New Zealand; London, England; and Brussels,
Belgium. The Company believes that its facilities are adequate for its current
needs and that additional facilities can be leased to meet future needs.

30
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information with respect to the
executive officers and directors of the Company as of December 15, 1997:

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
David J. Teece...................................... 49 Chairman of the Board
Thomas M. Jorde..................................... 50 President and Director
Kimberly D. Gilmour................................. 39 Chief Financial Officer
and Secretary
Donald A. Bunch..................................... 52 Chief Operating Officer
Richard J. Gilbert.................................. 52 Director
Robert G. Harris.................................... 54 Director
Gordon C. Rausser................................... 54 Director
Mario M. Rosati(1)(2)............................... 51 Director
William J. Spencer(1)(2)............................ 67 Director
</TABLE>
- ---------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

David J. Teece. Dr. Teece has served as Chairman of the Board of Directors
of the Company since the Company was founded in 1988. Since 1982, he has been
a professor of business administration at the University of California at
Berkeley where since 1994, he has directed the Institute of Management,
Innovation and Organization. Dr. Teece has authored numerous publications in
economics, business and technology strategy. He has been an economic and
business consultant for 25 years.

Thomas M. Jorde. Professor Jorde has served as President and on the Board of
Directors of the Company since 1988. Professor Jorde received his B.A. from
Yale University in 1969 and his J.D. from Yale University in 1972 after which
he served as a law clerk to Justice Brennan, United States Supreme Court.
Since 1982, Professor Jorde has been Professor of Law at the University of
California at Berkeley. Professor Jorde is the co-founder of Boalt Hall's
Program in Technology and Law.

Kimberly D. Gilmour. Ms. Gilmour has served as Secretary of the Company
since October of 1997 and as Chief Financial Officer of the Company since
1991. Prior to joining the Company she held various positions at KPMG Peat
Marwick, LLP. She has over 14 years of accounting and operational experience
and is a C.P.A.

Donald A. Bunch. Mr. Bunch has served as Chief Operating Officer of the
Company since 1995. Prior to joining the Company, he was a partner with Arthur
Andersen LLP and later a chief operating officer at the law firm of Finnegan,
Henderson, Farabow, Garrett & Dunner.

Richard J. Gilbert. Dr. Gilbert has served on the Board of Directors of the
Company since 1990. Since 1983, Dr. Gilbert has been professor of Economics
and adjunct professor of business administration at the University of
California at Berkeley. His previous positions include Assistant Attorney
General for Antitrust Economics in the United States Department of Justice and
Director of the University of California Energy Institute. Dr. Gilbert has
been an economic and business consultant for over 20 years.

Robert G. Harris. Dr. Harris has served on the Board of Directors of the
Company since 1994. Since 1996, Dr. Harris has been a Professor Emeritus, and
from 1977 until 1996, Professor at the Haas School of Business at the
University of California at Berkeley. Dr. Harris has also served as Deputy
Director of the Interstate Commerce Commission.

31
<PAGE>

Gordon C. Rausser. Dr. Rausser has served on the Board of Directors of the
Company since 1990. Since 1986, he has been the Robert Gordon Sproul
Distinguished Professor and, since 1994, Dean of the College of Natural
Resources at the University of California at Berkeley. He has served as a
Senior Economist on the Council of Economic Advisors and as a Chief Economist
of the Agency for International Development and is a fellow of the American
Association for the Advancement of Science, the American Statistical
Association and the American Agricultural Economics Association.

Mario M. Rosati. Mr. Rosati has served on the Board of Directors of the
Company since October 1997. He is a member of the law firm of Wilson Sonsini
Goodrich & Rosati, which he joined in 1971. Mr. Rosati is a graduate of Boalt
Hall, University of California at Berkeley. Mr. Rosati is a director of C*ATS
Software Inc., a software development company, Genus, Inc., a semiconductor
company, Meridian Data, Inc., a software development company, Ross Systems, a
client/server application software company, Aehr Test Systems, a semiconductor
testing device company, and Sanmina Corporation, a customized, integrated
electronics manufacturing services company, as well as several private
companies.

William J. Spencer. Dr. Spencer has served on the Board of Directors of the
Company since October 1997. Since 1990, he has been President and Chief
Executive Officer of SEMATECH, a non-profit research and development
consortium of U.S. semiconductor manufacturers. He was appointed Chairman of
the Board of SEMATECH in August 1996. From May 1986 until October 1990, he was
Group Vice President and Senior Technical Officer of Xerox Corporation. Dr.
Spencer is a director of Investment Corporation of America and Adobe Systems,
Inc.

BOARD OF DIRECTORS; COMMITTEES

The Board of Directors presently consists of seven members who hold office
until the annual meeting of shareholders and until a successor is duly elected
and qualified, or until his earlier resignation or removal.

In October 1997, the Board of Directors formed an Audit Committee and a
Compensation Committee. The functions of the Audit Committee will be to
recommend to the Board of Directors independent auditors for the Company and
to analyze the reports and recommendations of such auditors. The Compensation
Committee will review the compensation of the President and employee benefit
and incentive plans and present recommendations thereon to the Board of
Directors, and will also administer the Company's 1997 Stock Option Plan and
1997 Employee Stock Purchase Plan.

DIRECTOR COMPENSATION

Directors receive $1,000 for each meeting of the Board attended and $500 for
each meeting of a Committee attended, plus, in each case, expenses incident to
attendance at such meetings. Messrs. Rosati and Spencer are expected to be
granted options for their service as Directors. Certain directors also act as
Experts for the Company and receive compensation for their work as Experts.
See "Certain Transactions."

32
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth all compensation received for services
rendered to the Company in all capacities for the fiscal year ended December
31, 1996 by the Company's President (acting in a capacity similar to a chief
executive officer) and the only other executive officer whose total
compensation exceeded $100,000 for the fiscal year ended December 31, 1996
(collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER
<S> <C> <C> <C>
Thomas M. Jorde(1)................................ $100,000 $ 0 $396,796(2)
President
Donald A. Bunch(3)................................ $200,000 $40,000 $ 0
Chief Operating Officer
</TABLE>
- ---------------------
(1) In addition to these amounts, Mr. Jorde received Subchapter S
Distributions as a shareholder of the Company. See "S Corporation
Termination."
(2) Represents amounts paid by the Company in connection with a consulting
agreement. See "Certain Transactions--Principal Agreements."
(3) Bonuses for services rendered are granted at the discretion of the Board
of Directors. Such bonuses are generally determined and paid before the
end of December.

EMPLOYEE BENEFIT PLANS

1997 STOCK OPTION PLAN

The Company's 1997 Stock Option Plan (the "Option Plan") provides for the
granting to employees of incentive stock options within the meaning of Section
422 of the Code of, and for the granting to employees, directors and
consultants of nonstatutory stock options and stock purchase rights ("SPRs").
The Option Plan was approved by the Board of Directors and the shareholders in
October 1997. Unless terminated sooner, the Option Plan will terminate
automatically in 2007. A total of 1,500,000 shares of Common Stock are
currently authorized for issuance pursuant to the Option Plan, of which
1,500,000 are still available for issuance. As of November 30, 1997, no shares
had been issued upon the exercise of stock options or stock purchase rights
granted under the Option Plan, 340,000 shares were subject to outstanding
options and 1,160,000 shares remained available for future grant.

The Option Plan may be administered by the Board of Directors or a committee
of the Board (the "Committee"), which Committee shall, in the case of options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, consist of two or more "outside directors" within
the meaning of Section 162(m) of the Code. The Committee has the power to
determine the terms of the options or SPRs granted, including the exercise
price, the number of shares subject to each option or SPR, the exercisability
thereof, and the form of consideration payable upon such exercise. In
addition, the Committee has the authority to amend, suspend or terminate the
Option Plan, provided that no such action may affect any share of Common Stock
previously issued and sold or any option previously granted under the Option
Plan.

Options and SPRs granted under the Option Plan are not generally
transferable by the optionee, and each option and SPR is exercisable during
the lifetime of the optionee only by such optionee. Options granted under the
Option Plan must generally be exercised within three months of the end of
optionee's status as an employee or consultant of the Company, or within
twelve months after such optionee's termination by death or disability, but in
no event later than the expiration of the option's ten year term. In the case
of SPRs, unless the Committee determines otherwise, the Restricted Stock
Purchase Agreement (as defined in the Option Plan) shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
disability). The purchase price for shares of Common Stock repurchased
pursuant to the Restricted Stock Purchase Agreement shall be the original
price paid

33
<PAGE>

by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate
determined by the Committee. The exercise price of all incentive Stock options
granted under the Option Plan must be at least equal to the fair market value
of the Common Stock on the date of grant. The exercise price of nonstatutory
stock options and SPRs granted under the Option Plan is determined by the
Committee, but with respect to nonstatutory stock options intended to qualify
as "performance-based compensation" within the meaning of Section 162(m) of
the Code, the exercise price must at least be equal to the fair market value
of the Common Stock on the date of grant. With respect to any participant who
owns stock possessing more than 10% of the voting power of all classes of the
Company's outstanding capital stock, the exercise price of any incentive stock
option granted must equal at least 110% of the fair market value on the grant
date and the term of such incentive stock option must not exceed five years.
The term of all other options granted under the Option Plan may not exceed ten
years.

The Option Plan provides that in the event of a merger of the Company with
or into another corporation, a sale of substantially all of the Company's
assets or a like transaction involving the Company, each option shall be
assumed or an equivalent option substituted by the successor corporation. If
the outstanding options are not assumed or substituted for as described in the
preceding sentence, the Optionee shall fully vest in and have the right to
exercise the option or SPR as to all of the optioned stock, including shares
as to which it would not otherwise have been vested and be exercisable. In the
event that an option or SPR becomes exercisable in full in the event of a
merger or sale of assets, the Administrator (as defined in the Option Plan)
shall notify the optionee that the option or SPR shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice,
and the option or SPR will terminate upon the expiration of such period.

1997 EMPLOYEE STOCK PURCHASE PLAN

The Company's 1997 Employee Stock Purchase Plan (the "Stock Purchase Plan")
was adopted by the Board of Directors and the shareholders in October 1997. A
total of 500,000 shares of Common Stock have been reserved for issuance under
the Stock Purchase Plan. The Stock Purchase Plan, which is intended to qualify
under Section 423 of the Code, has consecutive six month offering periods. The
offering periods generally begin on the first trading day on or after May 1
and November 1 each year, except the first such offering period commences on
the first trading day after the effective date of the offering and ends on the
last trading day on or before October 31, 1998. The Stock Purchase Plan is
administered by the Board of Directors or by a committee appointed by the
Board. Employees are eligible to participate if they are customarily employed
by the Company or any participating subsidiary for at least 20 hours per week
and more than five months in any calendar year. The Stock Purchase Plan
permits eligible employees to purchase Common Stock through payroll deductions
of up to 10% of an employee's total compensation, subject to the limitations
of Section 423(b)(8) of the Code. The price of stock purchased under the Stock
Purchase Plan is 85% of the lower of the fair market value of the Common Stock
at the beginning of the offering period or at the end of the relevant purchase
period. Employees may end their participation at any time during an offering
period, and they will be paid their payroll deductions to date. Participation
ends automatically upon termination of employment with the Company.

Rights granted under the Stock Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution, or as
otherwise provided under the Stock Purchase Plan. The Stock Purchase Plan
provides that, in the event of a merger of the Company with or into another
corporation or a sale of substantially all of the Company's assets, the Board
of Directors shall shorten the offering period then in progress (so that
employees' rights to purchase stock under the Stock Purchase Plan are
exercised prior to the merger or sale of assets). The Stock Purchase Plan will
terminate in October 2007. The Board of Directors has the authority to amend
or terminate the Stock Purchase Plan, except that no such action may adversely
affect any outstanding rights to purchase Stock under the Stock Purchase Plan.

34
<PAGE>

401(K) PLAN

The Company maintains a 401(k) retirement savings plan (the "401(k) Plan").
Each participant may contribute to the 401(k) Plan, through payroll
deductions, up to a statutorily prescribed annual limit of $9,500 in 1997,
subject to statutory limitations imposed by the Internal Revenue Service. All
amounts contributed by employee participants and earnings on these
contributions are fully vested at all times. Employee participants may elect
to invest their contributions in various established funds.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors established a Compensation Committee in October 1997.
Prior to that time there was no compensation committee or other committee of
the board of directors of the Company performing similar functions. During the
fiscal year ended December 31, 1996, executive compensation decisions were
made by the entire board of directors of the Company including Messrs. Teece,
Jorde, Gilbert, Harris and Rausser and one additional person no longer a
director of the Company. Mr. Jorde was the President of the Company at such
time. The Company anticipates that executive compensation for future periods
will be determined by the Compensation Committee.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

The Company's Restated Articles of Incorporation limit the liability of its
directors for monetary damages arising from a breach of their fiduciary duty
as directors, except to the extent otherwise required by the California
Corporations Code. Such limitation of liability does not affect the
availability of equitable remedies such as injunctive relief or rescission.

The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by California law, including
circumstances in which indemnification is otherwise discretionary under
California law. The Company has also entered into indemnification agreements
with its officers and directors containing provisions which are in some
respects broader than the specific indemnification provisions contained in the
California Corporations Code. The indemnification agreements require the
Company, among other things, to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers (other than liabilities arising from willful misconduct
of a culpable nature) and to advance their expenses incurred as a result of
any proceeding against them as to which they could be indemnified.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.

35
<PAGE>

CERTAIN TRANSACTIONS

GENERAL

In its ordinary course of business, the Company enters into transactions
with certain of its directors and officers. The Company believes that each
such transaction has been on terms no less favorable for the Company than
could have been obtained in a transaction with an independent third party.

PRINCIPAL AGREEMENTS

The Company is party to a principal agreement with each of David J. Teece,
the Chairman of the Board of Directors of the Company, Thomas M. Jorde, a
director and the President of the Company, and Richard Gilbert, Robert Harris
and Gordon Rausser, each a director of the Company. Each of Messrs. Teece,
Jorde, Gilbert, Harris and Rausser have entered into exclusive consulting
agreements with the Company pursuant to which each such person provides
consulting services to the Company in consideration for a cash payment equal
to the sum of the amount of fees collected by the Company for the hours billed
by such person and a percentage (ranging from 14% to 20%) of fees collected by
the Company on projects secured or managed by such person. During 1996, the
Company paid $595,082, $396,796, $816,191, $1,461,486 and $1,314,235 to Dr.
Teece, Professor Jorde, Dr. Gilbert, Dr. Harris and Dr. Rausser, respectively,
pursuant to these arrangements as payment in full. These consulting agreements
are terminable at will by either the consultant or the Company and do not
contain restrictions on competition after termination.

SHAREHOLDERS' AGREEMENT

The Company and its shareholders (immediately prior to this offering) are
parties to the Amended and Restated Shareholders' Agreement, effective as of
the date of this offering, which provides, in part, (i) that each such
shareholder will not transfer such shareholder's shares of Common Stock to an
unaffiliated third party without the Company's consent and (ii) the Company
has the right to repurchase each such shareholder's shares of Common Stock at
one-half of the then current market price of the shares if such shareholder
(a) ceases to provide services on a regular basis to the Company, (b) breaches
any provision of such shareholder's Principal Agreement with the Company, or
(c) attempts to transfer such shareholder's shares of Common Stock to an
unaffiliated third party without the Company's consent. The Company's
repurchase right lapses ratably (at 20% per year) over a period of five years
starting on the date of the first anniversary of this offering. The following
directors and executive officers are parties to the Amended and Restated
Shareholders' Agreement: David J. Teece, Gordon C. Rausser, Thomas M. Jorde,
Robert G. Harris, Richard J. Gilbert, Donald A. Bunch and Kimberly D. Gilmour.
All shares held by Messrs. Teece, Rausser, Jorde, Harris, Gilbert, Bunch and
Ms. Gilmour and their respective family trusts upon completion of this
offering will be subject to the Amended and Restated Shareholders' Agreement.
See "Principal and Selling Shareholders."

INDEBTEDNESS

In connection with the purchase of shares of Common Stock on July 1, 1993,
Kimberly D. Gilmour, the Company's Chief Financial Officer, executed a
$117,702.40 promissory note to the Company with interest at 7% per annum. The
largest principal amount outstanding under such note during 1996 was
$115,922.53. As of November 15, 1997, the outstanding principal amount under
this promissory note was $78,990.51. In connection with the purchase of shares
of Common Stock on January 1, 1997, Donald A. Bunch, the Company's Chief
Operating Officer, executed a $87,013.76 promissory note to the Company with
interest at 7% per annum. As of November 15, 1997, the outstanding principal
amount under this promissory note was $87,013.76. In connection with the
purchase of shares of Common Stock on July 1, 1993, May 1, 1995 and October
16, 1996, Robert G. Harris, a director of the Company, executed three
promissory notes to the Company for $235,404.80, $536,143.68 and $687,427.20,
respectively, totalling $1,458,975.68 with interest at 7% per annum. The
largest aggregate principal amount outstanding under these three notes during
1996 was $ 1,395,695.06. As of November 15, 1997, the outstanding principal
amount on these three promissory notes was $1,168,508.64. Each of the above
notes was amended in October 1997 and Mr. Harris' three promissory notes were
consolidated into

36
<PAGE>

one $1,168,508.64 promissory note. As amended, each of the above notes matures
on December 31, 2002. The proceeds from the sale of shares of Common Stock
held by any such payee on the date hereof shall be used to pay amounts
outstanding under the notes.

S CORPORATION DISTRIBUTION

The Company has declared an S Corporation distribution to its existing
shareholders in an aggregate amount representing all cash basis undistributed
earnings of the Company taxed or taxable to its shareholders through the date
of this offering which is the date the Company ceases to be an S Corporation.
This amount of the distribution is estimated to be approximately $6.8 million.
This distribution will be paid to those persons or entities who held shares of
common stock of the Company immediately prior to this offering. If the total
distribution is $6.8 million, then, $1,661,000 will be distributed to David J.
Teece (including family trusts); $291,000 will be distributed to Thomas M.
Jorde (including family trusts); $848,000 will be distributed to Gordon C.
Rausser (including family trusts); $1,178,000 will be distributed to Richard
J. Gilbert (including family trusts); $1,120,000 will be distributed to Robert
G. Harris (including family trusts); $70,000 will be distributed to Kimberly
D. Gilmour and $39,000 will be distributed to Donald A. Bunch; provided,
however, that with respect to Mr. Harris, Mr. Bunch and Ms. Gilmour, the
Company will retain all or part of such distribution as discussed below. Of
the $6.8 million dividend, approximately $2.0 million will be retained by the
Company to reduce the principal and interest of the promissory notes
receivable from shareholders, including $1,102,000, $39,000 and $70,000 from
Mr. Harris, Mr. Bunch and Ms. Gilmour, respectively. The remaining amounts
retained are from shareholders who are not officers or directors of the
Company.

STOCK OPTIONS AND REPURCHASES BY THE COMPANY

On April 22, 1997, David J. Teece, the Chairman of the Board, exercised an
option (granted in April 1994) to purchase from the Company 171,379 shares of
Common Stock for $357,782. On October 10, 1997, the Company repurchased 85,690
of these shares from Mr. Teece for $184,998.01.

37
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 15, 1997, and as
adjusted to reflect the sale of the shares of Common Stock offered hereby, by
(i) each person known by the Company to own more than 5% of the outstanding
shares of the Common Stock, (ii) each Named Executive Officer, (iii) each of
the Company's directors, (iv) all directors and executive officers as a group
and (v) each Selling Shareholder:

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING(1)(2)
---------------------- NUMBER OF ----------------------
NAME AND ADDRESS OF NUMBER OF SHARES BEING NUMBER OF
BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT
- ------------------- ------------ --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
NAMED EXECUTIVE OFFICERS
AND DIRECTORS:
David J. Teece(3)..... 2,817,052 28.2% 412,792 2,404,260 18.4%
Gordon C. Rausser(4).. 1,499,571 15.0% 219,737 1,279,834 9.8%
Thomas M. Jorde(5).... 1,491,003 14.9% 219,737 1,271,266 9.7%
Robert G. Harris(6)... 1,178,235 11.8% 172,649 1,005,586 7.7%
Richard J.
Gilbert(7)........... 1,167,525 11.7% 172,650 994,875 7.6%
Kimberly D. Gilmour... 85,690 * 12,557 73,133 *
Donald A. Bunch....... 42,845 * 0 42,845 *
Mario M. Rosati....... 0 -- 0 0 --
William J. Spencer.... 0 -- 0 0 --
All directors and
executive officers as
a group (seven
persons)............. 8,281,921 82.8% 1,210,122 7,071,799 54.1%
OTHER SELLING
SHAREHOLDERS:
Daniel L. Rubinfeld... 499,143 4.9% 73,141 426,002 3.3%
Steven N. Wiggins..... 428,449 4.2% 62,782 365,667 2.8%
Joe D. Pace........... 321,337 3.2% 47,086 274,251 2.1%
Thomas E. Randlett.... 192,802 1.9% 28,252 164,550 1.3%
David F. Babbel....... 85,690 * 12,339 73,351 *
Barry Nalebuff........ 42,845 * 6,278 36,567 *
</TABLE>
- ---------------------
* Represents less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Unless otherwise indicated in the
footnotes to this table, the persons and entities named in the table have
represented to the Company that they have sole voting and sole investment
power with respect to all shares beneficially owned, subject to community
property laws where applicable. Unless otherwise indicated, the address of
each of the individuals listed in the table is c/o LECG, Inc. 2000 Powell
Street, Emeryville, California 94608.

(2) This column assumes no exercise of the Underwriters' over-allotment
option. If, however, the Underwriters' over-allotment is exercised in
full, certain shareholders will sell an aggregate of 675,000 shares of
Common Stock. Specifically, in such event, in addition to those share
amounts set forth in the table above (i) Mr. Teece will sell 195,167
shares, (ii) Mr. Rausser will sell 103,892 shares, (iii) Mr. Jorde will
sell 103,890 shares, (iv) Mr. Harris will sell 81,630 shares, (v) Mr.
Gilbert will sell 81,630 shares, (vi) Ms. Gilmour will sell 5,937 shares,
(vii) Mr. Rubinfeld will sell 34,582 shares, (viii) Mr. Wiggins will sell
29,684 shares, (ix) Mr. Pace will sell 22,262 shares, (x) Mr. Randlett
will sell 13,358 shares and (xi) Mr. Nalebuff will sell 2,968 shares.

(3) Includes 1,285,347 shares held by two family trusts of which 204,041
shares will be offered.

(4) Includes 214,225 shares held by one family trust of which 36,623 shares
will be offered.
(5) Includes 501,286 shares held by three family trusts.

(6) Includes 85,690 shares held by two family trusts of which 6,920 shares
will be offered.
(7) Includes 347,044 shares held by three family trusts.

38
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon the closing of this offering, the authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock, $0.001 par value per
share, and 5,000,000 shares of Preferred Stock, $0.001 par value per share.

COMMON STOCK

On December 15, 1997, there were 10,000,000 shares of Common Stock
outstanding, held of record by 34 shareholders. The holders of Common Stock
are entitled to one vote for each share held of record on all matters
submitted to a vote of shareholders. Accordingly, holders of a majority of the
shares of Common Stock entitled to vote in any election of directors may elect
all of the directors standing for election. Subject to preferences that may be
applicable to any outstanding Preferred Stock, holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally available
therefor. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of the Company, holders of Common Stock are entitled to share
ratably in all assets remaining after payment of the Company's liabilities and
the liquidation preference, if any, of any outstanding preferred stock.
Holders of Common Stock have no preemptive rights and no rights to convert
their Common Stock into any other securities, and there are no redemption
provisions with respect to such shares. All of the outstanding shares of
Common Stock are, and the shares to be sold in the offering when issued and
paid for will be, fully paid and non-assessable. The rights, preferences and
privileges of holders of Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock which the Company may designate and issue in the future.

PREFERRED STOCK

The Board of Directors is authorized, without any action of the
shareholders, to provide for the issuance of one or more series of Preferred
Stock and to fix the designation, preferences, powers and relative,
participating, optional and other rights, qualifications, limitations and
restrictions thereof including, without limitation, the dividend rate, voting
rights, conversion rights, redemption price and liquidation preference per
series of Preferred Stock. Any series of Preferred Stock so issued may rank
senior to the Common Stock with respect to the payment of dividends or amounts
to be distributed upon liquidation, dissolution or winding up. There are no
agreements or understandings for the issuance of Preferred Stock, and the
Board of Directors has no present intent to issue any Preferred Stock. The
existence of authorized but unissued Preferred Stock may enable the Board of
Directors to render more difficult or to discourage an attempt to obtain
control of the Company by means of a merger, tender offer, proxy contest or
otherwise. For example, if in the due exercise of its fiduciary obligations,
the Board of Directors were to determine that a takeover proposal is not in
the Company's best interests, the Board of Directors could cause shares of
Preferred Stock to be issued without shareholder approval in one or more
private offerings or other transactions that might dilute the voting or other
rights of the proposed acquirer or insurgent shareholder or shareholder group.
The issuance of shares of Preferred Stock pursuant to the Board of Directors'
authority described above could decrease the amount of earnings and assets
available for distribution to holders of Common Stock and adversely affect the
rights and powers, including voting rights, of such holders and may have the
effect of delaying, deferring or preventing a change in control of the
Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is Norwest
Bank Minnesota, N.A. Its address is 161 North Concord Exchange Street, South
St. Paul, Minnesota 55075.

LISTING

The Common Stock has been approved for listing, subject to official notice
of issuance, on the New York Stock Exchange (the "NYSE") under the symbol
"XPT". The Company has not applied to list its Common Stock on any other
exchange or quotation system. See "Risk Factors--Absence of Prior Market and
Possible Volatility of Stock Price."

39
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the Common Stock of the
Company. Therefore, future sales of substantial amounts of Common Stock in the
public market could adversely affect the prevailing market price from time to
time. Furthermore, because only a limited number of shares will be available
for sale shortly after this offering because of certain contractual and legal
restrictions on resale (as described below), sales of substantial amounts of
Common Stock of the Company in the public market after the restrictions lapse
could adversely affect the prevailing market price and the ability of the
Company to raise equity capital in the future.

Upon completion of this offering, the Company will have outstanding an
aggregate 13,060,000 shares of Common Stock, assuming no exercise of the
Underwriters' over-allotment option. Of these outstanding shares of Common
Stock, the 4,500,000 shares sold in this offering will be freely tradeable
without restriction or further registration under the 1933 Act, unless
purchased by "affiliates" of the Company as that term is defined in Rule 144
under the 1933 Act. As a result of lock-up agreements between certain
shareholders and the Underwriters, 8,560,000 shares will not become available
for sale in the public market until 180 days after the effectiveness of this
offering, subject in some cases to the volume and other restrictions of Rule
144 and Rule 701 of the Securities Act. Shares of Common Stock outstanding
upon completion of this offering and held by existing shareholders will be
"restricted securities" as that term is defined in Rule 144 under the
Securities Act ("Restricted Shares"). Restricted Shares may be sold in the
public market only if registered or if they qualify for an exemption from
registration under Rules 144, 144(k) or 701 promulgated under the 1933 Act,
which rules are summarized below. Sales of the Restricted Shares in the public
market, or the availability of such shares for sale, could adversely affect
the market price of the Common Stock.

All shareholders have entered into contractual "lock-up" agreements
providing that they will not offer, sell, contract to sell or grant any option
to purchase or otherwise dispose of the shares of Common Stock owned by them
or that could be purchased by them through the exercise of options to purchase
Common Stock of the Company for a period of 180 days after the date of this
Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, as Representative of the Underwriters.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for
at least one year, but less than two years, including persons who may be
deemed to be "affiliates" of the Company, would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of: (i)
one percent of the number of shares of Common Stock then outstanding (which
will equal approximately 130,600 shares immediately after this offering); or
(ii) the average weekly trading volume of the Common Stock during the four
calendar weeks preceding the filing of a Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain manner of sale provisions and
notice requirements and to the availability of current public information
about the Company. Under Rule 144(k), a person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of the Company at any
time during the 90 days preceding a sale, and who has beneficially owned for
at least two years the Restricted Shares proposed to be sold (including the
holding period of any prior owner except an affiliate), is entitled to sell
such shares without complying with the manner of sale, public information,
volume limitation or notice provisions of Rule 144. In general, under Rule 701
under the Securities Act as currently in effect, any employee, consultant or
advisor of the Company who purchases shares from the Company in connection
with a compensatory stock or option plan or other written agreement related to
compensation is eligible to resell such shares 90 days after the effective
date of the offering in reliance on Rule 144, but without compliance with
certain restrictions contained in Rule 144.

The Company has agreed not to sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock, or enter into any swap or similar agreement that transfers,
in whole or in part, the economic risk of ownership of the Common Stock, for a
period of 180 days after the date of this Prospectus, without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation,
subject to certain limited exceptions. See "Risk Factors--Shares Eligible for
Future Sale."

40
<PAGE>

The Company intends to file a registration statement under the Securities
Act covering 2,000,000 shares of Common Stock reserved for issuance under the
1997 Stock Option Plan and the 1997 Employee Stock Purchase Plan. See
"Management--Employee Benefit Plans." Such registration statement is expected
to be filed subsequently to the closing of this offering and will
automatically become effective upon filing. Accordingly, shares registered
under such registration statement will, subject to Rule 144 volume limitations
applicable to affiliates and the lapsing of the Company's repurchase options,
be available for sale in the open market, except to the extent that such
shares are subject to vesting restrictions with the Company or the contractual
restrictions described above.

41
<PAGE>

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement, dated
December 18, 1997 (the "Underwriting Agreement"), the underwriters named below
(the "Underwriters"), who are represented by Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") and Legg Mason Wood Walker, Incorporated
(collectively, the "Representatives"), have severally agreed to purchase from
the Company and the Selling Shareholders the respective number of shares of
Common Stock set forth opposite their names below.

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation......... 1,791,900
Legg Mason Wood Walker, Incorporated........................ 1,791,900
Bear, Stearns & Co. Inc. ................................... 67,500
Furman Selz LLC............................................. 67,500
Goldman, Sachs & Co. ....................................... 67,500
Lehman Brothers Inc. ....................................... 67,500
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 67,500
Morgan Stanley & Co. Incorporated........................... 67,500
NationsBanc Montgomery Securities, Inc. .................... 67,500
Salomon Brothers Inc........................................ 67,500
Adams, Harkness & Hill, Inc. ............................... 34,200
Robert W. Baird & Co. Incorporated.......................... 34,200
George K. Baum & Company.................................... 34,200
William Blair & Company, L.L.C. ............................ 34,200
Brean Murray & Co., Inc. ................................... 34,200
Fahnestock & Co., Inc. ..................................... 34,200
Friedman, Billings, Ramsey & Co., Inc. ..................... 34,200
Parker/Hunter Incorporated.................................. 34,200
Pennsylvania Merchant Group Ltd ............................ 34,200
Sands Brothers & Co., Ltd. ................................. 34,200
Tucker Anthony Incorporated................................. 34,200
---------
Total..................................................... 4,500,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval by their counsel of certain legal
matters and to certain other conditions. The Underwriters are obligated to
purchase and accept delivery of all the shares of Common Stock offered hereby
(other than those shares covered by the over-allotment option described below)
if any are purchased.

The Underwriters initially propose to offer the shares of Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain dealers (including
the Underwriters) at such price less a concession not in excess of $0.37 per
share. The Underwriters may allow, and such dealers may re-allow, to certain
other dealers a concession not in excess of $0.12 per share. After the initial
offering of the Common Stock, the public offering price and other selling
terms may be changed by the Representatives at any time without notice. The
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

The Selling Shareholders have granted to the Underwriters an option,
exercisable within 30 days after the date of this Prospectus, to purchase,
from time to time, in whole or in part, up to an aggregate of 675,000
additional Shares of Common Stock at the initial public offering price less
underwriting discounts and commissions. The Underwriters may exercise such
option solely to cover over-allotments, if any, made in connection with the
offering. To the extent that the Underwriters exercise such option, each
Underwriter will become obligated, subject to certain conditions, to purchase
its pro rata portion of such additional shares based on such Underwriter's
percentage underwriting commitment as indicated in the preceding table.

42
<PAGE>

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

Each of the Company, its executive officers and directors and certain of the
shareholders of the Company (including the Selling Shareholders) has agreed,
subject to certain exceptions, not to (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise) for a period of 180 days after the date of this Prospectus
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation. In addition, during such period, the Company has also agreed not
to file any registration statement with respect to, or exercise any right with
to, the registration of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock without
Donaldson, Lufkin & Jenrette Securities Corporation's prior written consent.

Prior to this offering, there has been no established trading market for the
Common Stock. The initial public offering price for the shares of Common Stock
offered hereby will be determined by negotiation among the Company,
representatives of the Selling Shareholders and the Representatives. The
factors to be considered in determining the initial public offering include the
history of and the prospects for the industry in which the Company competes,
the past and present operations of the Company, the historical results of
operations of the Company, the prospects for future earnings of the Company,
the recent market prices of securities of generally comparable companies and
the general condition of the securities markets at the time of the offering.

The Common Stock has been approved for listing, subject to official notice of
issuance, on the NYSE under the symbol "XPT." In order to meet the requirements
for listing the Common Stock on the NYSE, the Underwriters have undertaken to
sell lots of 100 or more shares to a minimum of 2,000 beneficial owners.

Other than in the United States, no action has been taken by the Company, the
Selling Shareholders or the Underwriters that would permit a public offering of
the shares of Common Stock offered hereby in any jurisdiction where action for
that purpose is required. The shares of Common Stock offered hereby may not be
offered or sold, directly or indirectly, nor may this Prospectus or any other
offering material or advertisement in connection with the offer and sale of any
such shares of Common Stock be distributed or published in any jurisdiction,
except under circumstances that will result in compliance with the applicable
rules and regulations of such jurisdiction. Persons into whose possession this
Prospectus comes are advised to inform themselves about and to observe any
restrictions relating to the offering of the Common Stock and the distribution
of this Prospectus. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any shares of Common Stock offered hereby in
any jurisdiction in which such an offer or a solicitation is unlawful.

In connection with this offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Underwriters may over-allot the offering, creating a
syndicate short position. The Underwriters may bid for and purchase shares of
Common Stock in the open market to cover such syndicate short position or to
stabilize the price of the Common Stock. In addition, the underwriting
syndicate may reclaim selling concessions from syndicate members and selected
dealers if they repurchase previously distributed Common Stock in syndicate
covering transactions, in stabilizing transactions or otherwise. These
activities may stabilize or maintain the market price of the Common Stock above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.

From time to time, in the ordinary course of business, Legg Mason Wood
Walker, Incorporated has provided and may in the future provide financial
advisory or other services to the Company. To date, Legg Mason Wood Walker,
Incorporated has received a fee of $25,000 from the Company for such services.

43
<PAGE>

LEGAL MATTERS

Certain legal matters with respect to the legality of the issuance of the
shares of Common Stock offered hereby will be passed upon for the Company and
the Selling Shareholders by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto,
California. A member of the firm, Mario M. Rosati, is a member of the Company's
Board of Directors. Certain legal matters in connection with this offering will
be passed upon for the Underwriters by Katten Muchin & Zavis, Chicago,
Illinois.

EXPERTS

The consolidated balance sheets of the Company and subsidiaries as of
December 31, 1995 and 1996 and September 1997 and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1996 and for the nine month period
ending September 30, 1997 appearing in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.

44
<PAGE>

LECG, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Consolidated Balance Sheets................................................ F-3
Consolidated Statements of Income.......................................... F-4
Consolidated Statements of Shareholders' Equity............................ F-5
Consolidated Statements of Cash Flows...................................... F-6
Notes to Consolidated Financial Statements................................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of LECG, Inc.:

We have audited the accompanying consolidated balance sheets of LECG, Inc.
(a California corporation) and subsidiaries as of December 31, 1995, December
31, 1996, and September 30, 1997, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1996 and for the nine month period ended
September 30, 1997. These financial statements are the responsibility of the
Company's 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 LECG, Inc. and
subsidiaries as of December 31, 1995, December 31, 1996, and September 30,
1997 and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 1996 and for the nine month
period ended September 30, 1997 in conformity with generally accepted
accounting principles.

/s/ ARTHUR ANDERSEN LLP
San Francisco, California
October 31, 1997

F-2
<PAGE>

LECG, INC.

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, SEPTEMBER SEPTEMBER
------------------------ 30, 30,
1995 1996 1997 1997
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash..................... $ 597,928 $ 2,889 $ 1,298,565 $ 1,298,565
Accounts receivable,
net..................... 9,604,923 11,128,887 15,886,023 15,886,023
Prepaid expenses......... 96,985 144,714 164,823 164,823
----------- ----------- ----------- -----------
Total current assets... 10,299,836 11,276,490 17,349,411 17,349,411
Security deposits.......... 71,941 114,326 131,127 131,127
Property and equipment,
net....................... 1,194,227 1,806,888 2,996,997 2,996,997
----------- ----------- ----------- -----------
Total assets........... $11,566,004 $13,197,704 $20,477,535 $20,477,535
=========== =========== =========== ===========
Liabilities and Sharehold-
ers' Equity
Current liabilities:
Borrowings under line of
credit.................. $ 0 $ 0 $ 1,227,313 $ 1,227,313
Accounts payable and ac-
crued liabilities....... 318,807 630,442 1,865,541 1,865,541
Accrued expert and proj-
ect origination fees:
Related party.......... 2,611,418 2,944,438 4,546,586 4,546,586
Other.................. 935,298 1,732,727 3,031,053 3,031,053
Client retainers......... 359,565 497,876 725,208 725,208
Deferred purchase option
deposit................. 0 851,862 0 0
Deferred tax liability... 0 0 0 2,554,000
Distribution payable..... 0 0 0 2,182,000
Other current liabili-
ties.................... 140,876 276,749 486,013 486,013
----------- ----------- ----------- -----------
Total current liabili-
ties.................. 4,365,964 6,934,094 11,881,714 16,617,714
Deferred purchase option
deposit................... 851,862 0 0 0
----------- ----------- ----------- -----------
Total liabilities........ 5,217,826 6,934,094 11,881,714 16,617,714
----------- ----------- ----------- -----------
Shareholders' equity:
Common shares, $.001 par
value; authorized
40,000,000 shares;
issued and outstanding,
9,918,595, 10,014,996,
and 10,186,375 shares as
of December 31, 1995,
1996 and September 30,
1997, respectively...... 9,918 10,014 10,186 10,186
Additional paid-in
capital................. 2,628,868 5,101,219 5,619,729 5,186,729
Notes receivable from
shareholders............ (1,575,992) (3,045,169) (2,734,455) (1,404,455)
Retained earnings........ 5,285,384 4,197,546 5,700,361 67,361
----------- ----------- ----------- -----------
Total shareholders' eq-
uity.................. 6,348,178 6,263,610 8,595,821 3,859,821
----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity.. $11,566,004 $13,197,704 $20,477,535 $20,477,535
=========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-3
<PAGE>

LECG, INC.

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------- -------------------------------
1994 1995 1996 1996 1997
------------ ------------ ------------ -------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $ 24,548,023 $ 24,835,188 $ 31,391,870 $ 22,730,994 $ 31,993,685
Cost of services
Related party.......... 7,389,395 6,440,823 7,329,346 5,305,854 6,823,199
Other.................. 9,382,933 10,024,540 13,551,511 9,955,671 13,528,445
------------ ------------ ------------ --------------- ---------------
Total cost of servic-
es.................... 16,772,328 16,465,363 20,880,857 15,261,525 20,351,644
------------ ------------ ------------ --------------- ---------------
Gross profit........... 7,775,695 8,369,825 10,511,013 7,469,469 11,642,041
General and administra-
tive................... 3,639,158 4,047,524 5,258,389 3,554,787 5,834,127
Other expense (income).. 0 0 0 0 (851,862)
------------ ------------ ------------ --------------- ---------------
Income before income
taxes................. 4,136,537 4,322,301 5,252,624 3,914,682 6,659,776
Income taxes............ 89,801 83,005 188,650 139,085 270,855
------------ ------------ ------------ --------------- ---------------
Net income............. $ 4,046,736 $ 4,239,296 $ 5,063,974 $ 3,775,597 $ 6,388,921
============ ============ ============ =============== ===============
Pro forma income data
(unaudited):
Net income as reported............................ $ 5,063,974 $ 6,388,921
Pro forma adjustments............................. (1,964,926) (2,459,654)
------------ ---------------
Pro forma net income.............................. $ 3,099,048 $ 3,929,267
------------ ---------------
Pro forma net income per share.................... $ 0.31 $ 0.39
============ ===============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-4
<PAGE>

LECG, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL NOTES AND INTEREST
------------------- PAID-IN RECEIVABLE FROM RETAINED
SHARES AMOUNT CAPITAL SHAREHOLDERS EARNINGS TOTAL
---------- ------- ---------- ------------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993................... 8,997,429 $ 8,997 $ 738,514 $ (470,810) $ 3,592,646 $ 3,869,347
Net income............. 4,046,736 4,046,736
Distributions to share-
holders............... (2,448,382) (2,448,382)
Sale of common shares.. 85,690 86 190,370 (152,365) 38,091
Accrued interest on
notes receivable from
shareholders.......... 53,049 (53,049)
Collection of notes re-
ceivable from share-
holders............... 33,557 33,557
---------- ------- ---------- ------------ ----------- -----------
Balance at December 31,
1994................... 9,083,119 9,083 981,933 (642,667) 5,191,000 5,539,349
Net income............. 4,239,296 4,239,296
Distributions to share-
holders............... (3,344,644) (3,344,644)
Sale of common shares.. 1,435,304 1,435 1,572,378 (982,930) 590,883
Repurchase of common
shares................ (599,828) (600) (3,400) (800,268) (804,268)
Accrued interest on
notes receivable from
shareholders.......... 77,957 (77,957)
Collection of notes re-
ceivable from share-
holders............... 127,562 127,562
---------- ------- ---------- ------------ ----------- -----------
Balance at December 31,
1995................... 9,918,595 9,918 2,628,868 (1,575,992) 5,285,384 6,348,178
Net income............. 5,063,974 5,063,974
Distributions to share-
holders............... (4,901,995) (4,901,995)
Sale of common shares.. 985,433 985 2,318,130 (1,619,174) 699,941
Repurchase of common
shares................ (889,032) (889) (519) (1,249,817) (1,251,225)
Accrued interest on
notes receivable from
shareholders.......... 154,740 (154,740)
Collection of notes re-
ceivable from share-
holders............... 466,926 466,926
Shareholder advances... (162,189) (162,189)
---------- ------- ---------- ------------ ----------- -----------
Balance at December 31,
1996................... 10,014,996 10,014 5,101,219 (3,045,169) 4,197,546 6,263,610
Net income............. 6,388,921 6,388,921
Distributions to
shareholders.......... (4,851,343) (4,851,343)
Sale of common shares.. 214,224 214 466,336 (87,014) 379,536
Repurchase of common
shares................ (42,845) (42) (95,187) 43,860 (34,763) (86,132)
Accrued interest on
notes receivable from
shareholders.......... 147,361 (147,361)
Collection of notes re-
ceivable from share-
holders............... 851,952 851,952
Shareholders advances.. (350,723) (350,723)
---------- ------- ---------- ------------ ----------- -----------
Balance at September 30,
1997................... 10,186,375 $10,186 $5,619,729 $ (2,734,455) $ 5,700,361 $ 8,595,821
========== ======= ========== ============ =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-5
<PAGE>

LECG, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DEC 31, SEPTEMBER 30,
------------------------------------- ------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities:
Net income............. $ 4,046,736 $ 4,239,296 $ 5,063,974 $ 3,775,597 $ 6,388,921
Adjustments to recon-
cile net income to net
cash provided by oper-
ating activities:
Depreciation and amor-
tization.............. 272,205 340,245 435,163 315,052 471,725
Bad debt expense....... 329,758 100,584 358,374 95,659 187,720
Expiration of deferred
purchase option....... 0 0 0 0 (851,862)
Loss on disposal of
property and equip-
ment.................. 9,194 15,335 26,186 26,186 0
Decrease (increase) in
accounts receivable... (3,587,543) 61,759 (1,882,338) (1,618,968) (4,944,856)
Decrease (increase) in
prepaid expenses and
security deposits..... 27,640 15,347 (90,114) (74,035) (36,910)
Increase (decrease) in
accounts payable and
accrued liabilities... (337,577) (110,077) 311,635 609,704 1,235,099
Increase (decrease) in
accrued expert and
project origination
fees.................. 1,454,845 (572,888) 1,130,449 1,892,521 2,900,474
Increase in client re-
tainers............... 123,853 73,065 138,311 93,723 227,332
Increase (decrease) in
other liabilities..... (32,108) 19,422 135,873 103,886 209,264
----------- ----------- ----------- ----------- -----------
Net cash provided by
operating activities.. 2,307,003 4,182,088 5,627,513 5,219,325 5,786,907
----------- ----------- ----------- ----------- -----------
Cash flows from invest-
ing activities:
Purchase of property
and equipment......... (321,651) (563,358) (1,080,333) (732,225) (1,661,834)
Proceeds from disposal
of property and equip-
ment.................. 76,960 2,700 6,323 6,323 0
----------- ----------- ----------- ----------- -----------
Net cash used in in-
vesting activities.... (244,691) (560,658) (1,074,010) (725,902) (1,661,834)
----------- ----------- ----------- ----------- -----------
Cash flows from financ-
ing activities:
Borrowings under line
of credit............. 500,000 0 2,206,380 2,206,380 3,504,643
Repayments on line of
credit................ (500,000) 0 (2,206,380) (1,948,820) (2,277,330)
Sale of common stock... 38,091 590,883 699,941 528,084 379,536
Repurchase of common
stock................. 0 (804,268) (1,251,225) (1,251,225) (86,132)
Advances to sharehold-
ers................... 0 0 (162,189) (66,750) (350,723)
Collection of notes re-
ceivable from share-
holders............... 0 0 121,923 382,672 147,821
Distributions to share-
holders............... (2,414,825) (3,217,082) (4,556,992) (4,901,995) (4,147,212)
----------- ----------- ----------- ----------- -----------
Net cash used in fi-
nancing activities.... (2,376,734) (3,430,467) (5,148,542) (5,051,654) (2,829,397)
----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in cash................ (314,422) 190,963 (595,039) (558,231) 1,295,676
Cash at beginning of pe-
riod................... 721,387 406,965 597,928 597,928 2,889
----------- ----------- ----------- ----------- -----------
Cash at end of period... $ 406,965 $ 597,928 $ 2,889 $ 39,697 $ 1,298,565
=========== =========== =========== =========== ===========
Supplemental cash flow
information:
Cash paid for inter-
est................... $ 10,497 $ 2,535 $ 12,008 $ 10,627 $ 11,443
=========== =========== =========== =========== ===========
Cash paid for state in-
come taxes............. $ 132,936 $ 73,652 $ 200,488 $ 164,167 $ 231,847
=========== =========== =========== =========== ===========
Noncash financing activ-
ities:
Sale of common stock
through issuance of
notes.................. $ 152,365 $ 982,930 $ 1,619,174 $ 931,747 $ 87,014
=========== =========== =========== =========== ===========
Collection of notes re-
ceivable through appli-
cation of distribu-
tions.................. $ 33,557 $ 127,562 $ 345,003 $ 345,003 $ 704,131
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements

F-6
<PAGE>

LECG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ALL INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)

1. DESCRIPTION OF BUSINESS:

The accompanying consolidated financial statements present the consolidated
financial position and results of operations of LECG, Inc. (formerly Law and
Economics Consulting Group, Inc.) a California Corporation formed in March
1988, and its wholly owned subsidiaries: LECG Limited (United Kingdom), and
Law and Economics Consulting Group Limited (New Zealand).

The Company is a provider of economic consulting services in matters related
to complex litigation, regulation, public policy, and strategic management and
derives its revenues almost exclusively therefrom. The Company provides its
economic consulting services to a broad client base, which includes national
governments, regulatory agencies, and development institutes and agencies in
the United States and abroad. Services are provided by academics, industry
leaders and former high-level government officials ("Experts") who are
supported by professional staff. The Company has offices in the United States
in California, Washington D.C., Illinois, New York, Texas, and Utah, as well
as in Ontario, Canada, Wellington, New Zealand, and London, England.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Consolidated Financial Information

The consolidated financial statements and related notes thereto for the nine
months ended September 30, 1996 are unaudited and have been prepared on the
same basis as the audited consolidated financial statements included herein.
In the opinion of management, such unaudited consolidated financial statements
include all normal recurring adjustments necessary to present fairly the
information set forth herein. Results of operations for the interim periods
are not necessarily indicative of the results of operations for the full year.

Risks and Uncertainties

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.

The Company's ability to retain current business and to attract new business
is highly dependent on the business generation capabilities and consulting
reputation of its Experts and professional staff and on the quality of their
work performed for the Company. There is no assurance that these individuals
will perform at previous levels, or that they will remain with the Company. In
the event that these individuals do not perform at previous levels or do not
remain with the Company, the Company's business, operating results and
financial condition could be materially and adversely affected. Additionally,
the Company's future performance depends in large part on its ability to
attract, develop and motivate highly-skilled Experts and professional staff.
The failure to recruit a significant number of Experts or qualified
professional staff could have a material adverse effect on the Company's
business, operating results and financial condition.

The Company's services involve risks of professional and other liability. If
the Company were found to have been negligent or to have breached its
obligations to its clients, the Company could be exposed to significant
liabilities and its reputation could be adversely affected.

Revenue Recognition

Revenue is recognized when services are provided. An allowance is provided
for any amounts considered uncollectable. Amounts collected in advance of
providing services are recorded as client retainers.

F-7
<PAGE>

LECG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company bills clients for hourly fees as well as reimbursable expenses.
Reimbursable expenses consist of direct out-of-pocket costs, telecommunication
charges and in-house reproduction services. In providing consulting services
to its clients, the Company engages Experts on both an exclusive and non-
exclusive basis. Once billings related to a specific job are collected, these
Experts are generally paid consulting fees in an amount equal to the Experts'
billing rate for time actually billed and collected.

Project origination fees are paid to Experts (some of whom are related
parties) for securing or managing projects. These project origination fees
approximate 15 percent of all collected professional staff fees (other than
Expert fees) and depend on project profitability. These project origination
fees are recorded on an accrual basis, although they are not paid to the
Experts until the project receivables have been collected.

Property and Equipment

Property and equipment are recorded at cost. Depreciation of furniture,
fixtures and equipment is calculated using the straight-line method over the
estimated useful lives of the assets, generally five to seven years. Leasehold
improvements are amortized over the estimated useful lives of the assets or
the lease term, whichever is shorter.

Income Taxes

The Company has elected Subchapter S Corporation status for income tax
purposes. As a result of this election, the income of the Company is reported
on the individual income tax returns of its shareholders, using a cash basis
of accounting. Accordingly, the consolidated statements of income for the
years ended December 31, 1994, 1995, and 1996 and the nine months ended
September 30, 1996 (unaudited) and 1997 do not include a provision for federal
and certain state income taxes. The recorded provision consists of state
income taxes at rates ranging from 1.5 to 10 percent.

The Subchapter S election will be terminated upon the closing of the
proposed initial public offering of common shares. Subsequently, the Company
will file income taxes as a C Corporation using an accrual basis of
accounting. A pro forma provision for income taxes has been presented as if
the Company was taxed as a C Corporation for the year ended December 31, 1996
and the nine months ended September 30, 1997. For those periods, Statement of
Financial Accounting Standards No. 109 (Statement 109), "Accounting for Income
Taxes" was used to calculate pro forma taxes on earnings and the pro forma
impact of deferred income taxes as a result of the conversion to C Corporation
status.

Under the asset and liability method of Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the consolidated financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.

At the time of the Company's Subchapter S Corporation status termination, a
net deferred income tax liability and a one-time additional provision for
income taxes will be recorded. The amount to be recorded will depend upon
differences between the financial reporting and tax bases of the Company's
assets and liabilities at the time. As of September 30, 1997, the pro forma
deferred tax liability is approximately $2,554,000 (see Note 10.)

Fair Value of Financial Instruments

All financial instruments are short term and are carried at amounts
approximating their fair value.

F-8
<PAGE>

LECG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

New Accounting Pronouncements

Statement of Financial Accounting Standards No. 128 (Statement 128),
"Earnings per Share", issued in February 1997, simplifies the standards for
computing and presenting earnings per share. It replaces the presentation of
primary EPS with basic EPS and requires a reconciliation of the basic EPS
computation to a diluted EPS computation. Basic EPS excludes dilution and is
computed by dividing income available to common shareholders by the weighted-
average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that would occur if securities or other
contracts to issue common shares were exercised or converted into common
shares or resulted in the issuance of common shares that then benefited from
the earnings of the entity. Adoption of this statement is effective for
financial statements issued for periods ending after December 15, 1997, and
earlier application is not permitted. Additional disclosure is required by
Statement 128, however; the Company does not expect the effects of Statement
128 to be material.

3. PROPERTY AND EQUIPMENT:

Property and equipment, at cost, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, ESTIMATED
1995 1996 1997 USEFUL LIVES
------------ ------------ ------------- ------------
(YEARS)
<S> <C> <C> <C> <C>
Furniture and fixtures... $ 389,311 $ 674,396 $1,026,944 7
Equipment................ 1,484,471 1,976,878 2,972,116 5
Leasehold improvements... 245,842 439,007 753,055 5-7
---------- ---------- ----------
2,119,624 3,090,281 4,752,115
---------- ---------- ----------
Less: Accumulated depre-
ciation and amortiza-
tion.................... 925,397 1,283,393 1,755,118
---------- ---------- ----------
$1,194,227 $1,806,888 $2,996,997
========== ========== ==========
</TABLE>

Depreciation and amortization expense was $272,205, $340,245, $435,163,
$315,052, and $471,725 for the years ended December 31, 1994, 1995 and 1996
and the nine months ended September 30, 1996 (unaudited) and 1997,
respectively. Costs of repairs and maintenance of property and equipment are
expensed as incurred.

4. ACCOUNTS RECEIVABLE:

At December 31, 1995 and 1996 and September 30, 1997, the components of
accounts receivable were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Billed amounts.......... $7,427,823 $ 8,882,499 $12,477,899
Unbilled amounts........ 2,377,100 2,546,388 3,867,541
Allowance for
uncollectable ac-
counts................. (200,000) (300,000) (459,417)
---------- ----------- -----------
Total................... $9,604,923 $11,128,887 $15,886,023
========== =========== ===========
</TABLE>

Unbilled amounts represent balances accrued by the Company for services that
have been performed but have not been billed to the customer. Billings are
generally done on a monthly basis for the prior month's services.

F-9
<PAGE>

LECG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The activity in the allowance for uncollectable accounts for the years ended
December 31, 1994, 1995, and 1996 and the nine months ended September 30, 1996
(unaudited) and 1997 was as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------- --------------------
1994 1995 1996 1996 1997
-------- -------- -------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period................... $100,000 $200,000 $200,000 $200,000 $300,000
Provision for losses
expensed................. 329,758 100,584 358,374 95,659 187,720
Charge-offs, net of recov-
eries.................... (229,758) (100,584) (258,374) (95,659) (28,303)
-------- -------- -------- -------- --------
Balance at end of period.. $200,000 $200,000 $300,000 $200,000 $459,417
======== ======== ======== ======== ========
</TABLE>

5. LINE OF CREDIT:

The Company has a commercial line of credit with a bank which allows
borrowings up to $3,000,000. The Company is currently negotiating with the
bank to increase the line to $10,000,000. The Company had $1,772,687 available
under the line of credit at September 30, 1997. The line is secured by
receivables and fixed assets. The line expires May 31, 2000, and bears
interest at the bank's prime rate, which was 8.5 percent at September 30,
1997. The weighted average interest rate of borrowings under the line of
credit for the years ended December 31, 1996 and for the nine months ended
September 30, 1997 was 8.37 percent and 8.48 percent, respectively. During
1995, no amounts were borrowed. The line of credit agreement contains certain
restrictive covenants including maintaining a ratio of liabilities to tangible
net worth (as defined), among other restrictions. The Company is currently in
compliance with all restrictive covenants.

6. RETIREMENT BENEFITS:

The Company has a defined contribution plan under Section 401(k) of the
Internal Revenue Code. All employees with at least 90 days of employment are
eligible to participate. The Company has the option of matching a portion of
employee contributions to the plan on a current or retroactive basis. In 1997,
the Company intends to match 100% of employee contributions for the first
three percent of salary and 50% of employee contributions between three and
five percent of salary. A liability for matching contributions is included in
accounts payable and accrued liabilities at September 30, 1997.

7. SHAREHOLDERS' EQUITY:

Share sales have been executed in accordance with the First Amended
Shareholders' Buy-Sell Agreement (the Buy-Sell Agreement). At the discretion
of the Board of Directors, new shares can also be sold subject to the Policy
for Option Program for High Performing LECG Shareholder Principals (the
Agreement).

Under the terms of the Buy-Sell Agreement, individuals are offered shares by
the Board of Directors at a formula price based on a multiple of earnings plus
equity. The Company finances up to 80% of the purchase price with notes
receivable. The notes are repaid out of subsequent distributions to the
shareholder. The interest rate charged on these notes was seven percent for
all periods. Principal balances due to the Company under these notes were
$1,525,980, $2,866,357 and $2,688,244 at December 31, 1995, and 1996 and
September 30, 1997, respectively. The principal and interest earned on these
notes are offset against shareholders' equity in the consolidated statements
of shareholders' equity.

At the discretion of the Board of Directors and under the terms of the Buy-
Sell Agreement, shareholders may be required to sell shares back to the
Company. The Company has the right of first refusal for any shares offered for
sale by a selling shareholder. Any repurchases are made at a formula price
specified in either the

F-10
<PAGE>

LECG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Buy-Sell Agreement or the Agreement. Balances due on notes receivable are
offset against the repurchase proceeds and the remainder is remitted to the
selling shareholder.

These agreements are expected to be terminated prior to the proposed initial
public offering of shares.

In April 1994, the Company granted options to the Chairman of the Board to
purchase up to 342,759 common shares at $2.09 per share, which was estimated
fair value at the time. Of these options, 171,380 were exercisable upon grant,
with the remaining shares exercisable in April 1997. Any unexercised options
would expire at that time. During 1996, 171,379 of these options were
exercised. The remaining options were exercised in April 1997. No other
options were granted, exercised, expired or outstanding during any of the
periods presented.

8. RELATED-PARTY TRANSACTIONS:

Included in shareholders' equity are notes receivable from shareholders
arising from the sale of common shares (see Note 7), as well as other advances
to shareholders. These amounts are unsecured and payable from future
distributions. The notes bear interest at seven percent.

Related party cost of services and accrued Expert and project origination
fees represent Expert fees, project origination fees and other amounts paid or
owed to shareholders. These amounts are paid when the related project
receivables have been collected.

9. COMMITMENTS AND CONTINGENCIES:

The Company leases its office facilities and certain equipment under
operating leases through the year 2007.

Future minimum rental payments under these noncancellable leases with
initial or remaining lease terms in excess of one year are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30
------------
<S> <C>
1997........................................................ $ 417,287
1998........................................................ 1,931,092
1999........................................................ 1,889,759
2000........................................................ 2,014,285
2001........................................................ 2,088,988
Thereafter.................................................. 4,217,541
-----------
Total minimum lease payments.............................. $12,558,952
===========
</TABLE>

Rent expense was $756,841, $978,113, $1,077,530, $712,902, and $1,329,862
for the years ended December 31, 1994, 1995, 1996 and the nine months ended
September 30, 1996 (unaudited) and 1997, respectively.

10. PRO FORMA FINANCIAL INFORMATION (UNAUDITED):

Pro Forma Adjustments To Consolidated Financial Statements

The following pro forma adjustments have been made to the historical
consolidated balance sheet as of September 30, 1997, and to the consolidated
results of operations for the year ended December 31, 1996 and the nine months
ended September 30, 1997:

a) The termination of the Subchapter S Corporation election will create a
deferred tax liability estimated at $2,554,000 as of September 30, 1997.
This amount has been reflected on the pro forma consolidated balance

F-11
<PAGE>

LECG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

sheet as of September 30, 1997. This liability results from differing
methods of accounting for financial reporting and tax purposes. The
components of the pro forma deferred tax liability as of September 30, 1997
are as follows:

<TABLE>
<S> <C>
Deferred tax assets:
Accrued Expert and project origination fees.................. $ 3,106,832
Accounts payable............................................. 764,872
Other current liabilities.................................... 296,161
-----------
4,167,865
Deferred tax liabilities:
Accounts receivable, net..................................... (6,513,269)
Property and equipment....................................... (146,053)
Other........................................................ (62,543)
-----------
(6,721,865)
Net deferred tax liability................................. $(2,554,000)
===========
</TABLE>

b) Subsequent to the consummation of its proposed initial public offering, the
Company will declare a Subchapter S Corporation distribution to its
existing shareholders in an amount representing all undistributed cash
earnings through the termination of the Company's Subchapter S Corporation
status. At September 30, 1997, the Subchapter S Corporation distribution is
estimated to be approximately $3,512,000, of which $1,330,000 will be used
to reduce notes receivable from shareholders. This distribution is
reflected as a liability on the September 30, 1997 pro forma consolidated
balance sheet. The amount of this distribution will significantly increase
based upon actual cash basis earnings between September 30, 1997 and the
close of the Company's initial public offering.

c) The pro forma consolidated statements of income for the year ended December
31, 1996 and the nine months ended September 30, 1997 have been adjusted to
reflect a provision for income taxes assuming an effective tax rate of 41
percent that would have been recorded had the Company been a C Corporation.

Other income in 1997 (see Note 11) is not expected to be recurring, although
it is included in pro forma net income and pro forma net income per share. If
this item had not occurred, pro forma net income and net income per share
would be $3,426,669 and $0.34, respectively.

Pro Forma Net Income Per Share

Pro forma net income per share is computed using the weighted average common
shares outstanding at each reporting date. In accordance with Securities and
Exchange Commission requirements, stock issued within a one year period prior
to the initial filing of the registration relating to the IPO has been treated
as outstanding for all reported periods, using the treasury stock method.
Also, common share options issued after the date of the financial statements,
but before the effective date of the Registration Statement were included in
the calculation of weighted average shares for all reporting dates. The
treasury stock method was used to calculate the effect of these options and
the initial public offering price was used as the market price. No material
dilutive effects resulted from common stock equivalents outstanding prior to
October 1997. The weighted average shares were 10,006,036 and 10,160,951 as of
December 31, 1996 and September 30, 1997, respectively.

11. OTHER INCOME--DEFERRED PURCHASE OPTION DEPOSIT:

In June 1993, another major consulting firm purchased from the Company an
option to buy all of the Company's assets at a formula price, based on a
multiple of earnings and equity. The Company received $1,000,000 for granting
this option, which was deferred in the consolidated balance sheet, net of
applicable expenses. During 1997, the option agreement expired and the Company
recognized the $851,862, as other income in 1997.

F-12
<PAGE>

LECG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

12. SUBSEQUENT EVENTS:

Share Split

During October, 1997, LECG, Inc. amended its articles of incorporation
effecting a 2,142.2451-for-one share split of the Company's Common Shares,
assigning a par value of $.001 per common share, and increasing the number of
authorized common shares to 40,000,000. The Company also authorized 5,000,000
preferred shares. The accompanying financial statements and notes thereto have
been adjusted retroactively to give effect to the aforementioned actions.

1997 Stock Option Plan

In October, 1997, the Board of Directors and shareholders approved the
Company's 1997 Stock Option Plan (the "Option Plan"). The Option Plan provides
for the granting to employees of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), and for the granting to employees, directors and consultants
of nonstatutory stock options and stock purchase rights ("SPRs"). Unless
terminated sooner, the Option Plan will terminate automatically in 2007. A
total of 1,500,000 shares of common stock are currently authorized pursuant to
the Option Plan.

During November 1997, 340,000 stock options were granted to employees with
an exercise price of $11. These options have been included in the calculation
of weighted average shares outstanding as described in Note 10.

1997 Employee Stock Purchase Plan

F-13
<PAGE>

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

NO DEALER, SALESPERSON OR ANY 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, ANY OF THE SELLING
SHAREHOLDERS OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CRE-
ATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Additional Information................................................... 2
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 9
S Corporation Termination................................................ 9
Dividend Policy.......................................................... 9
Capitalization........................................................... 10
Dilution................................................................. 11
Selected Financial Data.................................................. 12
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 13
Business................................................................. 18
Management............................................................... 31
Certain Transactions..................................................... 36
Principal and Selling Shareholders....................................... 38
Description of Capital Stock............................................. 39
Shares Eligible for Future Sale.......................................... 40
Underwriting............................................................. 42
Legal Matters............................................................ 44
Experts.................................................................. 44
Index to Financial Statements............................................ F-1
</TABLE>

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

UNTIL JANUARY 12, 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
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 OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

4,500,000 SHARES

[LOGO OF LECG]

COMMON STOCK

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

PROSPECTUS

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

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

LEGG MASON WOOD WALKER
INCORPORATED

DECEMBER 18, 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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 Registrant in
connection with the sale of Common Stock being registered. All amounts are
estimates except the SEC registration fee, the NASD filing fee and the NYSE
listing fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
SEC Registration Fee............................................... $ 22,652
NASD Filing Fee.................................................... 7,975
NYSE Listing Fee................................................... 119,600
Legal Fees and Expenses............................................ 325,000
Accounting Fees and Expenses....................................... 150,000
Printing and Engraving Expenses.................................... 70,000
Blue Sky Fees and Expenses......................................... 15,000
Transfer Agent and Registrar Fees.................................. 10,000
Miscellaneous Expenses............................................. 79,773
--------
Total............................................................ $800,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 317 of the California Corporations Code allows for indemnification
of officers, directors, and other corporate agents in terms sufficiently broad
to indemnify such persons under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act of 1933, as amended the "Act"). Article IV of the Registrant's Restated
Articles of Incorporation (Exhibit 3.1 hereto) and Article VI of the
Registrant's Bylaws (Exhibit 3.2 hereto) provide for indemnification of the
Registrant's directors, officers, employees and other agents to the extent and
under the circumstances permitted by the California Corporations Code. The
Registrant has also entered into agreements with its directors and executive
officers that will require the Registrant, among other things, to indemnify
them against certain liabilities that may arise by reason of their status or
service as directors and executive officers to the fullest extent not
prohibited by law.

The Underwriting Agreement (Exhibit 1.1) provides for indemnification by the
Underwriters of the Registrant, its directors and officers, and by the
Registrant of the Underwriters, for certain liabilities, including liabilities
arising under the Act, and affords certain rights of contribution with respect
thereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since October 14, 1994, the Registrant has sold or issued the following
securities which were not registered under the Act:

(a) The Registrant issued and sold to Robert Harris 257,069 shares of
Common Stock and 449,871 shares of Common Stock on May 1, 1995 and
October 16, 1996, for $670,180 and $859,284 respectively.

(b) The Registrant issued and sold to Richard Gilbert 964,010 shares of
Common Stock on June 1, 1995 for $345,150.

(c) The Registrant issued and sold to Joseph Pace 214,225 shares of Common
Stock and 107,112 shares of Common Stock on July 31, 1995 and June 1,
1996, for $558,483 and $279,242 respectively.

(d) The Registrant issued and sold to Stephen Wiggins 428,449 shares of
Common Stock on April 1, 1996 for $1,180,590.

(e) The Registrant issued and sold to Donald Bunch 42,845 shares of Common
Stock on January 1, 1997 for $108,767.

(f) On April 22, 1997, David Teece exercised an option (granted in April
1994) to purchase from the Company 171,380 shares of Common Stock for
$358,184.

II-1
<PAGE>

In all such transactions which relied upon the exemption set forth in
Section 4(2) of the Act, the recipients of securities represented their
intentions to acquire the securities for investments only and not with a view
to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the securities issued in such transactions.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Articles of Incorporation of the Registrant.*
3.2 Amended and Restated Bylaws of the Registrant.*
4.1 Form of the Registrant's Common Stock Certificate.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.*
10.1 Form of Indemnification Agreement entered into by the Registrant with
each of its directors and executive officers.*
10.2 1997 Stock Option Plan.*
10.3 1997 Employee Stock Purchase Plan.*
10.4 Line of Credit Agreement between the Registrant and Wells Fargo Bank,
N.A dated May 31, 1996, as amended.*
10.5 Promissory Note, dated October 1, 1997, between the Registrant and
Kimberly D. Gilmour.*
10.6 Promissory Note, dated October 1, 1997, between the Registrant and
Donald A. Bunch.*
10.7 Promissory Note, dated October 1, 1997, between the Registrant and
Robert G. Harris.*
10.8 Form of Principal Agreements.*
10.9 Form of Amended and Restated Shareholders' Agreement.*
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP, Independent Accountants (included on
page II-5).
24.1 Power of Attorney.*
27.1 Financial Data Schedule.*
</TABLE>
- ---------------------
* Previously filed with the Commission.

(b) Financial Statement Schedules

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.

ITEM 17. UNDERTAKINGS

The undersigned hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

II-2
<PAGE>

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions referenced in Item 14 of this Registration
Statement or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant 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
hereunder, the Registrant 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 Act and will be governed by the
final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, 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
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 Act, 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-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO REGISTRATION STATEMENT ON FORM S-1 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF EMERYVILLE, STATE OF CALIFORNIA, ON THIS 18TH DAY OF DECEMBER 1997.

LECG, INC.

By: /s/ Thomas M. Jorde
--------------------------------
NAME: THOMAS M. JORDE
TITLE: PRESIDENT

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

* Chairman of the December 18, 1997
- ------------------------------------ Board of Directors
DAVID J. TEECE

/s/ Thomas M. Jorde President December 18, 1997
- ------------------------------------ (Principal
THOMAS M. JORDE Executive Officer)

/s/ Kimberly D. Gilmour Chief Financial December 18, 1997
- ------------------------------------ Officer (Principal
KIMBERLY D. GILMOUR Financial and
Accounting
Officer)

* Director December 18, 1997
- ------------------------------------
RICHARD J. GILBERT

* Director December 18, 1997
- ------------------------------------
ROBERT G. HARRIS

* Director December 18, 1997
- ------------------------------------
GORDON C. RAUSSER

* Director December 18, 1997
- ------------------------------------
MARIO M. ROSATI

Director
- ------------------------------------

WILLIAM J. SPENCER

*By: /s/ Kimberly D. Gilmour
---------------------------------
KIMBERLY D. GILMOUR,
ATTORNEY-IN-FACT
</TABLE>

II-4
<PAGE>

EXHIBIT 23.2

[Letterhead of Arthur Andersen LLP]
CONSENT OF INDEPENDENT ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report dated October 31, 1997 (and to the references to our Firm) included in
or made a part of this registration statement.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

San Francisco, California

December 18, 1997

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED PAGE
------- ------------------- -------------
<C> <S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Articles of Incorporation of the
Registrant.*
3.2 Amended and Restated Bylaws of the Registrant.*
4.1 Form of the Registrant's Common Stock Certificate.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation.*
10.1 Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.*
10.2 1997 Stock Option Plan.*
10.3 1997 Employee Stock Purchase Plan.*
10.4 Line of Credit Agreement between the Registrant and
Wells Fargo Bank, N.A. dated May 31, 1996, as
amended.*
10.5 Promissory Note, dated October 1, 1997, between the
Registrant and Kimberly D. Gilmour.*
10.6 Promissory Note, dated October 1, 1997, between the
Registrant and Donald A. Bunch.*
10.7 Promissory Note, dated October 1, 1997, between the
Registrant and Robert G. Harris.*
10.8 Form of Principal Agreements.*
10.9 Form of Amended and Restated Shareholders' Agreement.*
23.1 Consent of Wilson Sonsini Goodrich & Rosati,
Professional Corporation (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP, Independent
Accountants (included on page II-5).
24.1 Power of Attorney.*
27.1 Financial Data Schedule.*
</TABLE>
- ---------------------
* Previously filed with the Commission.