EXHIBIT 1 

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12/28/17

Project Liberty

Summary

The following is subject to ongoing adjustments to reflect tax, GAAP accounting and 

financial markets considerations, as well as the ongoing business discussions among 

the parties.

1. Closing: Closing will occur on January 31, 2018.

2. Conversion to PLLC: Between Closing and April 1, 2018, LR will convert into a 

professional limited liability company. The term “LR” as used below will generally refer to 

this new PLLC, unless the context otherwise requires.

3. The JV: After LR converts to a PLLC and prior to April 1, 2018, UL and LR will form United 

Law Firm Support, which will be a JV structured as an LLC/LTD PS (UL would be the 

general partner). Except for certain fundamental matters (e.g., approval of transactions 

between the JV and UL), UL will control the affairs of the JV. It is anticipated that one or 

more current LR colleagues (e.g., Jen Mistal) will assume a senior management role in the 

JV.

4. LR’s Capital Contribution: Upon formation of the JV, LR will contribute its Strategic IP, 

Operating IP and Admin Operations (including the related fixed assets) to the JV. LR will 

secure prior to Closing a valuation by Keiter Stephens of that contribution.

5. CPMA: Upon formation of the JV, LR and the JV also will enter into a 10-year Client 

Practice Management Services Agreement (“CPMA”) pursuant to which (i) the JV will 

provide CPM Services to LR and (ii) LR will pay a CPM Fee to the JV.

6. Termination of CPMA: The CPMA will be terminable by either party with cause (upon 30 

days notice) or, after the second anniversary, without cause (upon 180 days advance notice

prior to each April 1 anniversary of the CPMA). Cause will be limited to material breaches 

(e.g., failure to pay the CPM Fee).

7. CPM Services: Client Practice Management Services will include business development, 

training, client solutions (e.g., knowledge management, project management), utilization 

management, operations support (e.g., pricing, budgeting, time entry, billing, collections and 

disbursements management), capital and compensation efficiency (e.g., LR no longer would 

have annual preferred dividends, stock redemption, loan interest and loan principal cash 

outflows) and other agreed-to services.

8. LR Value Pool Interest: In exchange for its contribution to the JV, LR will receive an equity 

interest in the JV (the “LR Value Pool Interest“). The LR Value Pool Interest will have a 

conditional value equal to 5 times the average annual Client Practice Management Fee paid 

by LR to the JV during the period April 1, 2018 through March 31, 2023 (the “Value Pool

Measurement Period”). LR may redeem the LR Value Pool Interest on April 30, 2023 (the 

“Value Pool Redemption Date”).

9. Taxes Upon Conversion: LR’s 2018 taxable income related to the conversion to the new 

PLLC will be reduced to the extent of LR’s NOLs. The 2018 taxable income incurred by LR 

Shareholders related to such conversion will be reduced to the extent of the PLLC’s 

corresponding 2018 losses. A final tax projection will be prepared before Closing based on 

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final 2017 results. It is anticipated that the conversion will be tax neutral to LR’s 

Shareholders and that funding for any net tax liability incurred by the C corporation will be 

arranged through an increase in the LR Loan discussed below.

10. LR Loan: At Closing, UL will lend (the “LR Loan”) to LR $20 million (the “Capital Funding”) 

[plus up to $13 million if UL will become LR’s term and working capital/landlord letter of 

credit lender (the “Debt Funding”)]. The LR Loan will be covenant-lite.

11. Security for LR Loan: The Capital Funding will be secured by a first lien on the LR Value 

Pool Interest and if LR terminates the CPMA without cause or UL terminates it with cause 

(either event, a “Black Hat CPMA Termination”), a second lien [first lien in the event the LR 

Loan also includes the Debt Funding] on LR’s WIP and AR. [The Debt Funding will be

secured by both the LR Value Pool Interest and a first lien on LR’s WIP and AR].

12. Repayment of LR Loan: The unpaid LR Loan principal and accrued simple interest (the 

“Loan Repayment Amount”) will be due on the earlier of a Black Hat CPMA Termination or 

January 31, 2028 (the “Loan Maturity Date”). The LR Loan will bear interest at the rate paid 

by LR to Wells Fargo in 2017. The LR Loan is subject to prepayment without penalty. Within 

30 days after the end of each April 1 to March 31 fiscal year (see below), LR will make a 

minimum repayment equal to up to 10% of the then outstanding loan principal amount, to the 

extent of 50% of LR’s free cash flow for such fiscal year, calculated after an assumed

payment of a $20 million CPM Fee for such fiscal year. LR also must prepay the LR Loan, if 

requested by UL, to the extent of any redemption payments to LR of its LR Value Pool 

Interest.

13. Offset vs. LR Value Pool Interest: On the Value Pool Redemption Date, LR may offset

against the LR Value Pool Interest an amount equal to the Loan Repayment Amount. In the 

event the CPMA is terminated and such termination is not a Black Hat CPMA Termination, in 

order to compensate LR for the potential disruption caused by such termination, LR may

offset the Loan Repayment Amount against the LR Value Pool Interest and such offset will 

be deemed a payment in full of the Capital Funding portion of the LR Loan. If a Black Hat 

CPMA Termination has occurred, any LR Loan balance remaining after the credit against

the LR Value Pool Interest will be repaid over 5 years. [If a Black Hat CPMA Termination has 

not occurred, any LR Loan balance attributable to the Debt Funding and remaining after the 

offset against the LR Value Pool Interest will be repaid over 5 years.]

14. Return of Shareholder Capital: At Closing, LR will distribute to its Shareholders $20 

million in return of their capital contributions [and pay up to $13 million in repayment of its

bank term debt (approximately $7.3 million), bank working capital line (approximately $5

million) and other miscellaneous debt (approximately $800,000)].

15. Future Capital Contributions: Capital contributions no longer will be required of promoted 

or lateral partners.

16. Shareholder Participations in LR Value Pool Interest: On April 1, 2018, LR will allocate

to its Shareholders Participations in the LR Value Pool Interest, which Participations will 

have value only to the extent the LR Value Pool Interest exceeds 125% (i.e., the amount 

required to repay the LR Loan and the estimated LR tax on the LR Value Pool Interest) of 

the LR Loan Repayment Amount. During the Value Pool Measurement Period, LR may grant 

additional Participations to its partners, including promoted and lateral partners, with such 

vesting terms that LR deems appropriate in the circumstances. In the event LR 

consummates a major law firm merger, UL and LR will cooperate in designing an 

appropriate Value Pool for LR and the partners in the merged firm.

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17. Fixed or Variable Participations: With respect to the initial grants of the Participations in 

the LR Value Pool Interest on April 1, 2018, Shareholders may elect to fix their 

Participations, in which case they will be paid in cash to the extent earned. Alternatively, 

they may elect a variable Participation, in which case they will be paid based on the change

in UL common stock equity value from Closing to the end of the Value Pool Measurement 

Period. At least 50% of the aggregate Participations must be fixed. See Appendix A for 

example. Any grants by LR of Participations after Closing will be fixed.

18. Vesting of Shareholder Participations in the LR Value Pool Interest: The Participations

will vest over 5 years with partial vesting in the event of a “white hat” departure. No vesting 

will occur if a “black hat” departure occurs before the end of the Value Pool Measurement 

Period.

19. New Compensation Fiscal Year: The fiscal year end for LR for compensation purposes 

will be March 31, which is also UL’s fiscal year end. LR’s tax and audit year end will remain 

December 31.

20. Annual Equity Interests: On April 1 of each year beginning in 2018 and for the duration of 

the CPMA, LR will award approximately $6.0 million of Annual Equity Interests to 

Shareholders. Those interests will vest on the April 30 of the following calendar year. Upon 

vesting, each Shareholder can elect by May 15 to cash out his Annual Equity Interest at its 

original value or continue to hold it. If the Shareholder elects to cash it out, it will be taxed at

the capital gains rate. If a Shareholder continues to hold it, he can cash out at the 

underlying UL equity’s value on the next April 30. Cash outs may be paid in cash or 

registered UL stock at the option of the JV/UL.

21. Performance Equity Interests: UL also may make available on an annual basis to LR 

(which in turn will make them available to LR partners) additional Performance Equity

Interests, subject to such vesting terms as UL may determine.

22. Valuation of Annual and Performance Interests: The equity value of the Annual Equity

Interests and the Performance Equity Interests will be tied to the value of UL common stock 

on the date of grant of the equity interests. Payments of the vested awards may be made in 

either cash or registered UL stock at the option of the JV/UL.

23. UL Guaranty: UL will stand behind the obligations of the JV to LR and with respect to the 

cash outs of the various Value Pool Interests.

24. 2018-2019 Shareholder Compensation: The compensation of LR Shareholders for April 1, 

2018 through March 31, 2019 will be as budgeted by LR for that period based on the effects 

of Project Liberty. The draws for January through March 2018 will be as currently budgeted.

25. DC and SR Plan Termination: It is intended that LR will terminate its non-qualified 

deferred compensation and supplemental retirement plans prior to Closing, with the plan 

balances (approximately $11 million) distributed one year after termination (some balances 

may need to be distributed upon plan termination). Any additional NOLs flowing from such 

termination and distribution will be used to offset any current or future LR gains or income.

26. Shareholder Compensation Policies: Beginning with the fiscal year starting April 1, 2019, 

Shareholders will draw at no more than 80% of their target cash compensation, with the final

no less than 20% at risk amount payable on April 30 of the following year contingent upon 

LR achieving a 100% point value. Shareholder compensation otherwise will be determined 

by LR in accordance with its Shareholder approved policies and procedures. Those policies 

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and procedures will reflect incentives to engage in the behaviors that will optimize the LR 

Value Pool Interest.

27. Ownership and Governance: LR will continue to be owned and governed by its partners. 

The CPMA will not place any controls or restrictions on LR’s ownership or governance. LR

will adopt policies and procedures that will take advantage of the CPM Services in order to 

optimize the LR Value Pool Interest.

28. [Additional Loan Financing: If UL becomes LR’s lender, LR and UL may agree from time 

to time to increase the LR Loan for growth or Cap Ex. Prior to the Loan Maturity Date, any 

such increase will be subject to repayment on the Loan Maturity Date, unless otherwise 

agreed. Presumably, the Value Pool Fees payable by LR will increase as a result of such 

growth or Cap Ex, which in turn will increase the LR Value Pool Interest.]

29. [Client Advances Loan: UL may take over the funding of LR’s approximately $4 million of 

client disbursement advances as part of its lending facility.]

30. Services to other Law Firms: The JV may render services to other law firms in the UL law 

firm constellation.

31. Legal Opinions: Prior to Closing, UL, the JV and LR will be provided legal opinions 

acceptable to them as to compliance with ethical guidelines.

Ongoing Due Diligence: Upon LR’s Board’s positive response to this summary, LR will 

complete its due diligence of UL.

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Appendix A

Project Liberty

LR Value Pool Interest and Shareholder Participations

Example

Assumptions: 

(i) Average Annual Client Practice Management Fee during the Value Pool 

Measurement Period is $20,000,000.

(ii) LR Loan is for both the $20 million Capital Funding and the $13 million Debt 

Funding, as well as additional growth and CapEx, resulting in a Loan 

Repayment Amount of $50,000,000.

(iii) 60% of the Shareholders Participations in the LR Value Pool Interest are fixed 

and 40% are variable.

(iv) The value of UL’s common equity doubles from the Closing through the end of 

the Value Pool Measurement Period.

Results:

(i) The LR Value Pool Interest will be $100,000,000 (5 times $20 million).

(ii) $62,500,000 (125% of $50 million) of the $100,000,000 will be paid to LR, which 

it in turn will use to (i) repay the LR Loan ($50 million) and (ii) cover its tax on the 

LR Value Pool Interest ($12.5 million).

(iii) $37,500,000 ($100 million minus $62.5 million) of the LR Value Pool Interest is 

available for the Shareholders’ Participations.

(iv) The fixed 60% of the Participations is paid out in cash or registered UL equity in 

the amount of $22,500,000 (60% of $37.5 million).

(v) The remaining variable 40% of the Participations is paid out in cash or 

registered UL equity in the amount of $30,000,000 (2 times $15 million).

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