SOURCE: LECG Corporation

LECG Corporation

February 28, 2011 08:00 ET

LECG Announces the Transition of Practice Groups to Other Firms

DEVON, PA--(Marketwire - February 28, 2011) - Professional services firm LECG Corporation (NASDAQ: XPRT) announced that today it expects to sign an amendment to its credit agreement and to transition two expert practice groups to FTI Consulting, Inc. LECG also announced it has agreed in principle to transition two other practice groups to Grant Thornton LLP and a third practice group to Grant Thornton LLP and WeiserMazars LLP.

The tenth amendment to the credit agreement is expected to allow LECG to transition several practice groups to other firms and determines the process for similar transactions in the immediate future. The tenth amendment also will limit how LECG may use its cash until it repays its lenders. The facility matures on March 31, 2011 and approximately $27.8 million is outstanding. Absent sufficient proceeds from the transition of practice groups, the company will not have adequate cash resources to repay amounts outstanding under the facility.

The transaction with FTI Consulting, Inc. involves the transition to that firm of LECG's International Arbitration and Aviation Competition practices and is expected to be effective today, subject to satisfaction of closing conditions, including the consent of its lenders to the release of liens on certain assets to be transferred. Terms were not disclosed.

The company also signed a letter of intent with Grant Thornton LLP to transition the company's tax and business consulting groups. Simultaneously, the partners of LECG Partners, LLP, which provide attest services under an alternative practice structure, will continue to provide their professional services with either Grant Thornton LLP or WeiserMazars LLP.

The announced transitions will involve approximately 350 employees in Atlanta, Albany, Cambridge, Chicago, Devon, Harrisburg, Houston, New York, Schaumburg and Washington, DC.

The company continues to negotiate the possible transition of the majority of its remaining practice groups, with the advice of its restructuring advisors.

LECG will initially use the majority of the proceeds from practice group transitions to repay the $27.8 million in principal outstanding under its credit facility. The Company does not believe there will be any value remaining for the common stockholders after taking into account the expected net sale values of these transactions in the aggregate, and the use of the proceeds to fund payments to the Company's lenders and unsecured creditors. Contractually, the remaining value available to equity holders, if any, would be first allocated to the Company's outstanding preferred stock.

Forward Looking Statement

Certain matters discussed in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties, including but not limited to the risk and uncertainty of whether the company can successfully transition its practice groups to other firms, the terms of such transitions or transactions, or the impact of such transitions or transactions on the company's operations. In addition to the risks and uncertainties identified above, reference is also made to other risks and uncertainties detailed in LECG quarterly report on Form 10-Q for the quarter ended September 30, 2010 and any other reports filed by LECG with the Securities and Exchange Commission. LECG cautions that the foregoing risks and uncertainties are not exclusive.

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