LEGAL FEE AUDITS INSURANCE BAD FAITH EXPERT BANKRUPTCY SPECIAL COUNSEL Legal auditing is the review and analysis of professional billing for legal fees and .... I have spent over 14 years adjusting or supervising thousands of high exposure cases .... We represent post petition lenders, secured creditors, and other interested parties ....

   February 2010   

     In Department of Fair Employment and Housing v. United Dominion Realty (Case Nos. 07CC12067, 02CC12069), the court accepted our audit findings, stating that:

“In awarding fees in these amounts, the court has fully accepted the declaration of James P. Schratz in opposition to the motion, including all of his recommended reductions. The court finds his qualifications to be impressive. Likewise his reasoning as to why the fees sought are excessive is persuasive.”


How much do you charge for an audit?

The audit is free if you do not think it is of the highest quality.  We will perform a full-scale legal fee audit, prepare an audit report, and, if you are not completely satisfied with the quality, there is no charge.

Do any other auditors make this guarantee?

Not that I know of.  Tell me if you come across one.

How can you make this guarantee?

I personally review all the pleadings, deposition transcripts, and other work product, so I know how good the quality of the audit is.  I personally sign the audit, and I personally will testify on the witness stand in support of the audit, if necessary.  I need to stand behind my audit reports.

What types of audits do you perform?

Only one kind:  a full-scale legal fee audit where I review all the invoices, pleadings, deposition transcripts, etc.

That seems narrow minded. Why don’t you perform a bill review where you just review the bills like other legal fee auditors?

That kind of review is not fair to the client or the law firm. The law firm will not accept the audit results, claiming, rightfully so, that the auditor did not review all the work product.  And the client is not receiving a complete picture.  For example, we performed a review of the invoices in a case in Boston where the attorney billed .2 hours numerous times to “draft letter” over a month-long period for a total of $400.  The client thought billing .2 to draft numerous letters was acceptable, until the on-site portion of the audit disclosed there was only one letter written during that period and it was four lines long!

A mere “bill review” would not have uncovered that.

Isn’t a full-scale audit more expensive than just a bill review?

Yes.  We are not the cheapest legal fee auditing firm.  You can retain a firm to just do a bill review and pay less money.  But I believe we are the best.  I won’t compete on price, but I will compete on quality.  That’s why I personally guarantee that if you are not completely satisfied with the quality of the audit, there is no charge.

Do you also guarantee the audit results?

No. We work for both law firms and clients.  If you are looking for an audit to automatically disallow a certain percentage, I recommend some other auditing firm.

How big is your company?

We are a small boutique firm, but have audited hundreds of millions of dollars for clients all over the country and the world.  This size allows me to keep overhead low, so I can keep the cost of the audit low, and also be deeply involved in maintaining the highest quality of the audit.

How are you compensated?

Usually we charge a flat fee based on the amount of fees audited so the client knows up front what the cost will be.  We are also willing to charge on an hourly basis.  It is important to remember when comparing the cost of an audit to compare like services.  Comparing what we charge for a full-scale audit to what somebody else charges for a “bill review” is comparing “apples to oranges.”

Do you only work for companies who are questioning their lawyers’ bills?

No.  The following is a sample of the law firms who have retained us to audit their fees and let them know if there are any problems:  

Sidley & Austin
Manatt, Phelps & Phillips
Mower, Koeller, Nebeker, Carlson & Halluck
Lanahan & Reilley
Lurie & Zepeda
Banning, Micklow, Bull & Lopez
Robles & Castles
Thelen Reid & Priest
Stoel Rives
Robinson & Cole
LeBoeuf, Lamb, Greene & MacRae
Husch & Eppenberger
Parson, Behle & Latimer
Christiansen Miller Fink Jacobs Glaser Weil & Shapiro, LLP
Berding & Weil
Lanahan & Reilley
Meredith Weinstein & Numbers
Spector Law Offices

I am interviewing a number of legal fee auditors, what questions should I ask?

1.  Will you personally guarantee the quality of the audit and if I am not satisfied waive the cost of the audit?

2.  If a dispute occurs with the law firm and the matter goes to court, will someone from the auditing company testify?

3.  Has the person who will testify testified as an expert witness before?  When?  Where?

4.  Has the person who will testify ever been rejected as an expert witness?



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