In late 2005 California’s Bureau of State Audits turned its attention to the huge Office of the City Attorney of Los Angeles.
The Attorney’s Office argued that its use of outside counsel had resulted in “two quantifiable benefits: reductions in amounts paid through settlements or judgments of cases (liability payouts) and significant revenue from litigation in which the City is the plaintiff” (id at 1). Unmoved and unpersuaded, the auditors rejected the plea (id at 20-25) because “the extent to which the use of outside counsel has contributed to the decrease is unknown.”
Under that standard, no law department could prove the value it brings if there is a reduction in payouts or increases in recoveries (See my post of Feb. 8, 2006 about DuPont and Feb. 16, 2006 about how to account for recoveries.).