Description of Services Legal Advantage Investments, Inc. is a registered investment adviser based in Los Altos Hills, California. We are organized as a corporation under the laws of the State of California. We have been providing investment advisory services since 1993. David Spector is our principal owner. Currently, we offer the following investment advisory services, which are personalized to each individual client:
•Continuous Portfolio Management Services
•Periodic Management and Investment Recommendation Services
•Financial Planning Services The following paragraphs describe our services and fees. Please refer to the description of each investment advisory service listed below for information on how we tailor our advisory services to your individual needs. As used in this Brochure, the words "we", "our" and "us" refer to Legal Advantage Investments, Inc. and the words "you", "your" and "client" refer to you as either a client or prospective client of our firm. Also, you may see the term Associated Person throughout this Brochure. As used in this Brochure, our Associated Persons are our firm's officers, employees, and all individuals providing investment advice on behalf of our firm. The use of these terms is not intended to imply that there is more than one individual associated with this firm providing investment advice to clients. At this time, David Spector is the sole member of our firm providing investment advice to clients.
Continuous Portfolio Management Services We offer discretionary portfolio management services. Our investment advice is tailored to meet our understanding of each client's needs and investment objectives, so asset allocations and investment selections may differ for each client. If you retain our firm for portfolio management services, we will meet with you in person or by telephone/videoconference to determine your investment objectives, risk tolerance, and other relevant information (the "suitability information") at the beginning of our advisory relationship. We will use the suitability information we gather to develop a target asset allocation for your accounts under management and a strategy that enables our firm to give you continuous and focused investment advice and/or to make investments on your behalf that we believe are in your best interests. Once we construct an investment portfolio for you, or select a model portfolio, we will monitor your portfolio's performance and will adjust the portfolio as we believe appropriate based upon our investment research, changes in economic or market conditions, and changes you have informed us of in your financial circumstances. It is important that you update us whenever your financial circumstances or goals change materially.
As part of our portfolio management services, you select one of the following growth strategy models for our management of the stock portion of your account(s): The Legal Advantage Hedge Strategy may establish both long and short positions in individual stocks. These positions may be held as long-term investments or as short-term trades, as we see fit. Accounts managed pursuant to this strategy may not be highly diversified and may also engage in margin transactions. If you select this strategy, you may also provide written instructions authorizing us to purchase or sell options on individual equity securities and/or market indices for your account. Accounts managed under this strategy may also hold cash reserves, invest in fixed income instruments, and in closed-end or open-end mutual funds and/or exchange-traded funds (ETFs). While we intend that the short positions, if any, will to some extent hedge the market risk inherent in the long positions, the Legal Advantage Hedge Strategy should be considered our highest risk strategy.
4 The Legal Advantage Growth Strategy may establish long positions in individual stocks similar to those in the Legal Advantage Hedge Strategy, but will not engage in short sales, purchases on margin, or trading in options. No single position shall account for more than fifteen percent (15%) of an account's assets at the time of purchase. Accounts managed under this strategy may also hold cash reserves, invest in fixed income instruments, and in closed-end or open-end mutual funds and/or exchange- traded funds (ETFs).
The Legal Advantage Growth and Income Strategy may establish long positions in individual stocks with a principal goal of capital appreciation and a secondary goal of producing some current income. Accounts managed under this strategy will not engage in short sales, purchases on margin, or trading in options. No single position shall account for more than fifteen percent (15%) of an account's assets at the time of purchase. Of the portion of such accounts invested in stocks (as opposed to cash, mutual funds, or fixed income instruments) at least thirty percent (30%) shall be invested in stocks paying at least some regular dividend. Accounts managed under this strategy may also hold cash reserves, invest in fixed income instruments, and in closed-end or open-end mutual funds and/or exchange-traded funds (ETFs).
For clients who prefer to invest in funds rather than directly in individual stocks or bonds, we offer Managed Fund Portfolios and/or ESG Managed Fund Portfolios, which make new investments solely in either open-end mutual funds, closed-end mutual funds, exchange-traded funds (ETFs), or a combination thereof. Funds will be selected to create an overall portfolio designed to meet your investment goals based upon discussion with you or more detailed financial planning work, for which there will generally be a separate fee charged. Managed Fund Portfolios and/or ESG Managed Fund Portfolios may also hold cash reserves, but will not generally invest in individual stocks or bonds (although such securities in the account at the time it is transferred to our management may remain in the account at our discretion).
As part of our investment process, we consider many factors including the possible impact of known environmental, social, and governance ("ESG") company policies on a company's business outlook. For clients who prefer to exclude certain investments from their portfolios based on ESG factors alone, we offer ESG Managed Fund Portfolios. These portfolios are similar to our other Managed Mutual Fund Portfolios, except that they will only make new investments in funds that self-identify as ESG funds. ESG funds can include, but are not limited to, those that select companies based on their stated commitment to one or more ESG factors; for example, companies with policies aimed at minimizing their negative impact on the environment, social issues, or companies that focus on governance principles and transparency. ESG practices of such funds may also entail screening out companies in certain sectors or that, in the view of the fund manager, demonstrate poor management of ESG risks and opportunities or are involved in issues that are contrary to the fund's own principles. Like with our other mutual fund portfolios, we will customize an asset allocation of such funds for you designed to best meet your investment goals given the investment restrictions imposed. It is possible that limiting a portfolio to ESG funds may result in a less diversified portfolio and lower long-term investment returns than a fund portfolio we would otherwise recommend without such limitations. A portfolio manager's ESG practices may significantly influence performance. Because securities may be included or excluded based on ESG factors rather than traditional fundamental analysis or other investment methodologies, the account's performance may differ (either higher or lower) from the overall market or comparable accounts that do not employ similar ESG practices. Some mutual funds or ETFs that consider ESG may have different expense ratios than other funds that do not consider ESG factors. Paying more in expenses will reduce the value of your investment over time if not offset by other factors such as better performance.
For institutional clients such as charitable foundations, we offer to manage investments pursuant to a mutually agreed Investment Policy Statement.
5 When a client has multiple brokerage accounts managed by advisor such as a taxable account and a tax-deferred account (like an IRA account), advisor will generally manage the accounts together as an overall investment portfolio. Each individual account may well not be diversified, as the advisor will consider tax and other implications in deciding in which account to place each given investment while focusing on achieving the desired diversification and asset mix for the client (depending on the investment strategy chosen, advisor's knowledge of the client, and advisor's discretion) across all the accounts taken in aggregation. Therefore, client (except in special cases agreed to in advance by advisor) will choose a single investment strategy described above that will apply to all of that client's accounts managed by advisor.
If your company retirement plan offers you the option to set up a self-directed brokerage account within the plan for which a limited power of attorney for discretionary trading only (but not for transfers between accounts or withdrawals of funds) may be granted to an outside advisor, you may include such account in the accounts we continuously manage for you on a discretionary basis upon your granting our firm such a limited power of attorney on the self-directed portion only of your plan.
While managed accounts will generally follow one of the above models that you select, you may submit an existing portfolio for management that may contain securities that may not fit within one of the above categories, with the understanding that the portfolio will be restructured over time to more closely model one of the above strategies. You may also direct us in writing to not purchase certain specified securities for your account. For example, you may wish to provide such instructions when you have a relationship with a public company and believe it is inappropriate to hold any securities of such company in your account. We will not render any opinion regarding such issues and, other than using our best efforts to follow your written instructions upon actual receipt, we will have no responsibility to further investigate such issues.
We will of course attempt to contact you if we believe we will be unable to follow your written instructions you submit. If you are concerned about any potential liability arising from the improper ownership or trading of securities in companies with whom you may have a special relationship, you should consult legal counsel.
Not every account managed pursuant to one of the above strategies will contain the same securities. Issues such as the liquidity needs, risk tolerance, and investment goals of individual clients, the valuation and trading liquidity of certain securities at the time an account is opened or money is deposited or withdrawn, and the nature of securities transferred from a pre-existing account will affect the actual holdings of a particular account. For clients with multiple accounts within their managed portfolio, individual accounts may often be less diversified than the overall client portfolio, as we will consider factors such as the tax status and liquidity needs of each account in determining where to place your individual investments. In general, tax-sheltered accounts will hold a different mix of securities than taxable accounts as we seek to increase both the total return and the after-tax rate of return for your entire portfolio.
In addition to managing assets pursuant to the above portfolio strategies, the Advisor may offer certain clients the opportunity to participate in investments based on special analysis concerning companies involved in significant legal or regulatory matters. The number of clients allowed to participate in such high-risk investments will be sharply limited due to the limited liquidity and high volatility often associated with the securities of such companies. An additional fee equal to an agreed percentage of the assets to be eligible for such investments may be negotiated with such clients on an individual basis, and there is currently no standard schedule.
6 If you participate in our discretionary portfolio management services, we require you to grant our firm discretionary authority to manage your account. Discretionary authorization will allow our firm to determine the specific securities, and the amount of securities, to be purchased or sold for your account without your approval prior to each transaction. Discretionary authority is typically granted by the investment advisory agreement you sign with our firm. You may limit our discretionary authority with respect to specifically identified securities only (not by industry group or class of securities) that will not be purchased for your account by providing our firm with your restrictions and guidelines in writing as described above. Rollover Recommendations Effective December 20, 2021 (or such later date as the US Department

of Labor ("DOL") Field Assistance Bulletin 2018-02 ceases to be in effect), for purposes of complying with the DOL's Prohibited Transaction Exemption 2020-02 ("PTE 2020-02") where applicable, we are providing the following acknowledgment to you. When we provide investment advice to you regarding your retirement plan account or individual retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement accounts. The way we make money creates some conflicts with your interests, so we operate under a special rule that requires us to act in your best interest and not put our interest ahead of yours. Under this special rule's provisions, we must:
•Meet a professional standard of care when making investment recommendations (give prudent advice);
•Never put our financial interests ahead of yours when making recommendations (give loyal advice);
•Avoid misleading statements about conflicts of interest, fees, and investments;
•Follow policies and procedures designed to ensure that we give advice that we reasonably believe is in your best interest;
•Charge no more than is reasonable for our services; and
•Give you basic information about conflicts of interest. We benefit financially any time you move assets from an account which we do not currently manage or charge an advisory fee on to an account which we manage for an advisory fee. Specifically with regards to retirement accounts, we benefit financially from the rollover of your assets from a retirement account on which we do not currently charge an advisory fee to an account that we manage or provide investment advice for compensation, because the transferred assets increase our assets under management and, in turn, our advisory fees. As a fiduciary, we only recommend a rollover when we believe it is in your best interest.
Periodic Management Services and Investment Recommendation Services For select smaller accounts typically consisting entirely of mutual funds or exchange traded funds for which the client does not desire continuous management by our firm, we may offer consulting services where we monitor your account and adjust it on a periodic basis for a flat quarterly consulting fee. We also offer add-on services for our existing portfolio management clients where we currently manage a portion of their assets on a continuous basis, but the client also has other accounts, such as an employer 401(k) or self-directed retirement plan account typically consisting entirely of mutual funds or exchange traded funds, for which the client desires only periodic monitoring and adjustment and/or recommendation services.
We offer periodic advice regarding your investments in various company retirement plans, stock option plans, employee stock purchase plans ("ESPP"), and/or restricted stock unit ("RSU") plans having a third party administrator (such as Fidelity, TIAA-CREF or Vanguard) as an optional add-on to your 7 continuous portfolio management services. Under this service we generally do not take discretionary authority over such accounts, but rather provide periodic advice that it is your responsibility to implement should you choose to do so. We also offer periodic advice regarding your investments in 529 college savings plans as an optional add-on to your continuous portfolio management services. Under this service we will generally have a limited power of attorney to make changes to your investments in the 529 plan as we deem appropriate to meet your objectives. We will review these plans at least quarterly and will assist in the process of helping you make contributions or take withdrawals from the plan, but we will not have the authority to make contributions or withdrawals on your behalf. Third party administrators of employer plans or 529 plans often do not provide an easy means for Advisor to download information about client plan accounts into Advisor's portfolio tracking software. In such cases, we may inform you, and you will agree, that you will rely upon the third party administrator performance information on such plans, and the Advisor's role shall be limited to providing advice on the plan account that Advisor believes most appropriate to meet client's investment goals, and reviewing such investments quarterly or more often. In such cases where we do not track periodically advised accounts in our computer system or provide detailed performance information on such accounts, and will only monitor such investments periodically, we charge a flat quarterly consulting fee, payable in arrears, for such services. Financial and Estate Planning Evaluations; Other Financial Advice Generally, we offer financial planning and other advice only to existing or prospective portfolio management clients. Our client contracts specify a certain amount of our time per quarter that is included in the portfolio management fee and can be used for financial planning advice related to the assets under management. This time is non-cumulative and therefore cannot be carried over to the next quarter.
Should requested financial planning advice exceed the scope of services included in the client contract, or should we agree to offer such services to someone other than a current portfolio management client, then we will perform such services and make recommendations at a fixed point in time for a fixed negotiable fee or on an hourly basis. Services offered for a fixed fee or hourly payment will terminate once we deliver a final report and final bill, unless the client contract specifically provides otherwise. Unless expressly agreed to in the client contract, Advisor assumes no obligation to update any financial advice after delivery of a final report.
Advisor's financial planning advice may cover some or all of the following areas:
•Estate Planning and Wealth Transfer
•Tax Planning
•Employee Stock Option Planning
•Retirement Planning
•Education Savings Planning
•Insurance Planning
•Budget and Debt Management A general Financial Planning Review requires you to complete a questionnaire detailing your current assets and liabilities, future earnings power, information on current and potential dependents, planning goals and other related matters. Questions concerning all of the above listed areas of financial planning will generally be included in order to pinpoint areas needing further attention. There will be an 8 initial meeting or telephone conversation to discuss issues raised by the questionnaire, after which we will prepare an overview containing recommendations for consideration or action. A final meeting or phone conversation will be held to discuss this written report.
An Estate Planning Review involves a review of your existing estate plan, including ownership of assets, gifting program, and existing will or trust documents in light of your estate planning goals as determined through the completed questionnaire or direct conversation. Various mechanisms of family wealth transfers, such as grantor and charitable trusts, trusts or custodial accounts for minors, family limited partnerships, and others, may be discussed as deemed appropriate. A report containing recommendations to be considered and discussed with an estate-planning attorney will be prepared. Although David Spector has legal training, he does not currently practice law. We do not prepare legal documents and we will specifically instruct you to consult with your attorney to discuss how and whether to implement any of our recommendations.
An Education Savings Plan Review will determine an estimated amount of future dollars needed for the education goals specified by you. Various vehicles for meeting these goals, such as 529 plans, Coverdell Education Savings Accounts (formerly Education IRAs), American Opportunity Tax Credits, student loans, withdrawals from IRA accounts, education savings bonds, custodial accounts for minors, and others may be discussed. Financial aid eligibility may also be discussed.
A Retirement Planning Review will help you determine the amount needed to fund your desired retirement lifestyle, and help develop a plan to save and invest appropriately to meet those needs. Related issues, such as replacement health insurance for early retirees, and how to handle employer pension and stock option issues upon retirement, may also be discussed.
If you wish to limit the focus of a review to a particular investment portfolio, an Investment Strategy Review may be appropriate and less expensive. Based upon your questionnaire responses and a review of the assets in the specified portfolio, we will prepare a written report discussing appropriate investment goals, recommended portfolio allocation, analysis of current assets and whether they meet your investment goals, and specific recommendations of portfolio changes designed to better meet those goals.
We may also offer to conduct research or render advice related to any specified investment or financial planning issue for an hourly fee.
You should be aware that services comparable to those provided by us are available from sources other than our firm and that some providers of comparable services may charge lower fees for such services than we do.
Wrap Fee Programs We do not sponsor or participate in a wrap fee program.
Types of Investments We primarily offer advice on equity securities, corporate debt securities, commercial paper, certificates of deposit, municipal securities, investment company securities, US Government securities, options contracts on securities and indices, and others. We may also offer advice on investments in real estate, mortgages, or mortgage-backed securities.
Additionally, we may advise you on any type of investment that we deem appropriate based on your stated goals and objectives. We may also provide advice on any type of investment held in your portfolio at the inception of our advisory relationship.
9 You may request that we refrain from investing in particular securities. You must provide these restrictions to our firm in writing and we will use best efforts to implement them. CF Cash Program For clients desiring access to an alternative cash management opportunity that may help maximize the earning potential of cash while maintaining insurance to protect the cash account, we make available the Cantor Fitzgerald Insured Cash Program ("CF Cash"), a private label program established and administered by StoneCastle Network, LLC ("StoneCastle") and introduced to us by CF Cash, LLC, a subsidiary of Cantor Fitzgerald L.P.. StoneCastle and its affiliates are leading administrators of insured cash solutions for many of the world's largest institutions. StoneCastle has the discretionary authority to select program banks and allocate deposits into these banks, while ensuring that each account's deposits remain at or below the FDIC insurance limit per bank. Accounts are opened with StoneCastle's program custodian bank and not through our firm or Cantor Fitzgerald. Legal Advantage Investments, Inc., StoneCastle, and CF Cash, LLC are not affiliated. The CF Cash program is a federally-insured structured bank deposit vehicle, with direct custodial accounts owned by the depositor. StoneCastle establishes a minimum initial deposit to participate in the CF Cash program, as specified in the account opening documents, and no custodian bank will hold more than the current FDIC insurance limit. Deposits to custodian bank accounts are backed by the full faith and credit of the US Government, and are insured through the Federal Deposit Insurance Corporation. If you wish to participate in the CF Cash program, you do so at your discretion and you will receive separate account opening disclosures and an application from StoneCastle. If you desire, we will assist you in signing up for this program and help facilitate the transfer of funds between your accounts. Higher yields on your cash reserves may be available with other solutions, especially if you do not require FDIC insurance on your entire cash balance or you are willing to directly open and manage multiple bank accounts yourself. We recommend clients discuss their specific needs regarding their cash reserves with us and consider alternative options before participating in this program.
Assets Under Management As of December 31, 2022, we provide continuous management services for $157,394,494 in assets on a discretionary basis. Of this total, $132,830,098 are assets of clients paying investment management fees to our firm, and $24,564,396 are assets in family and/or proprietary accounts held at our Custodian that are managed by our firm without charge. Please see Item 10 and Item 12 herein to understand how we manage the potential conflicts of interest between fee paying client accounts and the family and proprietary accounts we manage alongside them. We also manage $3,574,305 in client assets on a non-continuous basis for clients who pay a consulting fee for us to manage or consult on these assets on a periodic basis (most often quarterly).