Free Response in Opposition to Motion - District Court of Arizona - Arizona

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BEUS GILBERT PLLC
ATTORNEYS AT LAW

4800 NORTH SCOTTSDALE ROAD SUITE 6000 SCOTTSDALE, ARIZONA 85251 TELEPHONE (480) 429-3000

Leo R. Beus/002687 ­ [email protected] Scot C. Stirling/005757 ­ [email protected] Steven E. Weinberger/015349 ­ [email protected] Attorneys for Individual Plaintiffs and Trustee

STEVE BROWN & ASSOCIATES, LLC
1414 E. INDIAN SCHOOL ROAD, SUITE 200 PHOENIX, ARIZONA 85014-2412 TELEPHONE (602) 264-9224

Steven J. Brown/010792 ­ [email protected] Co-Counsel for Trustee UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA DIANE MANN, as Trustee for the Estate of LeapSource, Inc., CHRISTINE V. KIRK, et al., Plaintiffs, vs. GTCR GOLDER RAUNER, L.L.C.; et al., Defendants. MICHAEL MAKINGS, Counterclaimant, vs. LEAPSOURCE, INC., et al., Counterdefendants.

Case No.: CIV-02-2099-PHX-RCB

PLAINTIFFS' RESPONSE TO KIRKLAND & ELLIS' STATEMENT OF FACTS RE MOTION FOR SUMMARY JUDGMENT ON PROFESSIONAL MALPRACTICE CLAIM, AND PLAINTIFFS' STATEMENT OF ADDITIONAL FACTS PRECLUDING SUMMARY JUDGMENT (Assigned to the Honorable Robert C. Broomfield)

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Pursuant to Local Rule 56.1, and Federal Rule of Civil Procedure Rule 56, the plaintiffs submit the following response to Kirkland & Ellis' Statement of Facts and Plaintiffs' Statement of Additional Facts Precluding Summary Judgment, in support of Plaintiffs' Response to Kirkland & Ellis' Motion For Summary Judgment Regarding Malpractice and Professional Negligence (Count 10). The exhibits 1-58 referred to in the Statement of Additional Facts Precluding Summary Judgment and cited here as "SOAF Exhibit ___" are the same exhibits that were attached to the Plaintiffs' Statement of Facts in opposition to K&E's Motion for Summary Judgment regarding Aiding and Abetting Breach of Fiduciary Duty and Tortious Interference claims. Those documents are already in the Court's record as attachments to the Plaintiffs' Statement of Facts, Docket No. 292. Exhibits 59 through 61 are new and are attached to this Statement of Facts. PLAINTIFFS' RESPONSE TO K&E STATEMENT OF FACTS 1. K&E has represented GTCR in private equity transactions and investments for well over two decades. (Excerpts of Deposition Transcript of Kevin Evanich ("Evanich Dep."), attached as Ex. 1, at 9:17 - 10:8.) RESPONSE NO. 1: Undisputed. 2. K&E's first invoice regarding GTCR's investment in LeapSource covered a time period starting on September 1, 1999. [KE000350 - 51], attached as Ex. 2.) (Invoice and billing letter dated 1/25/2000,

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RESPONSE NO. 2: This fact is disputed; the invoice was not described as "regarding GTCR's investment in LeapSource." K&E's invoice dated January 25, 2000 was billed to LeapSource and paid by LeapSource for legal services rendered "in connection with the formation of Leap, Inc., and related matters" between September 1 and December 31, 1999, as described in the invoice: "Legal services rendered and expenses incurred from September 1 through December 31, 1999 in connection with the formation of Leap, Inc., and related matters, including: review term sheet, prepare, negotiate and revise Purchase Agreement, Certificate Of Incorporation, Stockholders' Agreement, Registration Agreement, Senior Management Agreement, and Professional Services Agreement; review management side letters and employment agreements, telephone conferences regarding the foregoing, prepare resolutions and stock certificates; facilitate closing; and various related matters." Invoice and billing letter dated 1/25/00, [KE 000350-51], attached as Exhibit 2 to Kirkland & Ellis Statement of Facts, and SOAF Exhibit 5. 3. In August and September 1999, Kirk understood that "GTCR was a long standing client of Kirkland & Ellis." (Excerpts of Deposition Transcript of Christine Kirk ("Kirk Dep."), attached as Ex. 3, at 587:1 - 14.) RESPONSE NO. 3: Undisputed. 4. Kirk had previously retained counsel at the Chicago law firm of Sachnoff & Weaver to represent her in the negotiations with GTCR. She first spoke with Jeff Gilbert, a partner at the Sachnoff & Weaver firm, in April 1999 or earlier. (Kirk Dep., Ex. 3, at 592:15 - 593:16.) 3 Filed 04/20/2006

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RESPONSE NO. 4: Agree that Christine Kirk first spoke with Jeff Gilbert in April 1999 or earlier. Deny the cited portions of the transcript support the remainder of the facts in No. 4. Defendants misstate the cited portion of the deposition transcript. Nowhere in the cited transcript is mentioned Kirk's retention of Sachnoff & Weaver or about that firm representing her in "the negotiations" with GTCR, or that this was the reason for retaining Mr. Gilbert's firm. In fact, Mr. Gilbert was consulted about the decision and process for leaving Arthur Andersen, where Ms. Kirk and other Individual Plaintiffs were employed at the time, and represented them in the Andersen litigation: Q. Do you know Jeff Gilbert? A. Yes. Q. Who is he? A. Jeff Gilbert was our attorney at Sachnoff & Weaver. Q. When you say "our," who are you referring to? A. The defendants in the suit that Andersen filed against us when we left Andersen. Kirk Dep., 95:11-18. 5. By late August and early September, Gilbert's partner Jeff Schumacher was advising her in connection with the negotiations with GTCR. (Excerpts of Deposition Transcript of Jeffrey Schumacher ("Schumacher Dep."), attached as Ex. 6, at 17:19 - 20:13, 28:17 - 29:2.)

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RESPONSE NO. 5: Undisputed, although it is important to note that Mr. Schumacher was advising Ms. Kirk personally; if the implication of this statement is otherwise, it is disputed and is not supported by the evidence cited. 6. Schumacher is experienced in representing clients in negotiations with venture capital firms, he has over two decades of experience in corporate and securities work, and has served as the head of the securities group at Sachnoff for over ten years. (Schumacher Dep., Ex. 4, at 9:22 - 10:11, 11:4 - 14.) RESPONSE NO. 6: Undisputed. 7. Sachnoff represented Kirk "in connection with negotiations with GTCR concerning a potential business opportunity." (Letter from J. Gilbert to J. Nolan dated 9/8/1999 [Dep. Ex. 503], attached as Ex. 5; Kirk Dep., Ex. 3, at 602:13 - 18.) This representation included advice concerning multiple "potential funding sources." (Sachnoff & Weaver Invoice dated 10/25/99, attached as Ex. 6.) RESPONSE NO. 7: Disputed in part. There is no mention in Exhibit 6 of "multiple" potential funding sources. It is not disputed that Sachnoff represented Ms. Kirk personally. 8. In connection with GTCR's investment in LeapSource, K&E worked on behalf of GTCR to prepare documents related to the formation of the company. (Excerpts of

Deposition Transcript of Stephen Ritchie ("Ritchie Dep."), attached as Ex. 7, at 9:12 10:16.) Kirk's lawyer provided comments to K&E about the draft agreements, including the

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Purchase Agreement. (Schumacher Dep., Ex. 4, at 64:17 - 21, 71:13 - 72:8.) K&E prepared revised drafts of these documents based on the comments received from Schumacher. (Ritchie Dep., Ex. 7, at 14:11 - 21.) RESPONSE NO. 8: The first sentence is disputed, to the extent that it implies that K&E was working only for GTCR, and was not also representing LeapSource. See for example the response to paragraphs 29, 47, and 76. The facts in the second and third sentences are undisputed. 9. In the course of the negotiations, Schumacher explained the agreements to Kirk and answered all of her questions. (Schumacher Dep., Ex. 4, at 31:23 - 32:10, 72:9 - 13; Kirk Dep., Ex. 3, at 629: 7 - 18.) RESPONSE NO. 9: Undisputed. 10. Kirk and her lawyers at Sachnoff understood that K&E represented GTCR, which they knew to be a long-standing client of K&E. Schumacher Dep., Ex. 4, at 27:14 - 28:15, 73:8 - 15.) RESPONSE NO. 10: Disputed to the extent that it implies that K&E was representing only GTCR, and not also representing LeapSource, which is directly contrary to Ms. Kirk's testimony. Ms. Kirk believed that K&E was also acting as the lawyer for LeapSource between September 16 and September 27, 1999. See the testimony cited in response to paragraph 29, below. (Kirk Dep. attached as Exhibit 3 to Kirkland & Ellis SOF, at 628:1 - 629:6.) (Kirk Dep., Ex. 3, at 587:1 - 14;

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11. Kirk knew in September 1999 that K&E was actively negotiating with her lawyers at Sachnoff on behalf of GTCR. (Kirk Dep., Ex. 3, at 678:1 - 13.) RESPONSE NO. 11: This fact is disputed to the extent that it implies that K&E was representing only GTCR, or that was Ms. Kirk's understanding. See response to paragraphs 29, 47, and 76. Kirk believed K&E was also acting as the lawyer for LeapSource between September 16 and September 27, 1999. (Kirk Dep. attached as Exhibit 3 to Kirkland & Ellis SOF at 628:1 629:6.) 12. Kirk knew throughout her time at LeapSource that K&E had GTCR as its client. (Kirk Dep., Ex. 3, at 588:19 - 22.) RESPONSE NO. 12: Disputed to the extent that it implies that K&E had only GTCR as its client, and was not also doing work for LeapSource. See response to paragraphs 47 and 76. 13. Steve Ritchie, the K&E partner handling the negotiations for GTCR, testified that Kirk's lawyers "raised objections to the language we drafted in the documents" because "[t]hey were looking for a firmer commitment from GTCR." (Ritchie Dep., Ex. 7, at 15:15 16:3.) RESPONSE NO. 13: Undisputed. 14. A draft of the Purchase Agreement dated September 16, 1999 reflects Schumacher's handwritten notes and his circling of the words "up to" $65 million. (Draft of

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Purchase Agreement dated 9/16/1999 [Dep. Ex. 532], attached as Ex. 8; Schumacher Dep., Ex. 4, at 62:3 - 63:12.) RESPONSE NO. 14: Undisputed. 15. Schumacher was involved with negotiations with K&E "on whether that language should be deleted or replaced with other language which would remove the conditional aspect associated with those words." (Schumacher Dep., Ex. 4, at 50:1 - 10.) RESPONSE NO. 15: Undisputed. 16. Schumacher discussed with Kirk that "there were conditions to the funding" commitment by GTCR. (Schumacher Dep., Ex. 4, at 63:3 - 20.) RESPONSE NO. 16: This fact is disputed because it is misleading and incomplete. The quoted portion of the deposition testimony of Jeffrey Schumacher is incomplete and taken out of context. Mr. Schumacher testified, "I think we had general discussions on what conditions would be attendant to the funding obligations," and that "I believe that we discussed that there were conditions to the funding." (Schumacher Dep., attached as Exhibit 4 to Kirkland & Ellis SOF, at 63:3 ­ 20). 17. Kirk testified that her lawyers fully explained the Purchase Agreement to her and that she understood its terms before she signed it. (Kirk Dep., Ex. 3, at 629: 7 - 12.) RESPONSE NO. 17: Undisputed.

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18. Kirk does not dispute that she never met any of the K&E lawyers representing GTCR on the LeapSource transaction, either during the negotiations or at any other time. (Kirk Dep., Ex. 3, at 582:10 - 583:15; Excerpts of Deposition Transcript of Richard Clyne ("Clyne Dep."), attached as Ex. 9, at 12:12 - 13; Ritchie Dep., Ex. 7, at 10:22 - 11:4; Evanich Dep., Ex. 1 at 19:5 - 9.) RESPONSE NO. 18: Disputed only because the use of the word "met" may be misleading. Kirk testified "I don't recall" or "I don't believe so" with regard to having met any of the K&E lawyers, referring to meetings in person. (Kirk Dep. at 582:10-583:15.) However, she also testified about other communications with K&E attorneys by telephone and otherwise. See, for example, paragraphs 19, 20, and 29 below. 19. During the negotiations, Kirk spoke with Richard Clyne, a K&E associate, who told her that he would be faxing her materials to sign and return and requested that she provide information for registration forms for the company. (Kirk Dep., Ex. 3, at 616:20 618:3; Clyne Dep., Ex. 9, at 14:2 - 6.) RESPONSE NO. 19: Disputed because it is incomplete and misleading. In addition to Clyne telling Kirk he would be faxing her materials to sign and return and requesting additional information for registration forms for the Company, Clyne also advised Ms. Kirk that K&E would be forming LeapSource, and that K&E would be doing the tax filings that are required for the corporation. (Kirk Dep., attached as Exhibit 3 to Kirkland & Ellis SOF, at 617:14 ­ 23). See also the response to paragraph 29, below.

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20. Kirk testified that she spoke with Steve Ritchie, the K&E partner, sometime in September 1999, but cannot recall any conversations with him thereafter. (Kirk Dep., Ex, 3, at 583:22 - 584:9.) RESPONSE NO. 20: Undisputed. 21. Schumacher testified that Kirk never told him that she had any substantive conversations with any K&E lawyer. (Schumacher Dep., Ex. 4, at 76:4 - 24.) RESPONSE NO. 21: Disputed. Mr. Schumacher testified that he could not "recollect" whether Christine Kirk told him about any substantive conversations she had with any lawyers from Kirkland & Ellis. (Schumacher Dep., attached as Exhibit 4 to Kirkland & Ellis SOF, at 76:12 ­ 19). 22. While the deal documents were being negotiated, a legal assistant at K&E prepared and filed the necessary paperwork to form Kirkco, LeapSource's predecessor, as a Delaware corporation on September 16, 1999. (Kirkco Articles of Incorporation [Dep. Ex. 3], attached as Ex. 10; Clyne Dep., Ex. 9, at 16:12 - 17:5.) RESPONSE NO. 22: Disputed. Richard Clyne testified that Joan Donovan, a K&E paralegal, formally incorporated LeapSource. There is also no reference to any "deal documents" or the

negotiation of any deal documents in the exhibits referenced. (Clyne Dep., attached as Exhibit 9 to Kirkland & Ellis SOF, at 16:12 ­ 17:5.)

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23. Schumacher was not surprised that K&E had filed the incorporation papers and did not believe that this rendered K&E counsel for Kirkco in all respects. (Schumacher Dep., Ex. 4, at 67:14 - 69:5.) RESPONSE NO. 23: Admit that Mr. Schumacher testified that he was not surprised that K&E had filed the incorporation papers, but deny that K&E was not acting as counsel for Kirkco, and deny the relevance of testimony that Mr. Schumacher did not believe that this fact alone rendered K&E counsel for Kirkco "in all respects." (Kirk Dep. attached as Exhibit 3 to Kirkland & Ellis SOF, at 628:1 - 629:6; Kirkco Articles of Incorporation, attached as Exhibit 10 to K&E SOF; Excerpts of Deposition Transcript of S. Michael Peck ("Peck Dep."), Ex. 1, at 73:10 ­ 77:2.) 24. Schumacher testified that Kirkco did not need to be represented by counsel between September 16 and 27, 1999 because "[i]t didn't have independent interests at that stage. The shareholders were ­ the putative shareholders were ­ I viewed them as the parties in interest." (Schumacher Dep., Ex. 4, at 69:15 - 24.) RESPONSE NO. 24: It is not disputed that Mr. Schumacher testified as shown on page 69 of his deposition transcript, but this is disputed to the extent that Mr. Schumacher's opinion is represented to be a fact. 25. To Schumacher's knowledge, LeapSource had no assets with which to retain counsel between September 16 and 27, 1999. (Schumacher Dep., Ex. 4, at 70:1 - 4.)

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RESPONSE NO. 25: Undisputed that Mr. Schumacher so testified, but not material. 26. Schumacher testified, it is "typical for the corporate entity being formed to be unrepresented for some period of time while the parties negotiate other documents relating to the funding of that corporate entity." (Schumacher Dep., Ex. 4, at 70:5 - 13.) RESPONSE NO. 26: Disputed, particularly to the extent that Mr. Schumacher's personal opinion is represented to be a material fact. It is not disputed that Mr Schumacher testified as quoted in this paragraph. What is believed to be "typical" is not material evidence of what was actually done, said, and understood in this case. See the response to paragraphs 29, 47, and 76. 27. Kirk did not tell Schumacher that she understood K&E to be representing LeapSource while the deal documents were being negotiated. (Schumacher Dep., Ex. 4, at 70:15 - 71:9.) RESPONSE NO. 27: It is undisputed that this was Mr. Schumacher's recollection. Ms. Matiski testified that Ms. Kirk did tell her, shortly after this time period (and well before the disputes that led to this litigation), that K&E was representing LeapSource, as quoted below from the deposition of Ms. Matiski, in the response to paragraph 47: A. When I asked her about the documents that -- I reviewed the documents, the formation documents of the company, and started asking questions, and she indicated that Kirkland was working -it was doing -- it was doing documents for and, as she basically said, taking care of everyone in the deal -- well, LeapSource. LeapSource and GTCR.
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28. As the sole director of the company once it was incorporated, Kirk acknowledges that she was responsible for retaining counsel for the company. (Kirkco Consent In Lieu of Organizational Meeting [Dep. Ex. 505], attached as Ex. 11; Kirk Dep., Ex. 3, at 613:5 - 8.) RESPONSE NO. 28: Undisputed. 29. Kirk could not identify any conversation or writing in which she retained K&E to serve as LeapSource's counsel during the period between September 16 and 27, 1999. (Kirk Dep., Ex. 3, at 616:1 - 19.) RESPONSE NO. 29: Disputed because this is misleading and incomplete, and taken out of context. Ms. Kirk testified as follows about how K&E was retained: Q. Is it your testimony that you retained Kirkland & Ellis to represent the company between September 16 and September 27 [1999]? A. I was told by GTCR that I would use Kirkland & Ellis.

Q. Is it your testimony that you, as the sole director, retained Kirkland & Ellis to represent the company between September 16 and September 27? A. Yes, I believe so. **** Q. How did you retain Kirkland & Ellis on September 16 to represent the company? A. I had a number of conversations with Kirkland & Ellis. They formed the company. They did the tax filings. ****

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Q. Do you remember any conversation with anyone from Kirkland & Ellis between September 16 and September 27 in which you, as the sole director, said in substance, "I would like to retain Kirkland & Ellis to represent LeapSource"? A. I recall a conversation with Richard Clyne where he said, "We will be doing all of the work for LeapSource. I am going to be faxing you things. You need to sign them and fax them back to me." **** Q. Was Mr. Schumacher aware that Kirkland & Ellis would be preparing the incorporation documents? A. Well, there was a point at which Mr. Schumacher wanted to do that. He and Jeff Gilbert had said that it would be cheaper, that they were ­ their rates were significantly less. I asked Joe Nolan about that, and Joe said, no, that Kirkland & Ellis handled all of the companies that GTCR invested in, that they would be LeapSource's counsel. Kirk Deposition 613:5-620:4. Ms. Kirk also testified as follows about K&E's role in forming LeapSource: Q. A. Q. Did you participate in the incorporation of LeapSource? Yes. What did you do?

A. Kirkland & Ellis, as counsel for the company, asked me to execute requests for tax I.D. numbers, both, I believe, federal and state. There were other regulatory items that they asked me to execute. They would draft them, send them to me. I would sign them, and then, depending on what their instructions were, I would either, for example, fax it to the regulatory body or send it back to them. Kirk Deposition 209:18-210:4. Q. .... Did LeapSource have counsel between September 16 and September 27, 1999?

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A. Well, Kirkland & Ellis formed LeapSource. They did the work for LeapSource, so I would say, yes, Kirkland & Ellis was LeapSource's counsel. Kirk Deposition 612:10-14. Mr. Nolan of GTCR testified as follows about the use of K&E by GTCR portfolio companies and those conversations with Ms. Kirk about the decision to use K&E to do work for LeapSource: Q. Do you remember having any conversation with Chris Kirk about what law firm would be used to form the company that became LeapSource? A. I don't remember that specifically, no.

Q. You don't remember a discussion with her about reasons that Kirkland & Ellis should be used to form the company because of its familiarity with GTCR's business? A. I don't remember that specifically but that's quite possible. Q. Do you remember having a discussion with Chris Kirk about K&E being retained to provide services to LeapSource, including maintaining the minutes, the stock ledger for the company? MR. FOSTER: Object to the form. MS. REFO: Object to the form. A. I don't remember that specifically, no.

BY MR. STIRLING: Q. Is that something that you have required for other companies funded by LeapSource -- by GTCR? MR. FOSTER: Objection -- I object to the form. [-] in there. A. We use K&E a lot. They're familiar with our documents, and a lot of times it's -- they do work for our companies. That makes it easier to get the equity documents done. 15 Filed 04/20/2006

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MR. STIRLING: Q. When you say "they do work for our companies," do you mean the companies in which GTCR equity funds make investments? A. Yes.

Nolan Deposition 153:17-154:23 (emphasis added). 30. Kirk does not recall anyone from K&E telling her that K&E would be representing LeapSource. (Kirk Dep., Ex. 3, at 619:17 - 20.) RESPONSE NO. 30: Disputed, because incomplete and misleading. Although Mr. Clyne of K&E may not have used the same words used in the question put to Ms. Kirk at her deposition, Ms. Kirk testified that, after her conversation with Mr. Nolan about using K&E, she subsequently heard from Mr. Clyne at K&E: "I recall a conversation with Richard Clyne where he said, `We will be doing all of the work for LeapSource. I am going to be faxing you things. You need to sign them and fax them back to me.'" This testimony is cited and quoted in response to paragraph 29, above. 31. In her deposition, Kirk testified as follows: Q: A: What legal advice did Kirkland & Ellis provide to you prior to September 27, 1999? About filing a ­ filing tax forms, about which states that we should file the corporation in, about things that should go into other employment agreements.

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other legal advice that you contend Kirkland & Ellis provided to you or through you to LeapSource in September 1999? [Objection] A: Not that I can recall at this time.

(Kirk Dep., Ex. 3, at 628:25 - 629:6, 630:17 - 24.) RESPONSE NO. 31: Admit this is a true and correct excerpt of the Deposition of Christine Kirk, and all of that is evidence of legal advice provided by K&E to LeapSource prior to September 27, 1999. 32. No lawyer involved in negotiating the deal documents thought K&E represented LeapSource in any aspect of the transaction. (Schumacher Dep., Ex. 4, at 70:15 - 7 1:1; Clyne Dep., Ex. 9, at 19:1 - 6, 40:11 - 19; Ritchie Dep., Ex. 7, at 17:17 - 18:4.) RESPONSE NO. 32: Admit that Schumacher (representing Ms. Kirk personally), Clyne (of K&E), and Ritchie (of K&E) testified that they did not believe K&E represented LeapSource in the transaction. It is disputed that Mr. Clyne did not actually understand that K&E was

representing LeapSource as well as GTCR in the transaction; based upon his comments to Ms. Kirk quoted in response to paragraph 30, above, and the evidence of the work actually done by K&E for LeapSource and reflected in the invoices included in SOAF Exhibit 5. 33. Schumacher's contemporaneous time entries sent to LeapSource in invoices ­ refer to K&E as the "attorneys for GTCR." Schumacher Dep., Ex. 4, at 59:8 - 21.) (Sachnoff & Weaver Invoice, Ex. 6;

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RESPONSE NO. 33: Undisputed. 34. Schumacher never thought that K&E had a conflict of interest, nor did he believe that K&E committed malpractice. (Schumacher Dep., Ex. 4, at 80:6 - 81:15.) If he had observed any such conflict of interest, he presumed he would have brought the matter to someone's attention. (Id. at 80:18 - 81:1.) RESPONSE NO. 34: Admit that Mr. Schumacher testified that he did not think Kirkland & Ellis had a conflict, nor did he believe Kirkland & Ellis committed malpractice, but plaintiffs deny that Mr. Schumacher's personal opinions are undisputed material facts, and deny that a conflict did not exist. See Professor Hazard's Report dated 7/15/05, attached as Exhibit 28 to K&E SOF (incomplete), and SOAF Exhibit 45. 35. Jeff Gilbert, who represented LeapSource in litigation with Kirk's former employer Arthur Andersen until August 2000, never thought that K&E ever had a conflict of interest. (Excerpts of Deposition Transcript of Jeffrey Gilbert ("Gilbert Dep."), attached as Ex. 12, at 31:13 - 20.) He does not recall ever telling anyone that K&E had a conflict of interest. (Id. at 32:5 - 7.) RESPONSE NO. 35: Dispute to the extent that the reference to the time period when Mr. Gilbert represented LeapSource is incomplete and misleading, and may be intended to suggest that Mr. Gilbert's law firm was representing LeapSource before that representation actually began, or with respect to its relations with GTCR. Admit that Mr. Gilbert testified that he

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did not think K&E had a conflict, but deny that Mr. Gilbert's personal opinions are undisputed material facts, and deny that a conflict did not, in fact, exist. Hazard Report dated 7/15/05, attached as Exhibit 28 to K&E SOF, SOAF Exhibit 45. 36. K&E has retained Sy Peck, an experienced venture capital lawyer, to serve as an expert in venture capital transactions. In Mr. Peck's undisputed expert opinion: During the formation stage, the company does not need to be represented by counsel. The company does not have independent interests at this stage. The putative shareholders on the two sides of the transaction are the only parties in interest at this time. I am not aware of a single leveraged build up or consolidation transaction where the company was represented during the formation stage. (Expert Report of S. Michael Peck dated 10/14/2005, attached as Exhibit 13, at 5.) RESPONSE NO. 36: Admit Sy Peck's Expert Report of October 14, 2005 contains the cited language at page 5. It is not true that Mr. Peck's personal opinion that a corporation does not need representation "during the formation stage," when it is entering into employment and other agreements, making decisions about where to register or qualify to do business, and what tax elections to make, is "undisputed," and it is certainly not an undisputed material fact. His opinion that a corporation does not have its own interests deserving of protection is a legal conclusion, and is incorrect. See the response to paragraph 58, below. 37. Plaintiffs' ethics expert, Prof. Geoffrey Hazard, assumed that Kirkland was engaged in September 1999 to provide legal representation to LeapSource. (Excerpts of Deposition Transcript of Geoffrey Hazard ("Hazard Dep."), attached as Ex. 14, at 105:4 -

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21.) Hazard did no investigation to determine whether that assumption was true, and stated that he is not an expert in venture capital transactions. (Id. at 105:8 - 12, 111:23 - 112:2.) RESPONSE NO. 37: It is not disputed that Professor Hazard is not a fact witness, but is an expert who was asked to assume certain facts, including facts supported by the documents and deposition testimony provided to him, including the fact question for the jury whether K&E was retained to provide services to LeapSource. See for example the responses to paragraphs 29, 47 and 76 (relating to that question), and SOAF Exhibit 59 (Deposition Exhibit 631, a list of documents provided to Professor Hazard for his review). Professor Hazard's opinions and the facts upon which they are based, including assumed facts, are identified in SOAF Exhibit 45; Professor Hazard's curriculum vitae is attached as SOAF Exhibit 61. Admit that

Professor Hazard does not claim to be expert in venture capital transactions, but dispute to the extent this statement implies that expertise in venture capital transactions was required for Prof. Hazard to reach the opinions and conclusions that he made in this case. Professor Hazard also testified that he does have experience with respect to issues relating to the formation and representation of businesses. Q Do you have any understanding whether it's customary for a portfolio company to be unrepresented until the documents providing it funding are signed and finalized? MR. STIRLING: Object to form. A I don't have any, but I can tell you from experience there is no general proposition you can make. People do it differently, sometimes with a purpose. Sometimes in an intersecting effort to create the enterprise, things get done in a different sequence. I don't think it makes a fundamental difference.

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Hazard Dep., 112:3-14. 38. Once it was funded on September 27, 1999, LeapSource retained lawyers to represent it. Sachnoff & Weaver continued its work with Kirk and started representing LeapSource, both for corporate matters and in the litigation with Arthur Andersen. (Schumacher Dep., Ex. 4, at 77:1 - 11.) RESPONSE NO. 38: Disputed and deny that the cited portions of the Schumacher deposition transcript support the claimed fact. (Schumacher Dep. attached as Exhibit 4 to K&E's SOF, at 77:111.) As indicated above in paragraph 29, below in paragraphs 47 and 76, and in the invoices from K&E to LeapSource, among the other evidence cited in this Response, K&E was already representing LeapSource before September 27, 1999. 39. Sachnoff continued to represent LeapSource, Kirk, and others in the Arthur Andersen litigation until the settlement agreement was finalized in September 2000. (Sachnoff & Weaver Invoices dated October 24, 2000 and November 27, 2000, attached as Ex. 15.) RESPONSE NO. 39: It is undisputed that Sachnoff represented LeapSource, Kirk and others in the Andersen litigation until it was settled in September 2000. The unsupported suggestion that Sachnoff "continued" to represent LeapSource, implying that it may have represented LeapSource in matters other than the Andersen litigation (including the matters referred to earlier in the K&E Statement of Facts), is disputed and not supported by the evidence cited here.

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40. In October 1999, LeapSource retained the Phoenix firm of Osborn Maledon as its principal outside law firm for transactional and corporate work. (Excerpts of Deposition Transcript of Michelle Matiski ("Matiski Dep."), attached as Ex. 16, at 21:2 - 10.) RESPONSE NO. 40: Undisputed, but this statement is not specific as to the date when Osborn Maledon began to perform work for LeapSource. Ms. Matiski testified as follows about the dates when Osborn Maledon first began to work on transactional matters for LeapSource, after "the funding documents" were executed: Q. Ms. Matiski, between 1999 and 2001, did you represent LeapSource? A. Yes, I did. Q. I am going to use today throughout my examination the name "LeapSource" to refer to the company in all of its various names. Is that acceptable to you? A. Yes, I understand. Q. It was originally incorporated as KirkCo and then became Leap, Inc., and then became LeapSource, right? A. Correct. Q. Okay. We will just use "LeapSource." How did you come to be retained to represent LeapSource? A. LeapSource was represented locally by Osborn Maledon in employment -- in noncompetition litigation with Arthur Andersen, and after a time, we were asked to start doing corporate work. Q. Do you recall that you were asked to begin doing corporate work for LeapSource fairly early on in its existence? A. Late 1999, so sometime after it was formed, but within the first four or five months. 22 Filed 04/20/2006

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(Deposition Exhibit Nos. 554 and 555 were marked for identification by the reporter.) Q. BY MS. REFO: Ms. Matiski, I have handed you what has been marked as Exhibit 554. Can you identify this as an Osborn Maledon memorandum from Vee Davis to a number of people with a copy to yourself dated October 18, 1999? A. Yes. Q. And does Exhibit 554 refresh your recollection as to when you began doing corporate work for LeapSource? A. It looks approximately right. Q. And if you look at Exhibit 555, can you identify Exhibit 555 as an invoice from Osborn Maledon to Leap, Inc., dated November 19, 1999? A. Yes. Q. And the second entry on the first page of Exhibit 555 is an entry for October 12, 1999. Do you see that? A. Yes. Q. And that is your time entry? A. Yes. Q. Does that comport with your recollection, that is, that October 12, 1999, or thereabouts, was the commencement of your involvement in representation of LeapSource? A. It looks right. Q. I will represent to you that LeapSource was incorporated on September 16 and that the funding documents between LeapSource and GTCR were executed as of September 27, 1999. With those dates in mind, did you begin your corporate representation of LeapSource relatively shortly after the formation and funding of the company? A. Yes. Matiski Dep. 9:7 ­11:12.

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41. Sachnoff & Weaver stopped doing transactional work for LeapSource when the company retained Osborn Maledon to perform the same type of work. (Schumacher Dep., Ex. 4, at 81:20 - 82:19.) RESPONSE NO. 41: Undisputed that Mr. Schumacher so testified. If this is meant to imply that Sachnoff & Weaver was doing transactional work generally for LeapSource prior to that time, or represented LeapSource in connection with negotiations with GTCR, which is not true and is not supported by the evidence cited, it is disputed. 42. Osborn Maledon lawyers attended meetings of the LeapSource Board of Directors. (Minutes of Meetings of LeapSource, Inc. Board of Directors, attached as Ex. 17.) No K&E lawyer ever attended a LeapSource board meeting. (Kirk Dep., Ex. 3, at 638:25 - 639:2.) RESPONSE NO. 42: Admit that there is no evidence that a K&E lawyer ever attended a LeapSource board meeting, admit that Ms. Matiski of Osborn Maledon attended some meetings, but deny that Exhibit 17 shows that Osborn Maledon lawyers attended meetings of the LeapSource Board of Directors. The evidence cited by K&E is not evidence that there were board meetings to be attended; Exhibit 17 is a Unanimous Written Consent of the Directors of LeapSource, Inc., and not the minutes of any LeapSource, Inc. board meeting attended by an Osborn Maledon lawyer. 43. Internal LeapSource documents describe Osborn Maledon as the company's "general counsel." (Chart Titled "Legal and Litigation Expense By Attorney" [Dep. Ex. 4], attached as Ex. 18.) Tina Rhodes testified that Osborn was "regular outside counsel" to

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LeapSource. (Excerpts of Deposition Transcript of Tina Rhodes ("Rhodes Dep."), attached as Ex. 19, at 189:9 - 13.) RESPONSE NO. 43: Disputed to the extent that the quoted terms are used as if they have specific meanings that establish undisputed material facts. Plaintiffs admit that Tina Rhodes testified that Michelle Matiski was "regular outside counsel" to LeapSource on general corporate matters, but deny that Exhibit 18 to the K&E SOF establishes that Osborn Maledon was "general counsel" to LeapSource, Inc., if that is meant to suggest that Osborn Maledon represented LeapSource to the exclusion of any other law firm. Admit that Osborn Maledon did

corporate and transactional work for LeapSource, and that other law firms also did work for LeapSource, as K&E also observes in paragraph 48, below. 44. From October 1999 through August 2001, Osborn Maledon billed LeapSource $290,835 for corporate and transactional work. (Declaration of J. Altendorf, attached as Ex. 20). RESPONSE NO. 44: Admit that Osborn Maledon billed LeapSource $290,835 between October 1999 and August 2001, but deny that all those billings were for "corporate and transactional work." 45. Michelle Matiski, the Osborn Maledon partner who was LeapSource's principal corporate lawyer from 1999 to 2001, testified that K&E never represented LeapSource, that she never observed K&E rendering legal services to LeapSource, and that she never concluded that K&E had a conflict. (Matiski Dep., Ex. 16, at 23:13 - 16, 26:25 - 27:4, 30:1 17, 118:12 - 16.)

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RESPONSE NO. 45: This is disputed. Plaintiffs admit that Michelle Matiski testified that she told Ms. Kirk that "I would expect that Kirkland & Ellis was representing GTCR and its interests" (Matiski Dep. at 28:1-2, emphasis added), and that she "believed" that K&E represented GTCR, but she also testified that she was advised that K&E had in fact been representing both GTCR and LeapSource. (See the responses to paragraph 76, below, and paragraph 29, above; see also the response to paragraph 60, below, concerning other evidence of LeapSource consulting K&E with respect to matters, which would be outside the knowledge of Ms. Matiski.) Admit that Ms. Matiski testified that she did not observe K&E rendering legal services to LeapSource, and that she did not conclude that K&E had a conflict. 46. When she was first retained, Matiski reviewed the deal documents and told Kirk that the agreements with GTCR did not provide a firm funding commitment. (Matiski Dep., Ex. 16, at 15:12 - 17:1 RESPONSE NO. 46: Undisputed that Ms. Matiski so testified in the cited testimony, although it should be noted that the term "firm funding commitment" used here does not have a precise meaning. 47. Early in the representation in 1999, Matiski told Kirk that she "would expect that" K&E was representing GTCR and looking out for GTCR's interests, not LeapSource's. (Matiski Dep., Ex. 16, at 27:18 - 28:5.) RESPONSE NO. 47: Admit that Ms. Matiski testified she told Kirk that she (Matiski) "would expect that" K&E was representing GTCR and looking out of GTCR's interests. Disputed to the extent

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that Ms. Matiski's expectation is presented as if it were an undisputed fact. Ms. Matiski also testified that Ms. Kirk told her at the time that she believed K&E represented LeapSource as well as GTCR with respect to the formation of the company and the preparation of the formation documents: Q. Did Ms. Kirk ever tell you that Kirkland & Ellis represented LeapSource? A. Yes, she did. Q. When did she tell you that? A. When I asked her about the documents that -- I reviewed the documents, the formation documents of the company, and started asking questions, and she indicated that Kirkland was working -it was doing -- it was doing documents for and, as she basically said, taking care of everyone in the deal -- well, LeapSource. LeapSource and GTCR. Matiski Dep. at 13:22-14:7. Q. Did anyone from LeapSource tell you from October of 1999 through the end of your representation of LeapSource that they believed Kirkland & Ellis was in that time frame acting as counsel for LeapSource? A. Yes. Q. And who told you that? A. Chris Kirk. Q. When did she tell you that? A. Early in the representation, either in that conversation about the documents or -- or shortly after that. Q. And as best as you can remember, what did she say to you and what did you say to her about that subject? A. When I asked about the documents, the stock purchase agreement, the funding -- the funding obligation, I said: Who represents -- who represented LeapSource? And she said:
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Kirkland & Ellis took care of the transaction for everyone. And I said: Didn't you have outside counsel? And she said: No, I didn't need outside counsel. Kirkland & Ellis was doing the transaction for everyone. And I said something on the order of: That would be surprising. I would expect that Kirkland & Ellis was representing GTCR and its interests and not being -- not looking to protect your interests. And she said: Don't worry. GTCR is the best partner in the world. They will fully fund. Q. Anything else that you recall about that conversation? A. No. There was more to it. It was more embellished than that, but it was a relatively short conversation, but it was -- she was adamant about her position, and I was questioning. Matiski Dep. at 27:5-28:11. 48. LeapSource hired other law firms to perform legal work, such as the Weinberg Legal Group for intellectual property matters. (Excerpts of Deposition Transcript of Indu Gupta, attached as Ex. 21, at 177:1 - 15.) RESPONSE NO. 48: Undisputed. 49. A company document dated June 6, 2000 listing vendor agreements identified law firms under the heading "Professional Services," including Osborn Maledon and Weinberg Legal Group. (Chart of Vendor Agreements [Dep. Ex. 6], attached as Ex. 22.) LeapSource does not list Kirkland & Ellis on that list of vendors supplying professional services to the company. (Id.) RESPONSE NO. 49: Admit that K&E is not listed as a LeapSource vendor "as of 6/6/00" on Exhibit 6 attached to the K&E SOF, but deny that is evidence that K&E did not represent LeapSource or Kirkco. The document is a "company document" in the sense that it appeared in a 28 Filed 04/20/2006

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LeapSource file and was presumably prepared by some person employed by LeapSource. The circumstances and manner in which it was prepared are not established, and it is not self-authenticating. 50. In 2000, LeapSource sent out letters to its legal counsel asking them to respond to audit requests from the company's auditors. LeapSource did not send an audit request letter to K&E. (Letter dated 3/7/2000 from T. Deniger to J. Gilbert [Dep. Ex. 537], attached as Ex. 23; Rhodes Dep., Ex. 19, at 223:17 - 226:10.) RESPONSE NO. 50: Admit K&E was not sent an audit letter on or about 3/7/00 regarding LeapSource, but deny that is evidence that K&E did not represent LeapSource or Kirkco, and this is disputed if the implication is that the failure to receive an audit letter is undisputed evidence of any material fact. The criteria for selecting the recipients for audit letters are not established by the evidence cited here; any law firm to which LeapSource owed any amount of money might have been selected to receive an audit letter ­ and there is no dispute that K&E sent invoices to LeapSource and that its fees were paid by LeapSource, SOAF Exhibit 5 ­ so the failure to receive an audit letter is not necessarily evidence of anything. Moreover, Ms. Rhodes' opinions and bias make her testimony unreliable, and will be the subject of dispute at trial. See the response to paragraph 52, below. 51. The Purchase Agreement required that LeapSource pay GTCR's legal fees incurred in connection with LeapSource. Kirkland sent its bills jointly to LeapSource and to GTCR. (Purchase Agreement, attached as Ex. 24, at Section 7A; Kirk Dep., Ex. 3, at 632:4 7; Rhodes Dep., Ex. 19, at 230:12 - 15.)

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RESPONSE NO. 51: Admit that Section 7(a) of the Purchase Agreement required LeapSource to pay GTCR's legal fees incurred for specific purposes itemized in the Purchase Agreement, but not to pay all of GTCR's legal fees "incurred in connection with LeapSource." Admit that cover letters for K&E invoices were generally addressed jointly to LeapSource and to GTCR, although the invoices themselves were generally addressed to LeapSource and to the attention of Ms. Kirk. SOAF Exhibit 5. 52. Tina Rhodes, LeapSource's controller responsible for managing relations with legal counsel, stated that LeapSource's payment of GTCR's legal fees did not make K&E counsel for LeapSource. (Rhodes Dep., Ex. 19, at 226:11 - 16, 232:17 - 20. RESPONSE NO. 52: Admit that Tina Rhodes testified that LeapSource's payment of GTCR's legal fees did not make K&E counsel for LeapSource, but deny that Ms. Rhodes's personal opinion is a material undisputed fact. Ms. Rhodes also described her working relationship with K&E, the nature of the work K&E handled and for which it billed LeapSource, and her testimony on this subject includes the following description of services provided by Kirkland & Ellis to LeapSource: Q. In connection with your responsibilities at LeapSource, did you have occasion to interact with attorneys from the law firm of Kirkland & Ellis? A. Yes.

Q. Who were the attorneys that you interacted with while you were at LeapSource?

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A. In the beginning of my employment, primarily Richard Clyne, and it was for minutes, board of directors minutes. Q. When you say "minutes," how do you mean that?

A. Managing the minutes. Whenever there was a board of directors meeting, being the secretary, I'd work with him to get them drafted up. Also, stock certificates, as well. He issued those for LeapSource in the beginning. Rhodes Deposition 10:18 ­ 11:8. Q. On the next to the last line of that paragraph there is a clause that refers to, "prepare resolutions and stock certificates." Do you see that? A. Yes.

Q. Are those the corporate minutes or, rather, corporate acts that you referred to earlier in your testimony? A. Yes.

Rhodes Deposition 13: 19- 14:1 Q. BY MR. STIRLING: What was your understanding with respect to Kirkland & Ellis' representation of LeapSource during the period of time that Kirkland & Ellis was maintaining the stock ledger for the corporation? MR. CONDO: Object to the form of the question. Q. BY MR. STIRLING: You can answer.

A. That they created organization documents for the company as well as handled administrative -- what I would call administrative matters including the resolutions and the stock certificates. Q. By "administrative matters," you're referring to - - well, what might also be described as corporate maintenance? A. Correct, yes.

Rhodes Deposition 16:16- 17:6.

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Plaintiffs also dispute that Ms. Rhodes was responsible for "managing relations" with legal counsel, whatever that is supposed to mean. In fact, Ms. Rhodes was the controller. Q. How long were you employed at LeapSource? A. Fourth quarter of 1999 to May, beginning of May of 2001. Q. In what capacity were you employed at LeapSource? A. The controller. Q. Were you also a corporate officer? A. I was a secretary. Q. And for what period of time were you the secretary of LeapSource? A. If I recall, the entire time. Q. How did you come to be employed at LeapSource? Q. This date on the first page of Exhibit 249 is February 7, 2000. Were you the controller at LeapSource at that point? A. Yes. Q. Did you have a role in reviewing and approving payment of invoices from Kirkland & Ellis at that time? A. No, not approving the invoices. I signed this check. Q. You're referring to the last page of the exhibit? A. Correct. Q. Could you describe what the process was that led to the approval or payment of an invoice before you would sign a check, sign the check to Kirkland & Ellis, that is the last page of this exhibit? A. This would have gone to Chris Kirk. She would have reviewed the information, given it to me to pay it.

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Rhodes Dep., 9:25-12:16 (emphasis added). The description of Ms. Rhodes as the person responsible for "managing relations" with legal counsel was in a question asked by K&E's counsel, which was objected to when it was asked, and it appears that the words used by K&E's counsel were taken from Ms. Rhodes' resume, in which she also described herself as "Vice President, Finance and Accounting" with responsibility for managing 20 individuals, and managing relations with investment bankers and venture capitalists, among others ­ which would mean that she was responsible for managing LeapSource's relations with GTCR. She also claimed responsibility for "negotiat[ing], perform[ing] due diligence, and integrat[ing] two strategic acquisitions" for LeapSource, which would mean that she was responsible for negotiating and integrating the ICG business into LeapSource (as there were only two acquisitions in the history of the company ­ CorpCare and ICG). Ms. Rhodes's resume is hearsay, and is certainly not competent evidence of the claims that she made about herself in that document. See Rhodes Depo. Exhibit 261, SOAF Exhibit 60. Moreover, Ms. Rhodes' bias and unreliability is evident from her deposition testimony, including the following testimony regarding the Cargill transaction, about which she expressed strong opinions but actually had no personal knowledge or understanding whatsoever: Q. Do you remember there being any discussions about signing an agreement with Cargill after Chris Kirk was terminated? A. No. Q. Is there a reason why you're laughing? A. Yeah. I mean, Cargill wasn't a viable option from the very beginning. One of Cargill's stipulations when we were going through the process of trying to entertain them was they wanted 33 Filed 04/20/2006

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to talk to our current client base to see how their current client base was getting serviced. And obviously, our current client base wasn't satisfied with the level of service they were getting as shown and evidenced by the amount of money that we were not collecting from these individuals. And so when they -- I don't even know if they engaged in those discussions, or once they did, that it wasn't -- obviously, they found out that the services weren't up to par. That was their decision for not going with us. Q. How did you learn that that was the basis for Cargill's decision not to pursue? A. From individuals that were in that meeting. Mike Makings or Karl Sachsenmaier, I think, was probably in that meeting, Mike Noble, Tom Gibson. Q. What did they tell you about that discussion? A. Tom Gibson -- Tom Gilman, I'm sorry. Tom Gibson now. Can you repeat your question? Q. What did they tell you about the conversation they had with Cargill in which Cargill said that was basis for their decision not to pursue that contract? MR. FIRESTONE: Object to form. THE WITNESS: Can you ask it again? Q. BY MR. STIRLING: What I would like to know is what you were told about a conversation in which somebody from Cargill said that that was the basis for their decision not to pursue this contract. A. I don't think I said that. I said what -- one of their stipulations was to go forward with entering a contract with LeapSource was to have these conversations with current client. And I said -- and I'm not sure if those conversations actually happened or if they did not, but I guess I just assumed from that point that was one of the reasons they didn't want to go with us, that they didn't want to be serviced by LeapSource. 34 Filed 04/20/2006

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Q. So you don't know whether Cargill ever actually spoke to any existing customers of LeapSource? A. I'm not sure. Q. And is it your testimony that it was just your assumption that that was Cargill's reason for not pursuing the contract with LeapSource? A. One of the reasons, yes, just my assumption. Rhodes Dep., 71:13-73:17 (emphasis added). 53. After the formation documents were executed, LeapSource's contact with K&E was limited to communications with Clyne, the junior associate. (Ritchie Dep., Ex. 7, at 28:10 - 23.) Clyne's work relating to LeapSource consisted of preparing supplements to the Purchase Agreement to document GTCR's continuing investments in the company, and printing out related board consents and stock certificates. (Clyne Dep., Ex. 9, at 30:13 - 25.) RESPONSE NO. 53: These facts are disputed. Deny that the quoted testimony of Stephen Ritchie stands for the claimed proposition that after the formation documents were executed, LeapSource's contact with K&E was limited to communications with Richard Clyne, or that the communications were limited to the subjects described by K&E in paragraph 53. See for example, the response to paragraph 60, below ("Richard ­ I will call tomorrow. I have many items to discuss" etc.). Further, K&E performed additional work for LeapSource relating to their Harris Bank line of credit, providing legal advice regarding potential WARN Act violations, and concerning the termination of LeapSource officers and employees. See SOAF Exhibits 5 (invoices) and 50 (email from Sean Cunningham re WARN Act issues).

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54. Clyne testified that he confirmed with LeapSource's counsel at Osborn Maledon that K&E would continue to perform the work relating to documentation of investments for GTCR. (Clyne Dep., Ex. 9, at 20:1 - 6.) RESPONSE NO. 54: Admit this fact is undisputed but deny the implication in the words "for GTCR" that this work was not performed on behalf of LeapSource as well. (Kirk Dep. attached as Exhibit 3 to Kirkland & Ellis SOF, at 612:10 ­ 614:1, 617:17 ­ 618:18, 619:5 ­ 619:9, 628:1 - 630:16, 642:1 ­ 643:6, 646:2 ­ 646:12.) See for example the responses to paragraphs 29, 45, and 76. 55. Matiski did not think there was anything improper about K&E preparing stock certificates for LeapSource, and she did not think it meant that K&E was counsel for LeapSource. (Matiski Dep., Ex. 16, at 26:14 ­ 23). RESPONSE NO. 55: Admit that Ms. Matiski so testified, but deny this work was not performed on behalf of LeapSource as well as GTCR, as noted in response to paragraphs 29, 45, 47, and 76. (Kirk Dep. attached as Exhibit 3 to Kirkland & Ellis SOF, at 612:10 ­ 614:1, 617:17 ­ 618:18, 619:5 ­ 619:9, 628:1 - 630:16, 642:1 ­ 643:6, 646:2 ­ 646:12.) 56. Kirk and Clyne communicated in early October 1999 about a draft offer letter and employment agreement checklist for LeapSource. (Clyne Dep., Ex. 9, at 35:16 - 36:7.) All of the employment agreements between LeapSource and its employees (except Kirk) were prepared by Osborn Maledon and were not finalized by K&E. (Kirk Dep., Ex. 3, at 644:13 19; Rhodes Dep., Ex. 19, at 246:13 247:5.)

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RESPONSE NO. 56: This fact is disputed in part because it is incomplete and misleading. K&E prepared the initial draft of the LeapSource employment agreement, as well as a draft [employment] offer letter, and a list of terms to be discussed in connection with new employees. (Clyne Dep., attached as Exhibit 9 to K&E's SOF, at 33:21 ­ 35:14; Kirk Dep. attached as Exhibit 3 to Kirkland & Ellis SOF, at 646:2 ­ 646:12.) Plaintiffs admit but deny that it is relevant to the issues in this case whether the employment agreements were "finalized" by K&E or by somebody else. 57. In October or November 1999, Clyne stopped sending documents related to GTCR's additional funding directly to Kirk for signature and started going to Rhodes. (Clyne Dep., Ex. 9, at 24:3 - 25:3.) RESPONSE NO. 57: Undisputed. 58. During the time period of October November 1999 through February 27, 2001, Clyne only spoke with Rhodes between four and seven times, and the conversations were limited to "administrative type matters, ministerial type issues," such as obtaining signatures. (Clyne Dep., Ex. 9, at 25:4 - 25, 27:18 - 20.) RESPONSE NO. 58: Admit this fact is undisputed with respect to the time period indicated, but do not admit that Mr. Clyne's characterization of the work done as "administrative" or "ministerial" is a relevant fact, or material to the existence of an attorney-client relationship, and the terms "administrative" or "ministerial" do not have precise meanings. Mr. Peck also admitted, in

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response to a hypothetical question, that even such "ministerial" acts could give rise to a claim for malpractice if not properly performed: Q. Let's just say I want you to assume that Kirkland & Ellis, through an attorney, through a paralegal, committed legal malpractice, hypothetically. One of your -- Barry Alberts told you, "I reviewed what they did. They committed malpractice. It's defective incorporation, and the corporation sustained some damages," okay. Would Kirkland & Ellis be responsible under a legal malpractice theory for the defective incorporation? MS. REFO: I object to the form of the question. THE WITNESS: Am I supposed to answer? MS. REFO: I'd like you to read it back, then you can answer. (Read back by the reporter.) THE WITNESS: Well, I guess technically speaking, in your question, which I will answer, I believe technically speaking, you assume the conclusion if Kirkland & Ellis committed malpractice in a transaction, Kirkland & Ellis committed malpractice would be responsible for it, and whatever damages flowed from that, they would be responsible for. I think what you're driving at is if Joan Donovan, any employee, any attorney, anyone acting for Kirkland & Ellis screwed up the incorporation, and someone was damaged by that, might that someone have a claim against Kirkland & Ellis? Absolutely. Q. BY MR. WEINBERGER: For legal malpractice? A. If they committed malpractice, which it could be in forming a corporation, someone might have such a claim. Whether that would be the shareholders of the corporation, the corporation itself, obviously, we'd have to know more facts to know exactly what the damages were and how that happened. Q. But -- but it's entirely conceivable, though, that even in the absence of a specific engagement letter and having merely ministerial tasks, what you've called "ministerial tasks,"
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performed by a paralegal or a lawyer in terms of corporate formation, that that situation can give rise to a claim for legal malpractice, correct? MS. REFO: I object to the form of the question. THE WITNESS: Absolutely. If -- if you're trying to establish the principle that if ministerial acts are performed incorrectly, could it lead to a malpractice claim? I guess we can all hypothesize about a situation in which that could happen. For purposes of -- of course, that's not what my -- that's not what my report addresses. The point I'm simply trying to make in my report is, for purposes of the issues that I addressed in my report, the acts that took place on September 16th, which I understand that you attribute great significance to, I don't for purposes of my opinions. In another context with different facts, could they have greater significance? Absolutely. But that's not what we're dealing with, I believe. Peck Dep., 74:20