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There are many things to consider when a law firm is hiring a private investigator.

Below is a guide to some best practices.

Licensed and Insured

There has been a troubling trend of unlicensed private investigators, so the first thing that a law firm should do is confirm licensing status with the local regulatory body.

In the United States, 43 of the 50 states have statewide licensing requirements for private investigators/private detectives.

As of June 2011, there are no licensing requirements in Colorado, Idaho, Mississippi, South Dakota or Wyoming; Alabama and Alaska have requirements in certain cities.

Prior to commencing an assignment, the law firm should request proof of liability insurance to protect the firm in case something does go wrong.

Communicate Your Needs

It is critical to communicate to the private investigator as much information as possible from the outset, no matter how minute the details may be.

It is also important for the law firm to understand what information is potentially attainable and what may not be, within the confines of the law.

Subject Matter Expertise

The private investigator should have subject matter expertise relating to the situation at hand.

If the investigation calls for surveillance, finding a witnessintelligence gatheringdue diligence investigationcomprehensive background investigationasset investigation or an expert witness background investigation, a private investigator should be able to provide the law firm with examples of previous work done on similar matters.

Establish a Budget and Deliverables

The private investigator should prepare a descriptive agenda of your objectives and what efforts the investigative firm will make to accomplish those goals.

The investigation should be conducted in stages, with deliverables provided upon completion of each stage, so the law firm can have a measuring stick to gauge the progress of the assignment.

Engagement Letter

Included in the engagement letter should be an indemnity agreement in case the private investigator engages in professional misconduct or violates the law.

Additionally, the scope of the work, the agreed-upon budget, any agreed-upon retainer agreement and a termination clause should be included in the engagement letter.

Documentation of the parameters in an engagement letter can alleviate future disputes over objectives, timing and fees.

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A pre-litigation asset search can provide you or your client with valuable information to determine if a lawsuit is worth filing or to gain leverage in the course of negotiations prior to filing a lawsuit.

Going through litigation is expensive.  There is nothing worse than racking up tens of thousands of dollars in attorney’s fees only to find the person or company you are suing doesn’t have anything of value.  In other cases, you may be in the midst of negotiating a settlement prior to filing a lawsuit and want to see how far you can push the negotiations, or if you should cut your losses and settle.

In pre-litigation mode, attorneys don’t have the luxury of having the legal authority to access information about liquid assets such as bank accounts and investment accounts.  Attorneys need information quickly, discreetly and most importantly, legally.

What to consider?

Determining whether you should sue a person or a company has two parts – what they may own and what other potential liabilities they may have.  Of course there may be a whole host of hidden assets, but here are a few key assets and potential liabilities that can be identified quickly, discreetly and legally in a pre-litigation asset search:

Assets

  • Personal Assets – The most significant asset that people own is typically their home, but other assets that can be identified through open sources include motor vehicles, boats and airplanes.  Beyond the obvious assets held directly by a person, assets may also be held by a close associate, family trust, family member or shell company.  Real property assets may have also been recently transferred to other related parties or held overseas.
  • Business Assets – In addition to holding individual assets, assets may also be held in a corporate entity.   Identifying corporate affiliations through secretary of state filings and other research is an important step in identifying assets held by affiliated companies which may not be held by the subject directly.

Liabilities

  • Bankruptcy – Obviously, if the person or company has filed for bankruptcy protection, you will eventually be notified and you can file a claim in the bankruptcy proceeding.  What if you haven’t been notified yet?  If the person or company has a history of filing for bankruptcy protection, wouldn’t you want to know?
  • Civil Litigation – If other civil litigation has already been initiated against the person or company you are about to sue, you may be in a long line of creditors once your lawsuit has finally been settled.  It may also be a sign that you should settle fast.
  • Judgments/Liens – If the person or company has been subject to recent judgments and/or lien filings, this may be a sign that the company is already heading for trouble.

Final thought

Conducting a pre-litigation asset search can quickly identify assets and potential liabilities that can help you make a more informed decision about whether you should file a lawsuit or if you should cut your losses and settle prior to filing a lawsuit.

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A private investigator is routinely called upon at various stages of a civil lawsuit. The case may not yet be filed – the attorney wants to find out as much information before he or she has to file a complaint. Perhaps the attorney is looking for additional information to bolster the amended complaint. It is also possible that litigation has been going on for years, and the attorney is trying to re-energize his case or prepare for a tough round of cross-examination.

Below are 5 scenarios where investigators were able to provide attorneys with valuable assistance:

The Reluctant Witness

After years of litigation, attorneys were trying to get the last of their key depositions completed. One of the defendant’s witnesses simply refused to appear for his deposition. He claimed that, due to his deteriorating health, he was no longer working and his doctor advised that the stress of a deposition would be too taxing for him.

Attorneys called in their private investigators who quickly discovered that the witness had recently purchased a small sailboat and a sports car. Furthermore, the witness had recently received a speeding ticket for driving significantly over the speed limit in his new car. Additional investigation revealed photos of the witness splashed across the society pages – at galas, regattas, and the theatre. He even tweeted about his recent deep sea fishing excursion. The judge was furious, the opposing attorneys were embarrassed, and the witness was soon deposed.

The Internal Investigation

The general counsel at a major corporation contacted her outside counsel for advice. An executive was suspected of receiving kickbacks from international suppliers. Private investigators were brought in by the outside counsel and they began to conduct discrete interviews and review the executive’s corporate telephone records and email exchanges.

While they did substantiate the kickback allegations, the intelligence led investigators to uncover evidence of a larger cover-up by the executive and others at one of the overseas facilities. There was proof of a significant environmental accident that had been hidden from corporate management and the local government officials.

The Employment Discrimination Suit

An employee of a large corporation alleged that during the workday for the past two years, he had experienced sexual harassment and threats through phone calls and emails. Although the communications were anonymous, the information conveyed to the employee led him to believe that they came from someone within the corporation. When he felt the company didn’t address his complaints and reporting of the incidents adequately, the employee quit his job and filed a multi-million dollar lawsuit against the company.

Through interviews, phone records, and intelligence gathering, investigators were able to narrow the pool of potential harassers down to three individuals. The employees’ company-owned computer hard drives were imaged and searched, revealing documents and an Internet history that supported the employee’s allegations. The lawsuit was settled to the company’s satisfaction. The offending employee was fired, arrested, and named as a defendant in several civil lawsuits.

The Insider’s Secrets

The highly-anticipated release of Company X’s new video game was shrouded in secrecy. All of Company X’s employees and contractors signed non-disclosure agreements and significant security measures were in place at the warehouse and development sites. As a result, there was shock throughout the industry when Company X’s game showed up on the Internet sites weeks before the release. Company X’s sales were half of what they had anticipated. The Company X CEO was furious and convinced that someone had leaked information to their biggest competitor.

Investigators were immediately brought in to review of surveillance, computer and phone records. A tip line was established and numerous interviews conducted. Through significant intelligence-gathering, investigators were able to prove that a group of key Company X executives had recently attended the same Asian conference as their competitors. During that time, the competitors purchased a development copy of the game and other corporate information regarding Company X. A criminal investigation commenced and Company X immediately filed a civil lawsuit against its competitor.

The Class Action

Two neighbors approached an attorney with complaints about recurring problems and broken parts in their dishwashers. The appliances were the same model, manufactured by a national company and serviced through regional centers. The attorney brought in investigators who were able to locate and interview people who had previously worked for the manufacturer and the service centers.

Many of the witnesses spoke of a systemic problem that was ignored by corporate management. In fact, several of the former employees had also owned that model of dishwasher and suffered similar problems. Using the information from the investigators, the attorney filed a class action lawsuit and eventually obtained a large settlement for his clients and class members.

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An attorney may think that they do not have any need for an experienced private investigator because of the variety of skills and resources that they employ.  But have you ever found yourself staring at a computer screen and asking:

I know the answer is out there…Where do we go from here?

Although law school and career experience provide an attorney with a number of useful research techniques and litigation skill, they do have limits.

Consulting with a professional private investigator can help attorney’s to leverage your position and find creative and efficient ways to come out ahead of your adversary.

Here are 10 ways that an attorney can use a professional private investigator:

1 Locate People
It may be a witness or an heir. Perhaps it’s a former employee who can shed light on corporate misconduct. Or maybe you need to locate a witness in possession of the proverbial “smoking gun.” Whether you would like to interview, serve, or investigate someone, an investigator can help you to identify and locate the individual.

2 Locate Assets
Investigators are skilled at locating assets such as real estate, valuable property (artwork, antiques, collectibles, etc.), and vehicles (motor vehicles, aircraft, vessels, etc.). An investigator can also help attorneys to identify the location both domestic and offshore bank accounts (though the details of these assets may not necessarily be disclosed by banking institutions without court order or permission from the account holder – see our post 5 Myths: What a Private Investigator Cannot (Legally) Get.

3 Leverage for Negotiations
An investigator can pull together key sources and intelligence to inform your side during litigation, an M &A deal, internal investigation, or any other adversarial situation that can make the difference between a favorable settlement.

4 Enforce Judgments
A judgment is only useful if you are able to enforce it. An investigator can help attorneys to identify current assets and any efforts to hide or misrepresent them through the transfer to family members, friends or other parties.

5 Connect the Dots
Investigators can help you to know who is actually sitting on the other side of the table during litigation or a potential business deal. You can gain immeasurable negotiation power by identifying who is actually behind a faceless corporation or tying together undisclosed connections.

6 Predict Your Opponent’s Next Move
Through an investigation, you can learn your opponent’s history and patterns of behaviors so as to best predict how they will react under pressure. This will help you to be successful in litigation strategizing, during cross examination, or at the deal table.

7 Prep For Cross Examination
During preparation for a deposition or courtroom testimony, an investigator’s report detailing your witnesses’ weaknesses, background, and behavioral tendencies may be one of your most valuable tools. This can also be useful in identifying information against your client, so you can be prepared for what may come up during the course of the litigation.

8 Collect and review electronic evidence
Whether it is an adversarial matter or an internal investigation, investigators may be used to efficiently recover electronic files – including those that a subject believes he or she has successfully deleted. Investigators are frequently used to identify and analyze a subject’s emails, documents, or other files.

9 Trademark and Intellectual Property Monitoring
Investigators can be used to successfully police a company’s products throughout the world. Counterfeiting and improper diversion of products onto the grey market are just two of the most common areas where an investigator can provide intelligence and assistance.

10 Reconstruction
A historical reconstruction may be helpful in a number of different areas. Perhaps you need to review the history of a family to locate heirs. It could be a corporate history or a chain of title issue in a real estate matter. Whatever the issue, an investigator can help to identify and piece together long lost documents, facts and witnesses.

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