A litigation management audit is conducted to reveal the level of function and efficiency of a law firm’s litigation strategy. The audit inquiry most typically utilized by insurance carriers is the quantitative audit, which examines the amount and breakdown of time that attorneys have invoiced. The goal of this type of audit is to determine whether the law firm has substantially complied with billing guidelines implemented by the carrier. Such an approach identifies permissible payment deductions for invoice entries that deviate from the carrier’s guidelines, or from generally accepted billing practices. This approach can fairly be characterized as a “procedural” review of the billings involved.
We often employ a different audit approach, one that perhaps is ultimately even more meaningful. It entails a qualitative assessment of the actual work reflected in the bills. This inquiry seeks to determine whether the bills incurred in the litigation and submitted for payment were in fact both reasonable and necessary, which is the dual standard required of legal billings articulated by generally accepted billing practices, case law and the U.S. Supreme Court. This audit approach can fairly be characterized as a “substantive” review of the billings involved.
The Qualitative Audit
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