COMMITMENTS AND CONTINGENCIES	6 Months Ended
Jun. 30, 2011
COMMITMENTS AND CONTINGENCIES	5. COMMITMENTS AND CONTINGENCIES SEC Matter Selling & administrative expenses for the three-month period ended June 30, 2011 include approximately $0.5 million of legal fees and other third-party costs related to the previously disclosed SEC matter and derivative action, net of approximately $0.6 million of reimbursement from the Company’s directors’ and officers’ liability insurance carrier. Of the $0.6 million reimbursement, approximately $0.3 million was received during the second quarter of 2011 and the remaining $0.3 million was approved for payment during the second quarter of 2011 and subsequently collected during the third quarter of 2011. Selling & administrative expenses for the six-month period ended June 30, 2011 include approximately $0.1 million of legal fees and other third-party costs related to the SEC matter and derivative action, net of approximately $1.8 million of insurance reimbursement. As previously disclosed in the Company’s 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011, the SEC matter was concluded as to the Company and its Chairman of the Board and Chief Executive Officer in January 2011. The Company expects to continue to incur legal fees and other expenses in connection with the previously disclosed civil action by the SEC against the Company’s Chief Financial Officer, including advancements of expenses, the expenses of the independent consultant which the Company retained to review and advise on certain Company policies, procedures and controls pursuant to the January 2011 settlement of the SEC matter, the derivative action (pending final settlement of such litigation described below) and the other litigation described below. Selling & administrative expenses for the three-month period ended June 30, 2010 include approximately $1.4 million of legal fees and other third-party costs related to the SEC matter, net of approximately $0.4 million of insurance reimbursement. Selling & administrative expenses for the six-month period ended June 30, 2010 include approximately $2.4 million of legal fees and other third-party costs related to the SEC matter, net of approximately $0.4 million of insurance reimbursement. Derivative Action As previously disclosed, the parties to the derivative lawsuit (Gene Sidore, derivatively on behalf of NIC Inc. v. William F. Bradley, Jr., John L. Bunce, Jr., Art N. Burtscher, Daniel J. Evans, Jeffery S. Fraser, Ross C. Hartley, Harry H. Herington, Alexander C. Kemper, Stephen M. Kovzan, William M. Lyons, Pete Wilson, and NIC Inc. (as nominal defendant), case No. 2:10-cv-02466 (U.S. District Court for the District of Kansas)) have agreed to a settlement. A motion for order of preliminary approval of settlement and for entry of a hearing order in connection with the proposed settlement was filed by the parties on June 24, 2011. The court preliminarily approved the settlement on July 8, 2011 based upon the same terms as originally proposed by the parties, as previously disclosed in Part I, Item 3 in the Company’s 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011, and scheduled a hearing on whether to grant final approval of the proposed settlement for October 11, 2011. According to the terms of the order, the Company will be required to mail a notice of the final settlement hearing, which will summarize the terms of the final settlement, to all current stockholders no later than August 26, 2011 and will also be required to issue a press release no later than August 26, 2011 regarding the proposed settlement, including the internet address to a page on the Company’s website where the full settlement terms will be available to view and download. NIC Technologies, LLC Litigation As previously disclosed, the Company’s subsidiary, NIC Technologies, LLC (formerly National Information Consortium Technologies, LLC) was a defendant in a lawsuit filed in the U.S. District Court for the District of Maryland by Micro Focus (US), Inc. and Micro Focus (IP) Limited (collectively, “Micro Focus”), alleging: (i) breach of contract regarding the software license for software used to compile code running on two NIC Technologies’ internal servers to deliver FEC services; and (ii) copyright infringement of the software covered by the licenses. The complaint in the lawsuit sought damages of at least $3,487,500 and a declaratory judgment. On July 29, 2011, the parties finalized a settlement of $195,000, which was paid by NIC Technologies, LLC to Micro Focus, in exchange for an appropriate release of all liability, no admissions of liability by either party, and dismissal with prejudice. The settlement was accrued in the consolidated financial statements at June 30, 2011. Litigation The Company is involved from time to time in legal proceedings and litigation arising in the ordinary course of business. However, the Company is not currently involved with any other material legal proceedings, with the exception of the purported derivative action noted above.

5. COMMITMENTS AND CONTINGENCIES

SEC Matter

Selling & administrative expenses for the three-month period ended June 30, 2011 include approximately $0.5 million of legal fees and other third-party costs related to the previously disclosed SEC matter and derivative action, net of approximately $0.6 million of reimbursement from the Company’s directors’ and officers’ liability insurance carrier. Of the $0.6 million reimbursement, approximately $0.3 million was received during the second quarter of 2011 and the remaining $0.3 million was approved for payment during the second quarter of 2011 and subsequently collected during the third quarter of 2011. Selling & administrative expenses for the six-month period ended June 30, 2011 include approximately $0.1 million of legal fees and other third-party costs related to the SEC matter and derivative action, net of approximately $1.8 million of insurance reimbursement. As previously disclosed in the Company’s 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011, the SEC matter was concluded as to the Company and its Chairman of the Board and Chief Executive Officer in January 2011. The Company expects to continue to incur legal fees and other expenses in connection with the previously disclosed civil action by the SEC against the Company’s Chief Financial Officer, including advancements of expenses, the expenses of the independent consultant which the Company retained to review and advise on certain Company policies, procedures and controls pursuant to the January 2011 settlement of the SEC matter, the derivative action (pending final settlement of such litigation described below) and the other litigation described below.

Selling & administrative expenses for the three-month period ended June 30, 2010 include approximately $1.4 million of legal fees and other third-party costs related to the SEC matter, net of approximately $0.4 million of insurance reimbursement. Selling & administrative expenses for the six-month period ended June 30, 2010 include approximately $2.4 million of legal fees and other third-party costs related to the SEC matter, net of approximately $0.4 million of insurance reimbursement.

Derivative Action

As previously disclosed, the parties to the derivative lawsuit (Gene Sidore, derivatively on behalf of NIC Inc. v. William F. Bradley, Jr., John L. Bunce, Jr., Art N. Burtscher, Daniel J. Evans, Jeffery S. Fraser, Ross C. Hartley, Harry H. Herington, Alexander C. Kemper, Stephen M. Kovzan, William M. Lyons, Pete Wilson, and NIC Inc. (as nominal defendant), case No. 2:10-cv-02466 (U.S. District Court for the District of Kansas)) have agreed to a settlement. A motion for order of preliminary approval of settlement and for entry of a hearing order in connection with the proposed settlement was filed by the parties on June 24, 2011. The court preliminarily approved the settlement on July 8, 2011 based upon the same terms as originally proposed by the parties, as previously disclosed in Part I, Item 3 in the Company’s 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011, and scheduled a hearing on whether to grant final approval of the proposed settlement for October 11, 2011. According to the terms of the order, the Company will be required to mail a notice of the final settlement hearing, which will summarize the terms of the final settlement, to all current stockholders no later than August 26, 2011 and will also be required to issue a press release no later than August 26, 2011 regarding the proposed settlement, including the internet address to a page on the Company’s website where the full settlement terms will be available to view and download.

NIC Technologies, LLC Litigation

As previously disclosed, the Company’s subsidiary, NIC Technologies, LLC (formerly National Information Consortium Technologies, LLC) was a defendant in a lawsuit filed in the U.S. District Court for the District of Maryland by Micro Focus (US), Inc. and Micro Focus (IP) Limited (collectively, “Micro Focus”), alleging: (i) breach of contract regarding the software license for software used to compile code running on two NIC Technologies’ internal servers to deliver FEC services; and (ii) copyright infringement of the software covered by the licenses. The complaint in the lawsuit sought damages of at least $3,487,500 and a declaratory judgment. On July 29, 2011, the parties finalized a settlement of $195,000, which was paid by NIC Technologies, LLC to Micro Focus, in exchange for an appropriate release of all liability, no admissions of liability by either party, and dismissal with prejudice. The settlement was accrued in the consolidated financial statements at June 30, 2011.

Litigation

The Company is involved from time to time in legal proceedings and litigation arising in the ordinary course of business. However, the Company is not currently involved with any other material legal proceedings, with the exception of the purported derivative action noted above.