<PAGE>
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 1998
                                                        OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 

For the transition period from ________ to ___________

Commission file number: 0-19239


                            Law Companies Group, Inc.
                -------------------------------------------------
             (Exact name of Registrant as specified in its charter)

Georgia                                                   58-0537111
------------------------------------                      ----------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

1105 Sanctuary Parkway, Suite 300, Alpharetta, GA                 30004
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip code)

                                 (770) 360-0600
                --------------------------------------------------
               (Registrant's telephone number including area code)

                                       N/A
--------------------------------------------------------------------------------
(Former name,former address,and former fiscal year,if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X NO
                                      ---  ---
The number of shares of Common Stock of the Company,  par value $1.00 per share,
outstanding at October 31, 1998 was 2,049,745.

<PAGE>



                                TABLE OF CONTENTS


PART I.  FINANCIAL INFORMATION

         ITEM 1.  FINANCIAL STATEMENTS

         Condensed Consolidated Balance Sheets
          as of September 30, 1998 and December 31, 1997.......................1


         Condensed Consolidated Statements of Income
          for the Quarters and Nine Months Ended September 30, 1998 and 1997...3


         Condensed Consolidated Statements of Cash Flows
          for the Nine Months Ended September 30, 1998 and 1997 ...............4


         Notes to Condensed Consolidated
          Financial Statements.................................................5


         ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............7

PART II.  OTHER INFORMATION

         ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K..........................11

SIGNATURE.....................................................................12

<PAGE>


PART I.  FINANCIAL INFORMATION
                  ITEM 1.  FINANCIAL STATEMENTS


CONDENSED CONSOLIDATED BALANCE SHEETS
LAW COMPANIES GROUP, INC.
(unaudited - in thousands)



                                                       September 30  December 31
                                                           1998         1997
                                                       ------------  -----------
Assets
Current assets:
    Cash and cash equivalents                          $   11,940    $    9,527
    Billed fees receivable, net of allowance               60,097        56,808
    Unbilled work in progress                              34,612        32,105
    Other receivables                                         799         1,779
    Employee advances                                         504           420
    Prepaid expenses                                        4,393         3,268
    Deferred income taxes                                   2,596             0
                                                       ------------  -----------
Total current assets                                      114,941       103,907
Property and equipment:
    Land and buildings                                     12,426        12,094
    Equipment                                              38,403        36,507
    Automobiles                                             2,702         3,088
    Furniture and fixtures                                 12,203        12,386
    Leasehold improvements                                  1,894         3,526
                                                       ------------  -----------
                                                           67,628        67,601
    Less accumulated depreciation and
       amortization                                        44,778        44,095
                                                       ------------  -----------
                                                           22,850        23,506
Other Assets:
    Equity investments                                      1,417         1,361
    Goodwill, net                                          13,559        13,775
    Other assets                                            4,636         3,219
                                                       ------------  -----------
                                                           19,612        18,355
                                                       ------------  -----------
Total assets                                           $  157,403    $  145,768
                                                       ============  ===========



See accompanying notes 


<PAGE>


CONDENSED CONSOLIDATED BALANCE SHEETS
LAW COMPANIES GROUP, INC.
(unaudited - in thousands)

                                                       September 30  December 31
                                                           1998         1997
                                                       ------------  -----------
Liabilities and shareholders' equity

Current liabilities:
    Short-term borrowings                              $       600   $     904
    Accounts payable                                        14,038      17,887
    Billings in excess of costs and fees earned 
      on contracts in progress                              15,319      15,168
    Accrued payroll and other employee benefits             11.600       5,990
    Accrued professional liability reserve                   2,988       3,504
    Other accrued expenses                                  20,226      21,339
    Income taxes payable                                     5,853       3,768
    Current portion of long-term debt                        4,713       2,231
    Deferred income taxes                                       -          701
                                                       ------------  -----------
Total current liabilities                                   75,337      71,492

Long-term debt                                              42,660      42,483

Deferred income taxes                                        1,162       1,528

Minority interest in equity of subsidiaries                    355       1,060

Cumulative redeemable preferred stock; issued and
 outstanding:  956,613 shares in 1998 and 956,613
 shares in 1997                                              9,880       9,864

Shareholders' equity:
    Common stock--$1 par value:
     authorized: 10,000,000 shares;
     issued and outstanding:
     2,049,745 shares in 1998
     and 1,872,000 shares in 1997                            2,050       1,872
    Additional paid in capital                              18,080      14,957
    Retained earnings                                       13,435       8,855
    Foreign currency translation adjustment                 (5,556)     (6,343)
                                                       ------------  -----------
                                                            28,009      19,341
                                                       ------------  -----------
                                                        $  157,403   $ 145,768
                                                       ============  ===========
                                                                     

See accompanying notes 


<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LAW COMPANIES GROUP, INC.
(unaudited - in thousands, except per share data)

                                        For the Quarters                       For the Nine Months
                                       Ended September 30,                      Ended September 30,
                                ---------------------------------       ----------------------------------
                                     1998               1997                  1998               1997
                                ---------------    --------------       ---------------    ---------------
<S>                             <C>                <C>                  <C>                  <C>                
Gross fees                      $     79,462       $     78,131         $    230,972         $  232,954
Less: Cost of outside services         9,817              8,459               26,559             25,914
                                ---------------    --------------       ---------------    ---------------
Net fees                              69,645             69,672              204,413            207,040

Direct costs and expenses:
    Payroll                           20,303             20,663               60,442             61,501
    Job related expenses               8,396              7,994               23,895             23,701
                                ---------------    --------------       ---------------    ---------------
Gross profit                          40,946             41,015              120,076            121,838

Indirect costs and expenses:
    Payroll                           16,053             15,067               47,298             46,296
    Other expenses                    19,310             22,513               59,600             65,720
                                ---------------    --------------       ---------------    ---------------
Operating income                       5,583              3,435               13,178              9,822

Other income (expense):
    Interest expense                  (1,038)            (1,042)              (3,229)            (3,025)
    Deferred financing costs             (31)              (275)                 (92)              (915)
    Other income (expense)              (104)                43                  133               (267)
                                ---------------    --------------       ---------------    ---------------
    Income before income taxes 
      and equity investments           4,410              2,161                9,990              5,615
                                                                        
Income tax provision                  (1,829)            (1,152)              (4,396)            (2,718)

Equity investments                        16                (39)                   9                (53)
                                ---------------    --------------       ---------------    ---------------
Net income                             2,597                970                5,603              2,844
                                ---------------    --------------       ---------------    ---------------

Less:  Preferred stock dividend
       and accretion                    (283)              (283)                (847)              (458)
                                ---------------    --------------       ---------------    ---------------
Net income available to common
shareholders                    $      2,314       $        687         $      4,756      $       2,386
                                ===============    ==============       ===============    ===============
Basic earnings per
 common share                   $       1.13       $        .36         $       2.45      $        1.26
                                ===============    ==============       ===============    ===============
Diluted earnings per 
 common share                   $        .81       $        .31         $       1.87      $        1.17
                                ===============    ==============       ===============    ===============
</TABLE>
See accompanying notes.

<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LAW COMPANIES GROUP, INC.
(unaudited - in thousands)
<TABLE>
<CAPTION>
                                                                For the Nine Months
                                                                 Ended September 30,
                                                           ------------------------------
                                                                 1998            1997
                                                           --------------    ------------
<S>                                                        <C>               <C>
Operating activities
     Net income                                             $      5,603      $    2,844
     Adjustments to reconcile net income to 
     net cash provided by operating activities:
         Depreciation and amortization                             5,019           5,974
         Provision for losses on receivables                         399             127
         Provision for losses on claims                               -              (89)
         Deferred income taxes                                    (3,663)         (2,502)
         Undistributed (earnings) losses from equity investments      (9)             53
         Gain on disposal of property and equipment                  200             325

             Changes in operating assets and liabilities:
                 Billed fees receivable                           (3,176)         (2,878)
                 Unbilled work in progress                        (2,204)          1,245
                 Other current assets                               (191)         (1,426)
                 Accounts payable and accrued expense              3,320            (163)
                 Billings in excess of costs and fees 
                  earned on contracts in progress                 (1,099)         (1,654)
                                                           --------------    ------------
     Net cash provided by operating activities                     4,199           1,856

Investing activities
     Cash used for acquisitions                                     (187)           (415)
     Purchases of property and equipment                          (4,187)         (5,898)
     Proceeds from disposal of property and equipment                 34              82
     Other, net                                                   (1,482)            483
                                                           --------------    ------------
Net cash used by investing activities                             (5,822)         (5,748)
                                                                            
Financing activities
     Net (payments) proceeds on short-term borrowings               (305)            438
     Net (payments) proceeds on revolving 
      line of credit and long-term borrowings                      2,659            (762)
     Deferred financing and preferred
      stock issuance costs                                          (369)         (3,447)
     Issuance of common stock and warrants                         2,888             150
     Repurchase and retirement of shares                            (343)           (306)
     Issuance of redeemable preferred stock                            -           9,850
     Preferred dividends paid                                       (600)           (321)
                                                           --------------    ------------
Net cash provided by financing activities                          3,930           5,602
Effect of exchange rate changes on cash                              106            (235)
                                                           --------------    ------------
Increase in cash and cash equivalents                              2,413           1,475
Cash and cash equivalents at beginning of period                   9,527           8,097
                                                           --------------    ------------
Cash and cash equivalents at end of period                   $    11,940      $    9,572
                                                           ==============    ============
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LAW COMPANIES GROUP, INC.


NOTE 1 - There have been no significant  changes in the  accounting  policies of
the Company during the periods  presented.  For a description of these policies,
see Note 1 of Notes to  Consolidated  Financial  Statements  for the year  ended
December 31, 1997 in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Form 10-K").

NOTE 2 - The unaudited condensed  consolidated  financial  statements  presented
herein have been prepared in accordance  with the  instructions to Form 10-Q and
do not include all of the information and note disclosures required by generally
accepted accounting  principles.  These statements should be read in conjunction
with the Consolidated Financial Statements and Notes for the year ended December
31, 1997  included in the Form 10-K.  The  accompanying  condensed  consolidated
financial  statements at and for the quarter and nine months ended September 30,
1998 and 1997 have not been audited by independent  auditors in accordance  with
generally  accepted  auditing  standards,  but in the opinion of management such
financial  statements  include  all  adjustments,   consisting  only  of  normal
recurring adjustments,  necessary to summarize fairly the Company's consolidated
financial position and results of operations.  The results of operations for the
quarter and nine months ended  September  30, 1998 may not be  indicative of the
results that may occur during the year ending December 31, 1998.

NOTE 3 - On January 15, 1998, the Company  refinanced its credit facilities into
one credit  facility  with a global  bank.  For a  description  of these  credit
facilities,  see Note 4 of Notes to  Consolidated  Financial  Statements for the
year ended December 31, 1997 in the Company's Form 10-K.

NOTE 4 - As of January 1, 1998,  the  Company  adopted  Statement  of  Financial
Accounting Standards No. 130, Reporting  Comprehensive Income ("SFAS 130"). SFAS
130 establishes new rules for the reporting and display of comprehensive  income
and its  components;  however,  the  adoption  of SFAS 130 had no  impact on the
Company's net income or shareholders' equity. SFAS 130 requires foreign currency
translation  adjustments or other  adjustments,  if any, which prior to adoption
were  reported  separately  in  shareholders'  equity  to be  included  in other
comprehensive income.

During  the  first  nine  months of 1998 and 1997,  total  comprehensive  income
amounted to $6,091,000 and  $1,968,000,  respectively.  For the third quarter of
1998  and  1997,  total   comprehensive   income  was $3,091,000  and  $356,000,
respectively.



<PAGE>
NOTE 5 - Computation of Earnings Per Share
<TABLE>
<CAPTION>
                            LAW COMPANIES GROUP, INC. 
                        COMPUTATION OF EARNINGS PER SHARE
                      (in thousands, except per share data)

                                                 For the Quarter Ended September 30,   For the Nine Months Ended September 30,
                                                 -----------------------------------------------------------------------------
                                                       1998              1997                1998              1997
                                                 ---------------------------------------------------------------------------
<S>                                              <C>                <C>                <C>               <C> 
Numerator:
   Net income                                    $   2,597          $    970           $     5,603       $     2,844
   Preferred stock dividends and accretion            (283)             (283)                 (847)             (458)
                                                 ---------------------------------------------------------------------------
   Numerator for basic earnings per share -
    income available to common shareholders          2,314               687                 4,756             2,386

   Effect of dilutive securities:
      Preferred stock dividends and accretion          283                -                    565               175
                                                 ---------------------------------------------------------------------------
      Numerator for diluted earnings per
     share - income available to common
     shareholders                                $   2,597          $    687           $     5,321       $     2,561

Denominator:
   Denominator for basic earnings per share -
    weighted-average shares                          2,051             1,886                 1,941             1,892

   Effect of dilutive securities:
       Employee stock options                           90                41                    79                22
       Other stock options                             115                 -                    70                 -
       Cumulative convertible redeemable
        preferred stock                                957                 -                   638               193
       Common stock warrants                             -               258                   112                86
                                                 ---------------------------------------------------------------------------

   Dilutive potential common shares                  1,162               299                   899               301
                                                 ---------------------------------------------------------------------------

      Denominator for diluted earnings per
      share-adjusted weighted-average shares         3,213             2,185                 2,840             2,193
                                                 ===========================================================================

Basic earnings per common share                  $    1.13          $    .36           $      2.45       $      1.26
                                                 ===========================================================================

Diluted earnings per common share                $     .81          $    .31           $      1.87       $      1.17
                                                 ===========================================================================

</TABLE>
<PAGE>


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

The  following  table  sets  forth,  for the  quarters  and nine  month  periods
indicated, (i) the percentage of net fees represented by certain items reflected
in the  Company's  condensed  consolidated  statements  of  income  and (ii) the
percentage  increase or decrease in each of such items in the 1998  periods from
the  comparable  periods in the prior year.  The Company  measures its operating
performance  on the basis of net fees since a substantial  portion of gross fees
flow through to clients as costs of  subcontractors  and other  project-specific
outside services. Net fees are determined by deducting the cost of these outside
services from gross fees.  The  following  table and the  subsequent  discussion
should  be  read  in  conjunction  with  the  Condensed  Consolidated  Financial
Statements and Notes to Condensed  Consolidated  Financial  Statements contained
elsewhere in this Form 10-Q.
<TABLE>
<CAPTION>

                                             Qtr to Qtr                                  Year to Year
                                               Dollar                                        Dollar
                     Quarters Ended           Increase       Nine Month Periods Ended       Increase
                      September 30,          (Decrease)           September 30,            (Decrease)
                   --------------------   ---------------   ------------------------   ----------------
                      1998      1997       1998 vs  1997       1998         1997        1998 vs  1997
                   ---------  ---------   ---------------   -----------  -----------   ----------------
<S>                <C>        <C>         <C>               <C>          <C>           <C>
Net fees           100.0%     100.0%         (0.1%)           100.0%       100.0%            (1.3%)

Gross profit        58.8%      58.9%         (0.2%)            58.7%        58.8%            (1.4%)

Indirect costs 
  and expenses      50.8%      53.9%         (5.9%)            52.3%        54.1%            (4.6%)

Operating income     8.0%       4.9%         62.5%              6.4%         4.7%            34.2%

Net income           3.7%       1.4%        167.5%              2.7%         1.4%            96.9%

</TABLE>
Results of Operations

Effective  control of indirect labor and expenses for the third quarter and nine
months ended  September 30, 1998  resulted in  significant  improvements  in net
income,  although net fees were  slightly  unfavorable  compared to the previous
year.  Consolidated net fees of $204.4 million for the first nine months of 1998
decreased  1.3% from net fees of $207.0 million for the same period in 1997. For
the third  quarter of 1998,  net fees of $69.6 million were  substantially  even
with the third quarter of 1997.

Net fees from the Company's United States operations  decreased 0.4% from $134.8
million for the first nine months of 1997 to $134.2  million for the same period
in 1998. Net fees from United States  operations for the third quarter increased
1.1% from $45.8  million in 1997 to $46.3  million  for the same period in 1998.
While year-to-date  United States net fees continue to be negatively impacted by
increased  competitive  pressures in the environmental  markets, the improvement
for the  third  quarter  is the  result  of  ongoing  improvements  in  business
development initiatives, including sales and marketing programs introduced since
1997.

Net fees from the  Company's  International  Group for the first nine  months of
1998 decreased 2.8% from $72.2 million in 1997 to $70.2 million in 1998. For the
third  quarter,  the  International  Group's net fees  decreased 1.7% from $23.8
million in 1997 to $23.4 million. This period to period decrease is attributable
to  continued  reductions  in  government  expenditures  in the  United  Kingdom
resulting in a lower volume of public sector work.

The Company's gross profit margin of 58.7% for the first nine months of 1998 and
58.8% for the third  quarter of 1998 were  substantially  even  compared  to the
corresponding  periods in 1997.  The gross  profit  margin  from  United  States
operations  was flat  compared  to the first nine months of 1997,  remaining  at
64.8%. The International Group's gross profit margin decreased from 47.8% in the
first nine  months of 1997 to 47.1% for the same period in 1998.  This  decrease
was  primarily  due  to  project  performance  issues  combined  with  increased
competition in international markets. Indirect costs and expenses, which include
expenses related to both operations  support as well as  administrative  support
functions,  were $106.9 million, or 52.3% of net fees, for the first nine months
of 1998, compared with $112.0 million, or 54.1% of net fees, for the same period
in 1997. This decrease of 4.6% is attributable to the continued  positive impact
of the Company's  expense  reduction  initiatives  in insurance  costs and other
areas.  The  Company's  drive to lower real  estate and office  occupancy  costs
continued over the first nine months of 1998, with positive results.

Interest  expense for the first nine  months and third  quarter of 1998 was $3.2
million and $1.0 million,  respectively.  This  compares to interest  expense of
$3.0  million and $1.0 million for the same  periods of 1997.  This  increase is
attributable  to higher average  outstanding  debt over the first nine months of
1998.  Interest  rates  charged  on bank  borrowings  during  the 1998  periods,
however, have improved over rates charged in the comparable periods of 1997. The
amortization  of deferred  financing  costs  declined  significantly  (from $0.9
million in the first nine months of 1997 to $0.09 million during the same period
of 1998)  reflecting the successful  efforts to negotiate a bank credit facility
with reduced fees and related legal costs. This new credit facility replaced the
old credit facility in January of 1998.

The effective  income tax rate was 44.0% for the first nine months of 1998.  For
the first nine  months of 1997,  the  effective  income tax rate was 46.0%. The
effective  tax rates were  higher  than the  statutory  federal  rate of 34% due
primarily  to the  effect  of  state  income  taxes  and  certain  nondeductible
expenses.

For the first nine  months of 1998,  the  Company  recorded  an  increase in net
income of $2.8  million  or 97.0% from $2.8  million  in 1997  ($1.17 per common
share - diluted) to $5.6  million in 1998,  ($1.87 per common  share - diluted).
For the third quarter of 1998, net income  increased $1.6 million or 167.0% from
$1.0  million  ($0.31 per common  share - diluted)  to $2.6  million  ($0.81 per
common share - diluted).

Currency Translation

The translation of the Company's foreign subsidiaries' financial statements into
U.S.  dollars is done in  multiple  steps.  First,  all foreign  operations  are
measured into the functional currencies of the foreign  subsidiaries'  operating
environments  by  utilizing a  combination  of  current,  monthly  average,  and
historic  exchange  rates,  with  translation  impacts  included in income.  The
foreign  subsidiaries'  functional currency financial  statements are translated
into U.S. dollars,  the Company's  reporting  currency,  utilizing month-end and
monthly  average  exchange  rates,  resulting in an adjustment to  shareholders'
equity. In addition,  transactions denominated in different currencies result in
exchange  gains or losses,  which are included in income.  The impact of foreign
currency  translation  and  exchange  transactions  included  in income  was not
significant over the first nine months of 1998. The translation of the Company's
foreign  subsidiaries  for the first nine months of 1998 resulted in a change of
$787,000  in  the  Foreign   currency   translation   adjustment   component  of
shareholders'  equity.  This  fluctuation  was  caused  primarily  by  increased
strength of the U.S. dollar relative to the pound sterling and the South African
rand from December 31, 1997 to September 30, 1998.

Debt and Short-Term Borrowings

The  Company  reported  debt  and  short-term  borrowings  of $48.0  million  at
September 30, 1998,  compared to $45.6 million at December 31, 1997. The renewal
of the company's professional indemnity insurance coverage for a three-year term
also contributed to higher  borrowings during the third quarter of 1998 compared
to the end of 1997.  Debt and  short-term  borrowings  as a percentage  of total
capitalization  amounted to 55.9% at September  30,  1998,  compared to 61.0% at
December 31, 1997.

On January 15, 1998,  the Company  refinanced its credit  facilities  (the "1998
Facility") with a bank with which the Company had no previous relationship.  For
a description of these credit  facilities,  see Note 4 of Notes to  Consolidated
Financial  Statements for the year ended December 31, 1997 in the Company's Form
10-K. The 1998 Facility bears a three-year  term expiring in January 2001,  with
two one-year extension periods at the Company's option. Subsequent to the end of
the  third  quarter  of 1998,  the  Company  exercised  the  first of these  two
extension period options so that the 1998 Facility now expires in January, 2002.
The 1998 Facility includes certain restrictions relating to, among other things,
limitations on capital  expenditures  and  achievement  of certain  leverage and
fixed charge ratios, as well as other customary covenants.  The 1998 Facility is
secured by  substantially  all of the assets of the Company's  United States and
United  Kingdom  operating   subsidiaries.   See  also  "Liquidity  and  Capital
Resources."

Liquidity and Capital Resources

While the Company anticipates continuing capital requirements to support growth,
expansion of services,  and capital expenditures,  the Company believes that its
cash provided by operations  and  borrowings  available  under the 1998 Facility
will be sufficient to meet its requirements for the foreseeable future.

Prior to 1995, certain of the Company's  subsidiaries filed their federal income
tax returns on the cash basis of accounting.  Effective  January 1, 1995,  these
subsidiaries  changed  their method of  accounting  from the cash to the accrual
method for federal income tax purposes. Accordingly,  previously deferred income
of approximately  $47.0 million at January 1, 1995 is included in taxable income
over a four-year  period,  beginning in 1995,  resulting in an  accelerated  tax
liability  of $16.0  million.  The Company  will make the final  payment of this
liability in the form of additional  income tax payments of  approximately  $1.1
million  during the fourth  quarter of 1998 related to this change in income tax
accounting.

The Company's 401(k) Savings Plan (the "Plan")  permitted  employees to elect to
invest their Plan  contributions  in Company Common Stock, and provided that the
Company's matching contributions,  if any, under the Plan be made in the form of
Company Common Stock.  As of May 10, 1996, the Board of Directors of the Company
decided to terminate the use of Company Common Stock under the Plan,  whether as
employee  contributions  or as Company matching  contributions.  Consistent with
that  decision,  employees  are allowed to trade out of (but not into) shares of
the  Company's  Common  Stock  held in  their  individual  401(k)  accounts,  in
accordance  with Plan  provisions.  Over the first nine  months of 1998,  17,911
shares were traded out of the Plan totaling $343,000.

Cash Provided by Operations

Cash provided by  operations  over the first nine months of 1998 of $4.2 million
increased  from $1.9 million  provided by operations in the first nine months of
1997.  This increase was primarily due to increased net income in the first nine
months of 1998 compared to the same period in the prior year.

Capital Expenditures

Capital  expenditures  for the first  nine  months  of 1998  were  $4.2  million
compared to $6.3 million for the first nine months of 1997. This decrease was in
line with the Company's 1998 capital  expenditures plan. In order to continue to
enhance  productivity  and  potentially  increase  earnings,   the  Company  has
continued,  and will continue,  its capital spending programs,  particularly for
computer and other  technology-related  equipment. The Company believes that the
limit of capital spending imposed by its credit facility ($7.0 million per year)
is sufficient to meet foreseeable requirements.

Dividends

Cash dividends on Common Stock have been and continue to be prohibited under the
current and  previous  bank credit  facilities.  As required by the terms of the
Company's  outstanding  Cumulative  Convertible  Redeemable  Preferred Stock and
permitted by the 1998 Facility, the Company paid dividends to the holders of the
Preferred Stock.  These dividends  totaled $0.6 million,  or $0.63 per preferred
share for the nine months ended September 30, 1998,  including $0.2 million,  or
$0.21 per preferred share for the third quarter of 1998.

<PAGE>
Year-2000

As the  Company's  core  business  services are  engineering  and  environmental
science professional  consulting services, the delivery of these services is not
critically dependent on any mainframe,  mini-computer or personal computer-based
systems  or  software   applications.   Where  computer   systems  and  software
applications  are used to support the  delivery  of  services to clients,  these
systems and  applications are largely  personal  computer-based  and essentially
year-2000  compliant.  For  certain  applications  which are used to support the
administrative  operations of the Company and certain  systems and  applications
used to support the Company's  international  operations,  year-2000  compliance
projects are currently in the process of being  implemented. These  projects are
expected to be completed in mid-1999.

The Company expects to spend a total of approximately  $150,000 to address known
year-2000  issues,  with  approximately  $35,000  of the  total  spent  to date.
Additionally,  the Company does not anticipate a material  adverse effect on the
Company's business,  results of operations,  or financial  condition  associated
with  any  currently  identified  or  anticipated  year-2000  compliance  issue,
inclusive of both internal systems and software applications as well as those of
other  parties with whom the Company  does  business.  As part of the  Company's
contingency plan to address year-2000 matters, a centralized task force has been
established to coordinate identification,  evaluation, and implementation of any
year-2000 contingency plans or future compliance  requirements.  This task force
is  evaluating  all of its  major  external  providers  of  essential  goods and
services for year-2000  readiness.  Based on the critical  nature of any good or
service,  the task force is  developing a  contingency  plan  regardless  of the
reported year-2000 readiness of the provider or industry.

While the  Company is taking all steps that it  believes  to be  reasonable  and
prudent to assess the year-2000 readiness of third parties with whom the Company
does  business,  the failure of any of these third parties to correct a material
year-2000  problem could result in an interruption  in, or a failure of, certain
normal  business  activities  or  operations.  Due  to the  general  uncertainty
inherent in the year-2000 problem, resulting in part from the uncertainty of the
year-2000  readiness  of third party  suppliers  and  customers,  the Company is
unable to determine at this time whether the consequences of year-2000  failures
will have a material impact on the Company's  results of operations,  liquidity,
or financial condition.  Readers are cautioned that  forward-looking  statements
contained  in the  year-2000  update  should  be read in  conjunction  with  the
Company's  disclosures under the heading:  "Forward Looking  Statements",  which
follows this section.

Forward Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking  statements" within
the  meaning  of the  Private  Securities  Litigation  Reform  Act of 1995 which
represent the Company's  expectations or beliefs.  When used in this report, the
words "may," "could," "should," "would,"  "believe,"  "anticipate,"  "estimate,"
"expect,"  "intend,"  "plan" and similar  expressions  are  intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties,  certain of which are beyond the Company's control. The
Company  cautions that various factors,  including the factors  described in the
Company's   filings   with  the   Securities   and  Exchange   Commission   (the
"Commission"),  as well as the impact of year-2000  issues and general  economic
and  regulatory  conditions  in each of the  geographic  regions  served  by the
Company and industry  trends  could cause  actual  results or outcomes to differ
materially  from  those  expressed  in  any  forward-looking  statements  of the
Company. Any forward-looking statement speaks only as of the date of this report
and the Company undertakes no obligation to update any forward-looking statement
or statements to reflect  events or  circumstances  after the date on which such
statement is made or to reflect the occurrence of an  unanticipated  event.  New
factors  emerge  from time to time,  and it is not  possible  for the Company to
predict all of such factors.  Further,  the Company  cannot assess the impact of
each  such  factor  on its  business  or the  extent  to which  any  factor,  or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.

Effect of Inflation

General  economic  inflation  had the effect of increasing  the Company's  basic
costs of operations.  These  increased  costs were generally  recovered  through
increases in contract prices.


<PAGE>


PART II.  OTHER INFORMATION


ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

                  (a)   Exhibits

                           10.00          First Amendment to the Credit 
                                          Agreement dated October 16, 1998 
                                          by and among the Company,  Bank of 
                                          America National Trust and Savings 
                                          Association, and Bank of America, FSB.

                           27.00          Financial Data Schedule

                  (b)   Reports on Form 8-K

                           None


<PAGE>


SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant,  Law Companies Group, Inc., has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


LAW COMPANIES GROUP, INC.




/s/ R.B. Fooshee
------------------------------------------------------------
Robert B. Fooshee
Chief Financial Officer and Treasurer


Dated:    November 13, 1998