Phillips Lytle LLPUSA February 27 2019
For most people, business litigation is not among the pleasant thoughts they ponder over their first cup of morning coffee. Others have the misperception that litigation should be avoided at all costs— with thoughts of depositions, court appearances, mountains of documents and electronic data, and legal fees. Then again, if you or your business are being harmed, or the well-being of your employees, shareholders or customers are at risk, then litigation may be the best option.
An efficient and strategic avenue to explore in a business dispute is the pre- and early-litigation use of a private investigator. After a proper evaluation of need, their services can be invaluable, particularly so for identifying and mitigating immediate harm and reducing the cost and time commitment required later, during the discovery process of litigation. This approach also allows a party to legally and ethically obtain unfiltered evidence to evaluate and build a case before that case is commenced in the courts.
Private investigators are especially helpful in the business fraud scenario. A dishonest principal, employee, vendor, shareholder or competitor is, in the first instance, dishonest. They lie and conceal. By the time a lawyer serves discovery demands and deposition notices after the first scheduling conference in court, the money may be spent, the trade secrets or confidential information disclosed or sold, and the incriminating emails deleted.
If the harm done to your business has the potential for criminal prosecution, just turning the matter over to law enforcement may be the right move, but prosecutors do not represent the victim. They represent “the People.” They do great work, as does law enforcement, but their first duty is to the commonwealth, not you, your employees, customers or shareholders. Plus, if the evidence and witness statements are collected properly, they can always be provided to law enforcement at a later date. Further, a private investigator and the lawyer supervising his or her work are not “state actors,” governed by the strict constitutional and legislative restraints imposed on law enforcement and prosecutors.1
Early in a case, a private investigator can help identify witnesses, targets, accomplices and allies in an investigation. They can be invaluable in collecting evidence and witness statements that pass muster in either civil or criminal proceedings. Assuming the privacy laws and labor regulations governing your business allow for it, a computer forensic consultant can image and preserve electronic evidence, and have it processed for early review.2 Consider pulling email account data from your company server and imaging the suspect’s workstation after hours. What is in his or her Internet history or “My Documents” file? Should recently deleted files be recovered and reviewed? What attachments are being sent to his or her personal email address? Hey look, is that a personal net worth statement in his or her recycle bin? Pre-litigation investigation can help determine if the litigation would be worth it—are there assets and where are they? If bank statements and financial accounts are discovered, and can be legally reviewed, an accountant can add insight and identify patterns that may be useful. You just need to make sure that what is accessible is accessed legally (and then thoroughly, and then preserved without alteration).
Background checks and social media profiles can also be helpful. Surveillance may be in order, be it tracking vehicles to a competitor’s parking lot or a pinhole camera in the ceiling tile above the desk of the pilfering payroll clerk.3 Also, if there is a threat of violence or sabotage, surveillance of the target may be more economical than security for everyone else. And all of this can be done confidentially, prior to commencing suit.
Although given more latitude than law enforcement, investigators and the attorneys who supervise their work are still constrained by certain legal and ethical rules. For example, depending on the jurisdiction, an investigator may not legally be able to record a conversation with a witness who does not consent to the recording, and cannot trespass on private property to obtain evidence.4 In addition to legal constraints, in New York, investigators acting at the direction of an attorney must obey the attorney’s ethical obligations.5 An experienced and competent investigation/ legal team will understand these obligations, so as to not prejudice a case before it is commenced. Moreover, your attorney should work closely with the investigator to ensure the investigation is conducted ethically. Additionally, litigation consultants and experts in these cases should be engaged under the principles outlined in United States v. Kovel, 6 via a Kovel letter, which protects the confidentiality of the work undertaken at counsel’s direction.
In sum, private investigators can be of invaluable assistance in litigation. A good investigator can locate and secure crucial evidence, mitigate harm, help a business protect its rights before the wrongdoer is tipped off, provide surveillance and protection where appropriate, and function as a liaison with law enforcement when needed. Most sensitive commercial litigations should begin by evaluating whether to involve a skilled and reputable private investigator to work with counsel to develop the case.