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October 27, 2016

Just as a savvy, ethical corporate investigation can make a case, an investigation that lacks sensible governance can severely damage it.

Recently, a number of major household names have found themselves in the media over their use of questionable corporate investigation tactics.

These big-name cases leave companies and their counsel wondering how to best proceed when considering the launch of an investigation. Under pressure to achieve results, corporations may fail to set the scope or ask tough questions of the investigators. And, in their eagerness to satisfy clients’ needs, some investigators may cross the thin line that exists between creative investigative procedures and dangerous activities.

Nevertheless, there are many circumstances where an investigation is necessary. By following a few sensible governance steps and some defined rules of the road, parties can trigger an investigation with confidence. Moreover, an informed, ethical investigation can give companies and their counsel an edge and make a critical difference in high-stakes litigation.

In preparing to launch an investigation, senior management, boards, and inside and outside counsel must weigh numerous considerations:

1. Should We Investigate?

Many investigations are vital to a company’s interests. There may be a theft of trade secrets, a whistleblower complaint or government inquiry. It’s important to conduct integrity due diligence of new business relationships. In considering litigation, you should know whether your potential adversary has sufficient assets to make the suit worthwhile, and if a case has begun, you should know everything you can about the adverse experts. But some investigations result from company officials overreacting to a perceived threat or slight.

2. Should We Use an Outside Investigator?

The next step is to decide whether to conduct the investigation in-house or engage an outside investigator. Internal investigators or security staff may be motivated to satisfy their “boss” and be tempted to push the envelope. For more than routine matters, companies would be well served to seek an outside specialist with the requisite objectivity, experience and resources.

3. Who’s In Charge?

There needs to be clear and proper governance: Who will be responsible for supervising the investigation and making key decisions? Will the general counsel be involved? The CEO? The board? Will the investigation be supervised by an outside law firm to protect legal privilege?

4. What are the Rules of the Road?

The company and investigations firm should agree on acceptable investigative tactics. In determining the specific techniques to be used, clients must always consider their reaction to media disclosure. In certain situations, some actions are easily defensible – as when company trade secrets are stolen or products are counterfeited. They may not be as easily defended when a CEO is upset by a rumor on the internet.

5. What Investigative Tactics are Acceptable?

Investigative Research – Sophisticated research and analyses of “open sources” for public record information is the most common investigative approach. It may lack drama but it is often the most efficient and cost-effective way to obtain information. The gathering of such data raises no legitimate legal or ethical issues.

Source Interviews — In the context of litigation, investigators cannot misrepresent who they are and why they are asking the questions.

Surveillance — Surveillance is expensive, complicated and risky. Unless the surveillance is intrusive enough to constitute harassment, there are usually no legal issues. But, if the surveillance becomes known, it is likely to be described in the media as “snooping” or “spying,” and could create a public relations nightmare.

Searching Trash — Known as “dumpster diving,” the collection and search of refuse by investigators may be legal if the trash has been disposed of in a manner that indicates there is no “expectation of privacy.” Even when conducted legally, it could result in negative publicity for the client and investigator if the practice becomes known.

6. How Do We Select an Outside Investigator?

The need to inaugurate an investigation is often generated by a crisis, and companies sometimes lose sight of the distinction between “gumshoe” and “white shoe” investigation firms.

  • Get recommendations from people you trust and ask for references.
  • Determine how the firm monitors its own activities.
  • Make sure that the people you meet will work on your investigation.
  • Ask about their use of outside subcontractors and how they supervise them.
  • Make sure their retention letter warrants that only legal methods will be employed.


Corporate leaders need to make smart decisions to protect their company’s reputation and integrity. Stay cognizant of potential risks and ensure your investigator, whether internal or external, will abide by your governance guidelines and scope so you can confidently leverage the investigation’s results.