Third-party audits of law firm invoices

I do not like this practice. The first law departments to deploy this weapon, back in the mid-to-late 80’s, may have gained some data and leverage, but later adopters ran into resistant law firms, overly-aggressive auditors, fewer egregious billing practices, a surfeit of poorly trained auditors trying hard to sell work, and costly services (See my post of Jan. 10, 2006 about its use in a patent infringement case.). The residue of the erstwhile trend remains in insurance and in litigation over legal fees incurred (See my post of Nov. 25, 2006 about OxyContin.).

There are bubbling disputes over attorney client privilege at risk if a third party looks at invoices on cases. But that concern is not my complaint.

I dislike routine bill auditing – in the normal course of operations, not during litigation that involves legal fees – because the firm-department atmosphere poisons and degenerates to adversarial (See my posts of May 4, 2005 on bad blood between carriers and insurance defense firms; and Nov. 14, 2005 on audits not being “strategically sound.”). Fly specking invoices long after the work was done undermines the management responsibility of the in-house lawyer all the while the firm was toiling away.

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