Legal Fee Audits

Legal Fee Audits: Comprehensive and Objective Analysis

At Jim Schratz and Associates, we provide comprehensive legal fee audits that bring transparency and accountability to billing practices in complex litigation.

Every matter begins with a free initial file review. We review the invoices and related materials and let you know whether a full audit appears warranted. In roughly 15–20% of cases, we conclude that an audit is not indicated and say so directly. When we do see “red flags” suggesting potential billing issues, we recommend a full-scale legal fee audit and outline a not-to-exceed budget so you understand the scope and cost before moving forward.

What Is Included in a Full-Scale Legal Fee Audit?

A full-scale legal fee audit is detailed and structured. The process typically includes:

• Inputting and coding invoices so that time entries can be analyzed by attorney, task, phase, and billing pattern.
• Generating and reviewing computer reports to identify trends, patterns, and anomalies in billing.
• Thorough examination of work product, including pleadings, discovery, correspondence, deposition transcripts, and other key documents.
• Ongoing consultation with the client and counsel to create focused, customized reports.
• Preparation of a comprehensive expert report explaining our findings and opinions.
• Consultation with clients and attorneys to prepare for mediation, hearings, or trial, including assistance with fee-related strategy.
• Attendance at depositions, when appropriate, to assist in cross-examination on billing issues.
• Providing trial testimony and post-trial consultation, including support during appeals when fee issues remain in dispute.

Why a Full-Scale Legal Fee Audit?

A full-scale audit allows us to look beyond individual time entries and understand how the case was staffed, managed, and billed as a whole. By comparing the invoices to the underlying work product, we can determine whether the time billed is consistent with what was actually done, and whether the work was reasonable for the case.

For example, if a deposition transcript reflects a two-hour examination but the billing records show six hours of deposition time, the discrepancy is flagged and investigated. We do not rely on samples or cursory reviews. Instead, we evaluate the billing in context, so our conclusions are grounded in the facts and the record.

Extensive Experience in Legal Fee Audits

Jim Schratz has conducted more than 4,000 legal fee audits nationwide for government entities, corporations, insurers, and individual clients. His work has been relied upon by courts across the country in reducing and evaluating attorney fee requests.

He has been retained in matters involving tens of millions of dollars in fees, and his opinions on the reasonableness of attorneys’ fees have been accepted in state and federal courts. Jim has also been quoted in publications such as The Wall Street Journal and The National Law Journal on legal fee and billing issues.

Representative Matters

Representative engagements in the legal fee audit context include:

• Retention by investor Carl Icahn and other shareholders to review approximately $60 million in professional fees in the United States Bankruptcy Court for the District of Delaware.
• Appointment by the District Court in the Northern Mariana Islands to audit roughly $22 million in legal fees in connection with the estate of Larry Lee Hillblom, co-founder of DHL Express.
• Engagements by the State of Hawaii, Department of the Attorney General, the U.S. Department of Justice, and other governmental entities to audit tens of millions of dollars in legal fees.

Expert Witness and Consulting Experience

In addition to conducting audits, Jim frequently serves as an expert witness on the reasonableness of attorneys’ fees, as well as on insurance bad faith and claims handling. His background as both an insurance adjuster and insurance executive gives him a practical understanding of how litigation and claims decisions are made inside an organization.

If you are preparing or opposing a fee application, or confronting fee issues in a coverage or bad faith dispute, you can request a free file review. We will review your matter and provide a not-to-exceed budget so you know the scope of work and potential costs before authorizing a full audit.