Finding Sherlock: In-House vs Outside Investigators

Hiring an Ethical & Skilled Investigator
by Joanne Parrent

Part 1: In-House vs Outside Investigators

Whether you are an attorney in a large firm with law-librarians and paralegals at your service, an attorney in a small or solo firm, a CEO of a multi-national corporation or a small business owner, you are likely to need investigative services in the course of your practice or in the running of your business.

These services include everything from background checks or due diligence work, gathering sensitive or difficult to uncover information and investigating a problem. How do you best get that investigative work done? Do you do it yourself? Do you look for help from computer-savvy employees in your firm or business - such as secretaries, paralegals, law librarians? Or, do you retain the services of a professional private investigation firm? And, if you do decide to hire a professional, how do you choose the right one for your job - one who you can count on to be both ethical and competent - from the myriad of different companies that offer investigative services? Can you find a good private eye - or do you really need to?

Let's look at the advantages and disadvantages of using in-house personnel for your investigative needs. There are basically two broad categories of investigative work:

Investigations that help prevent problems for businesses and litigators
Investigations that help attorneys and businesses solve problems

Preventing Problems

In the first category, preventing problems, the types of investigations needed include:

Background checks on potential employees
Background checks on witnesses, experts, plaintiffs or defendants
Witness interviews
Due Diligence

These types of investigations are most often the kind that some firms and businesses feel they can handle in-house. After all, there has been no problem or crisis - yet. What is needed is simply information about a person or company. Are they who they say they are? Are they likely to be a good employee, a good witness, a good potential partner? A secretary or law librarian might be asked to run public record searches on Westlaw or Lexis-Nexis to check out an individual or a company. If there are no major "adverse filings" such as lawsuits, liens or bankruptcies, the individual under scrutiny may look just fine and are cleared to be hired or deliver testimony. In the case of due diligence, if the company being investigated appears to "check out," a merger or acquisition might proceed on schedule. This seems cost-effective, perhaps. The firm or company has saved a $500-$5000 fee (depending on the fees charged by the investigator and how much information is needed) of a private investigator and has presumably gotten the information needed. But, is it really cost effective?

But, is it really cost effective? In perhaps half of those cases, the individual or company under investigation will really have nothing to hide and there will be nothing to suggest future trouble. But - since studies have shown that 50 percent of all resumes contain misrepresentations - a cursory background check or insufficient due diligence (including inadequate checks on company owners and management) can lead to very expensive problems. We know because, at PSI, our private investigators are often retained to deal with problems that occur because thorough preventative background checks and due diligence were not done in the first place. Much larger, more difficult cases come to us because secretaries, paralegals or law librarians have missed facts and information that a trained investigator would not have missed. The $750 or more that is saved (or in the case of law firms the money that may actually have been earned by billing clients for the work of in-house staff rather than outside professionals) may actually cause problems for the company or client-company in the future. Here are some examples:

A financial services company had an in-house employee run an online database check for criminal and adverse filings on a potential executive secretary. They did not hire a professional do a thorough background check. The woman was hired and, soon afterward, she accused the CFO of sexual harassment. Through her attorney, she attempted to wrest a large financial settlement from the company. Our investigator was brought in and he quickly found out that this woman was a professional call-girl, working from her home in a very expensive area of San Francisco. This would most likely have been revealed during a background check by a professional investigator since the red flag was right on her employment application: her address. How could she afford to live in such an expensive area of the city on a secretary's salary? Also, her previous employers had not even been called for references, and we found that her last employer did not exist! Clearly, if a thorough background check had been done, she would not have been hired, saving the company the cost of much larger legal and investigative fees needed to solve the problem that occurred after she was hired.
An attorney in a large environmental case hired our investigators to do thorough background checks on all of the witnesses and experts in the upcoming litigation. The court files of all cases that the experts claimed to have worked on were examined by our investigator, and we discovered that one expert the other side was using had lied on his resume - he did not testify in a case as he claimed he had. This finding allowed our attorneys to discredit the expert at trial, making the case much stronger. We later learned that the attorney for the other side had used his firm's law librarian to investigate the witnesses and experts in the case, rather than hiring a professional investigator. Although this resulted in extra billing for the law firm, it severely damaged the client's case in court.
An attorney regularly used his paralegals to interview witnesses in order to bill more money to the firm and presumably save his clients the cost of professional investigators. At one trial, however, something he hadn't contemplated happened. A witness got on the stand and told a different story from the one that had been told to the firm's paralegal. The attorney was faced with a major problem: he could only impeach the witness by calling his paralegal to testify, but the paralegal would not be credible as an objective witness because she was part of the attorney's staff. Also, if he called the paralegal to testify, the attorneys for the other side would be able to cross-examine the paralegal and delve into otherwise protected work product of the firm. After that experience, this attorney stopped the practice of using paralegals to interview witnesses and began using an outside investigative firm - our firm. Investigators are much more credible witnesses at trial because they are not a party to the case. Their job is to uncover the facts, not to prove a case.
An eager wannabe-investigator who worked as an administrative assistant in a company did a background check on an individual who was being considered for a position. He found out that the man had numerous liens, had filed bankruptcy and had lied about his address. The man was not given the job. Since the man had already been told he was hired pending a background check, he demanded to know why he wasn't being hired and was told that there were inaccuracies on his application and other irregularities that made him not right for the company. Soon, the man's attorney contacted the company. It turned out that the wannabe-investigator had gathered information on the wrong individual - someone with a similar name.

These examples, as well as many others, reveal the consequences of using in-house employees who are not trained as investigators rather than professional investigators. Although the perception is that money may be saved, that one possible advantage of using in-house personnel is far outweighed by the potential disadvantages and negative consequences of using in-house personnel who are not trained investigators.

Solving Problems

Attorneys and business clients generally know that there are certain areas where they definitely need professional investigative help. This is the second major category of investigative work - solving problems. These include such areas as:

Asset searches - for a variety of problems, such as collecting judgments
Skip tracing - locating witnesses and others
Fraud investigations
Other criminal investigations
In-depth field investigations or "deep backgrounds" on parties to litigation
In-depth historical research in environmental litigation
Any investigations requiring undercover investigations or surveillance

For these types of cases, most attorneys and companies do employ the services of professional investigative firms. Law firms, particularly, usually want to utilize outside investigators to avoid any hint of "undue influence" in the investigatory process. (In fact, many large law firms keep an investigative firm they trust on retainer.) Clients should be very skeptical of attorneys who want to have their firms handle these types of cases without using outside investigators. Businesses that attempt to keep these functions in-house are asking for trouble - or they don't want their problem solved.

Professional Investigators?

Throughout this article, we have referred to "professional investigators." But what essential qualities do professional investigators possess that in-house staff are unlikely to have? Although private investigators have different types of backgrounds and different specialties, there are certain qualities that all good ones have in common. All are trained to follow every lead, to analyze every piece of data and to go the extra mile (or in today's world, go the extra click) before closing a case. Persistence, analytical skills and seeing what others don't always see are qualities that a good investigator must have.

Although novels and television shows have often distorted our image of a private investigator's daily life, some of the characteristics of fictional detectives really are those necessary for people who become private investigators. Perhaps the most famous fictional investigator of all time is Sherlock Holmes. What were his most important qualities? He was extraordinarily observant. He noticed things other people - even his friends at Scotland Yard - did not notice. He was analytical - he sat smoking his pipe thinking about the importance and significance of the facts and details he had gathered. And, he was thorough and persistent. He didn't let go of a problem until he solved it. Those are the same qualities a good PI must have today - even if he or she may not be quite as amazing as Sherlock or work on cases as dramatic as Sherlock's fictional cases.

When a private investigator does a background check, for example, or performs due diligence for a company, he or she will not simply run a few checks on online databases - as an in-house employee might. A professional PI will keep searching until he or she is satisfied that the check is thorough and complete. And, if the client does not want to pay the fee to have the investigator to go that extra mile, the client will get a report advising him or her not only what has been done, but what has not yet been done on the investigation.

So, if you rely on non-professionals to do even the "simple" investigative work of background checks and due diligence, much less the more involved problem-solving cases, you are gambling with your own or your client's money. You are taking a risk of encountering trouble in the future - trouble that might be easily avoided by hiring a professional PI.

Part 2: Finding an Ethical and Skilled Professional Investigator

When you need investigative help in either problem-solving or preventative fact-gathering areas, how do you know you will be getting a good professional investigator who will do the best possible job for you? How do you know that investigator is ethical and will not put you at risk? And, how do you evaluate whether or not the person or firm you are thinking of hiring has the qualities of a good investigator? This is where you have to do your own investigation. Here are some guidelines as you conduct your search for the best investigator for your team:

Licensing

First and foremost, it is important to verify that the investigator is licensed by the state. Are the PIs who will be working on your case licensed? Have there ever been complaints against the individual investigators or the firm? (In California, private investigators are licensed by the Bureau of Security and Investigative Services. The Bureau's website will verify that an investigator is licensed and indicate whether or not any complaints have been filed against them.)

Ethics and Integrity

What do the investigators you are considering have to say about their ethical responsibilities as investigators? Every investigator at our firm must make the following commitments:

To never place our clients at risk.
To use ethical means to investigate and solve cases.
To always be aware of current privacy laws and other laws regulating our profession.
To cross-check information and facts with more than one source before providing them to clients.
To conduct our business with honesty, sincerity, integrity, fidelity and morality in all dealings with our clients.
To provide only those services which we are competent to perform.
To respect and protect confidential and privileged client information unless contrary to state or federal law.
To strictly observe the precepts of truth, accuracy and prudence.
To prepare and present our investigative reports based upon truth and fact.

Be blunt. Ask your prospective investigator about the Pellicano case and how his agency is different.

References

Don't hesitate to ask for references and to call them. Good investigators will have clients who won't mind telling you what kind of experience they've had with the firm.

Background and experience of the lead investigator

Find out as much as you can about the lead investigator's background and experience. Ask for a resume or bio. Some of the issues that often come up when thinking about an investigator include:

Law enforcement vs. non-law enforcement.
- Some people think that the best investigators always have a law-enforcement background. In our experience, that is not true. Working in the private sector and working in government or law enforcement is very, very different. Don't be swayed by companies who brag about how many of their investigators come from law enforcement. They might not be whom you want or need on your case.
Men vs. women
- Others think that men are better private investigators but, in reality, women are superb investigators. Many women are able to make people feel at ease and therefore can get more information from witnesses and others they need to interview in the course of an investigation.
Experience
- How long has the PI been an investigator? If he or she has been an investigator for decades then there is not much that will stymie them. Also, look at their former experience if they have not been an investigator long. Were they a reporter? A researcher? What skills do they bring to this work?

Size of the Firm

Are large firms going to be more effective than smaller ones? Not necessarily. Even the very large firms do not keep large numbers of investigators on staff. They bring on additional staff when the need arises. Our firm contracts with other licensed investigators when we need to. This keeps our overhead down so that we are not as expensive as the very large firms. Yet, the quality of our work is still high because our investigators oversee the work of the investigators we bring in on large cases or on cases that require extensive work out of our area.

Cost

Is the least expensive PI, who claims he can do a background check for a few hundred dollars the best? Is the most expensive firm the best? With private investigators, like any professionals, you generally get what you pay for. The best way to control costs is to work with firms that will give you a proposal in advance of doing the work so that you know what the potential cost will be and what will be done for the fees. This forces the investigator to think about the case before taking it on and to tell you the type of work he or she plans to do. Often, the best proposals are proposals with two or more steps, where the firm will do so much work in the first step to develop leads and then check with the client before proceeding to do additional work following those leads.

Intangibles

Every time you hire a consultant or service professional of any sort, including a PI, you probably consider a number of intangible qualities. You meet with the representatives of the firm and you have a chance to see whether or not you might enjoy working with them. Are they professional? Do they seem reliable? Do you like them? Do they understand your practice area or industry? Do they have ideas about how to solve your problem(s)? How do they think? You can discern a lot from a simple conversation with the people you are thinking of retaining. Most good investigators would deduce a lot about you from a meeting. If you can do a fraction of what he can do - and you follow the general guidelines above - you'll find a good PI to handle your case.

Of course, we hope your choice will be our firm.

Joanne Parrent (CA PI License #24108) is a partner at Parrent Smith Investigations.