Is the incidence of internal audits of legal departments rising?

“It’s a fact of life that more law departments are being subjected to audits by internal auditing functions, particularly reviews of law department spending and budgets.” This assertion, proclaimed with no quantitative support, comes from an excellent article on e-billing in the ACC Docket, Vol. 27, May 2009 at 58. The authors do state, however, that the Law Department of NSTAR Electric & Gas endured a “thorough internal audit,” but that single example does not support a statement that “more law departments” face audits.

During my consulting career of two decades, I have not taken part in such an audit, but the practice may well be common and increasing. Certainly, government legal departments face internal audits of their legal teams and processes (See my post of May 31, 2005: audit of Austin, Texas law department; Dec. 23, 2005: Pierce County (Washington) Prosecuting Attorney’s Office; March 26, 2007: Hernando County, Florida; May 19, 2006: LA’s Office of the City Attorney; Jan. 20, 2006: California Department of Transportation’s Legal Division; and Dec. 18, 2006: Amtrak.).

Other references to audits of law departments have appeared (See my post of Nov. 2, 2006: internal audits of tax departments; June 5, 2007: Kraton Polymers; June 10, 2007: internal audit of matter management system controls; June 26, 2008: internal reviews of matter management systems; March 11, 2009: internal audit leads to firing of general counsel; and June 4, 2009: expense audits.). There is even a book on internal legal audits: Fargason, Scott, Auditing the Legal Process: Improving the Efficiency and Effectiveness of Legal Counsel (Inst. Of Internal Auditors 2002)

Can readers offer other examples of what a legal department audit has tested?

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