In 2011, Forbes published an article on excessive legal fees[5] in the Madoff litigation. A legal review of a business that is not a law firm may include an analysis of current operations, strategies, assets, and legal structures. It may also include reviews of documentation procedures as well as employee policies. Often, this type of audit is designed to analyze a company`s legal needs and determine what those needs might be in the future. Similarly, it can be used to assess changes in legal requirements and new risks that may arise from changes in policies, objectives or business structures. Alternatively, he may find that a company`s records are unverifiable and end his relationship. A company`s legal review process may include on-site meetings and the review of a number of relevant documents. Often, this type of legal review includes written documentation of the results of the review. It may also include an estimate of how much the company is likely to need to spend to resolve issues identified during the audit. First, lenders often require the results of an annual external audit as part of their debt covenants.

This means that companies that are to blame for not being properly audited are vulnerable to lawsuits and can no longer raise capital at reasonable interest rates to expand or keep their operations afloat. The term legal review generally refers to a process in which billing practices and policies are analyzed for inaccurate, ineffective, or abusive legal settlements. For this process, an accounting firm typically reviews a law firm`s records for issues that may mean the firm is not complying with billing standards. In some cases, however, the term legal review has a different meaning. It is sometimes used to refer to a process by which a company`s risks are identified and analyzed, with the aim of using the information to minimize the company`s risks in the future. This type of legal review is sometimes referred to as the company`s health check. Legal examiners conduct a detailed analysis of original time records, production of legal documents, expenses, and hourly reference rates. The purpose of the statutory audit is to save money for the insurance company and its customers. Many audits measure the performance and quality of services in addition to cost. Legal project auditors may be tasked with monitoring the progress of the case in order to give a second opinion in significant cases or in the form of an autopsy. Best practices include ensuring that the correct legal representation title, paralegal or partner, performs a specific task.

When an accounting firm conducts a legal audit, it can not only ensure that the fees charged by a firm are reasonable and up to standard, but also that the firm has actually done the work it charged its clients. Similarly, an accounting firm usually checks the documentation of expenses it has invoiced. Most clients trust law firms to be honest with fees and minimize errors. Sometimes, however, legal audits have revealed glaring errors and systematic overcalculations. In this way, legal audit firms provide valuable services. In 2006, Stuart Maue stated that it had conducted the largest legal review recorded in the OxyContin litigation, which invoiced and reviewed claims for attorneys` fees and expenses in the amount of more than $400,000,000, with the negotiated final settlement resulting in a reduction in the total invoice amount of $200,000,000. [4] Typically, a law firm billing audit includes an audit of the firm`s legal accounting records not only for errors and overbilling, but also for duplicate billing for the same work. It can also look for non-billable expenses to bill customers. Typically, this type of monitoring is done not only to uncover issues, but also to promote improvements in billing policies. The corporate scandals at Enron and WorldCom are just two examples of auditors not doing their job properly.

Instead of identifying these entities as ineligible for audit, audit firms issued clear and unqualified opinions about them in their audit reports. It is really very important that law firms regularly have an accounting firm to review the financial records of the law firm. A look at a company`s billing shows whether the number of hours it works matches what it charges.