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                                                                   EXHIBIT 10.34

                         PACIFICARE HEALTH SYSTEMS, INC.
                                KONOWIECKI & RANK
                            LEGAL SERVICES AGREEMENT

I.      PARTIES

        The agreement is between PacifiCare Health Systems, Inc., a Delaware
        corporation, and its subsidiaries (PHS) and Konowiecki & Rank (K&R).

II.     PURPOSE

        PHS has a unique relationship with its outside counsel, K&R. K&R is
        accountable for all legal services required by PHS, including those
        rendered by other attorneys and law firms unaffiliated with K&R
        (collectively "Third Party Firms"). The goal of this agreement is to
        control PHS legal costs through planned efficiency targets and to share
        with K&R a portion of the efficiencies achieved.

III.    K&R RESPONSIBILITIES

        K&R shall be responsible for and shall have the authority to:

        a.  Manage and assure performance of all legal services required by PHS,
            including those set forth in Exhibit I ("Legal Services");

        b.  Devise, implement and coordinate with PHS procedures for utilization
            control and quality assurance of such Legal Services;

        c.  Provide Legal Services directly, or arrange for the provision of
            Legal Services by Third Party Firms as requested by PHS; and,

        d.  Make good faith efforts to advise PHS as to legal trends, upcoming
            legislation and potential court action which may effect the business
            of PHS and its policies.

IV.     PHS RESPONSIBILITIES

        PHS shall:

        a.  Take all necessary legal and administrative steps to empower K&R to
            perform its duties described above;

        b.  Cooperate with K&R in the completion of legal projects and matters,
            including the timely provision by PHS of necessary information on a
            case by case basis;

        c.  Designate a senior management level person whom K&R may contact
            regarding the performance of this Agreement; such designated person
            shall be Alan Hoops until otherwise changed in writing by PHS;

        d.  Make payments to K&R for Legal Services rendered to PHS by K&R and
            related activities as set forth in Section V. K&R agrees that legal
            rates and charges for Legal Services directly provided by K&R to PHS
            are and shall continue to be the most favorable legal rates and
            charges for such Legal Services provided to K&R's clients.
            Notwithstanding the foregoing, the legal fees and rates paid by
            insurance carriers to K&R for insurance litigation defense work
            performed by K&R shall be consistent with industry standards and
            shall not be considered in the determination of K&R's most favorable
            rates for Legal Services; and,

        e.  Make payments to K&R for savings in the total budgeted cost of Legal
            Services incurred by PHS, as set forth in Section VI.


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V.      K&R HOURLY RATES, COSTS AND EXPENSES

        K&R shall bill PHS for actual time spent by K&R providing Legal Services
        to PHS at billing rates described in Exhibit II hereto, except that, any
        and all time incurred by Joseph S. Konowiecki will be billed at a total
        monthly amount of $42,166 (Forty-Two Thousand One Hundred Sixty-Six
        Dollars) (referred to herein as the "JSK Level Payment") On January 1,
        2000 and on January 1 of each year thereafter during the Term of the
        Agreement, such rates and the JSK Level Payment shall be increased by
        multiplying the JSK Level Payment and each rate by the applicable PHS
        Merit Pool Factor. The PHS Merit Pool Factor is equal to the most
        recently published (usually by the PHS President or VP Human Resources)
        average merit increase guidelines for exceptional performance.

        The hourly rate for any K&R attorney not named in Exhibit II shall be
        determined based on experience of the new attorney in comparison to the
        experience of the attorneys listed in Exhibit II (i.e., the rates shall
        be based on the number of years of experience of the new attorney
        compared to other attorneys at K&R).

        In addition to K&R hourly rates, K&R shall invoice PHS four and one-half
        percent (4.5%) of billed services for copying, postage and telephone.
        The total of billed services and the 4.5% administrative charge shall be
        discounted by 25%. K&R shall invoice PHS for all out of pocket costs and
        expenses associated with the provision of Legal Services for PHS,
        including, without limitation, travel, messenger and overnight mail,
        litigation costs, filing fees and Legal Services and costs provided by
        law firms other than K&R.

        PHS agrees to remit payment to K&R for hourly attorney rate charges, the
        JSK Level Payment and costs and expenses ("K&R Legal Service Payment")
        in accordance with this Section V within twenty-five (25) days of
        receipt of K&R's invoice for the same.

VI.     INCENTIVE CALCULATIONS

        a. Defined Legal Budget

           The Defined Legal Budget shall be a number equal to the Defined Legal
           Expenses for calendar year 1998 plus 5%.

           i. New Business Adjustment

              If there is a material change in the business of PHS, the parties
              shall reasonably negotiate the effect of such change to the
              Defined Legal Budget.


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        b. Defined Legal Expenses

           Defined legal expenses shall be quantified for each calendar year
           using the accrual method of accounting as follows:

                  K&R Legal Service Payment
                  Plus:   Payments for Third Party Firm Legal Services and
                          related expenses
                  Less:   Amounts over Project Stop Loss (as defined below)
                  Less:   Amounts reimbursed by third parties for Legal Services
                  Equals: Defined Legal Expenses

                  i.   K&R Services and Expenses

                       All K&R Legal Service Payments determined in accordance
                       with Section V will be included in the calculation of
                       Defined Legal Expenses.

                  ii.  Third Party Firm Legal Services and Expenses

                       Because K&R is responsible for the management of all
                       Legal Services, the accrued legal fees and expenses for
                       Legal Services provided by law firms or attorneys other
                       than K&R ("Third Party Firm") will be included in the
                       calculation of Defined Legal Expenses, provided that such
                       services and expenses have been approved in writing by
                       K&R. Third Party Firm Legal fees and out-of-pocket
                       expenses not approved by K&R shall be excluded from
                       Defined Legal Expenses. K&R shall not unreasonably
                       withhold approval of any Third Party Firm but will
                       appropriately evaluate cost, quality and whether K&R
                       could have performed the applicable Legal Services
                       performed or proposed to be performed by the Third Party
                       Firm. K&R will make good faith efforts to educate and
                       communicate to PHS staff that K&R manages all Legal
                       Services.

                  iii. Project Stop Loss

                       All legal fees and expenses, excluding the Joseph S.
                       Konowiecki Level Payment, exceeding $85,000 per project
                       each calendar year for projects with legal fees and
                       expenses which exceed $170,000 ("Project Stop Loss")
                       shall be excluded from the Defined Legal Expenses.

                  iv.  Reimbursements by Third Parties

                       Reimbursement for K&R or Third Party Firm Legal Services
                       received from third parties (e.g., recent acquisition
                       sellers, or shared costs with UniHealth America, or
                       reimbursement from insurance carriers) shall be excluded
                       from Defined Legal Expenses when written evidence of
                       reimbursement is submitted to PHS by K&R. The evidence
                       may include purchase/sale agreements, offering agreements
                       and/or confirming correspondence from third parties.

         c. Incentive Pool Savings

            Incentive Pool Savings for a calendar year are defined as follows:

                               Defined Legal Budget for calendar year
                       Less:   Defined Legal Expenses for such calendar year
                       Equals: Incentive Pool Savings

            When Defined Legal Expenses are less than the Defined Legal Budget
            for the year to date measurement period, K&R shall be paid an
            additional amount equal to 50% of the Incentive Pool Savings.


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         d. Frequency of Calculation

            On a quarterly basis, a calculation shall be made of the Incentive
            Pool Savings. Calculations shall be on a PHS fiscal year-to-date
            basis and completed with in 45 days of the end of each calendar
            quarter subject to timely receipt of K&R. billing. If savings have
            been generated, then the amount due K&R shall be paid as an interim
            payment against the final year's Incentive Pool Savings results. If
            prior quarterly periods resulted in Incentive Pool Savings payment
            greater than the current measurement period, K&R will reimburse PHS
            for any excess Incentive Pool Savings payments through offsets into
            the next quarterly calculation. Payment for Quarter 4 shall be
            subject to the final Incentive Pool Savings calculation which shall
            be made within 90 days of the end of the fiscal year.

VII.    EXCLUSIVITY

        Except with the approval of PHS, K&R shall not provide legal
        representation to any PHS HMO competitors in PHS' markets in matters
        pertaining to HMO law and legal issues which are unique to HMOs and the
        other specialty products businesses of PHS.

VIII.   TERMS

        The term of this Agreement shall be for three (3) years ("Term") and
        shall commence on January 1, 1999 ("Commencement Date"). A "year" under
        this Agreement shall begin on January 1st and end on December 31st. The
        Term of this Agreement shall be automatically extended for one (1) year
        on each successive anniversary of the Commencement Date unless either
        party provides the other with written notice of such party's intention
        not to extend the Term no less than one hundred eighty (180) days prior
        to such anniversary of the Commencement Date. The parties acknowledge
        that on each successive January 1, a three (3) year term shall be in
        effect, unless notice of termination has been given, provided in this
        Section VIII.

IX.     APPROVALS

        Please indicate your agreement with the terms of this letter by signing
        below.

        PACIFICARE HEALTH SYSTEMS                    KONOWIECKI & RANK


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        Alan Hoops                                   Michael C. Foster
                                                     Managing Partner


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