After years in business, one of my biggest marketing challenges is still explaining to potential clients why an investigator can’t just use a few mysterious databases and “deep Googling,” as one hopeful person described it, and produce an answer in an hour or two.
Someone’s well-hidden assets? The eight-month job in 1998 that ended badly and was conveniently less off the resume by expanding the dates of the jobs before and after? The ugly fallout with a business partner last year over a company you didn’t know about?
Those things take time to find. Following is a typical assignment and what each step costs:
Assignment: Background of new CEO of a tech company with sales of $2.5 billion a year. Client is considering a $3 million investment.
Databases: Some of these are pay as you go, and sometimes we use databases such as Lexis Nexis ($300 a month) and Bloomberg Law ($600 a month) that are fixed price. We allocate a portion of the monthly bill for the fixed ones to each case we do. In this case, total database costs are $140.
Courthouse Retrievers: The CEO has lived and worked in five counties around the U.S. since 1996. We want to check civil and criminal cases in which he was involved in all of these. Remember, not all litigation is online, and sometimes even the dockets (case summaries) are not online either.
In our current assignment, one county (Miami-Dade in Florida) has all the cases we need online. But three counties are in California, and we need to send someone to the three difference county courthouses to search and retrieve any records. The CEO has a moderately common name, so they will need some time to sort through all the records to make sure the case relates to our person. Finally, the CEO has a home in Montana. In that state, not only are cases not online, but the clerk has to do the computer search for you. That means two trips to the courthouse – one to drop off the search and one to pick up the records. This step could cost about $700 even if we find nothing. If we find cases, those run to $1.25 a page (at cost, but note that Bloomberg and Westlaw charge $2 a page if you get them to retrieve documents).
Say we find eighty pages of litigation, and say we want copies of his mortgages in California. Call that $150 in copy costs. That a retriever bill of $850 and a running total of $990.
In addition, we found three securities class actions on PACER, the website of the federal courts. Running total is now $1,030.
Our Work: On top of the time it takes for us to search the databases, find and manage the subcontractors who go to the courts across the country, we need to put in time. For instance, our man worked for years in the auto industry, a business that is intensively covered by the media (as opposed to vitally important companies that make braking systems of trucks or trains and get very little coverage). We needed to look through some eight hundred news articles mentioning his name. We had to fine-tune the search parameters to get the field down from 4,500 stories. That took time. In the end, we found an early story that revealed a job he left off his LinkedIn profile.
We spent some time looking for people who might have worked with him at that job – people we or our client could interview to find out why he lasted such a short time there. We also had to add the newly-found company to our searches for legal and regulatory issues. There was every possibility that the company got sued for something our man participated in, but got sued two years after our man left. That would be significant and reportable even if our man were not named in the litigation.
Also, our man had formed two limited liability companies over the years. What did they do? What did they own? It took some time to find out.
We also looked at the man’s social media and that of his wife and grown children. Some people say nasty things on social media or display themselves in a way that might call into question their fitness for the job. (One person we once examined commuted back and forth between the east and west coasts for many years, and interviews painted a picture of someone who was always halfway out the door to get to the airport and who drank too much).
We look at electoral contributions (they sometimes list place of work), whether he’s ever been to tax court, whether any of his data ever turned up on the Dark Web.
The Value Proposition
Even if we did all this in four hours (and that can be done with someone who is not that complicated and has a light litigation and corporate structure), you would be up to a bill of $2,390.
You are thinking of investing $3 million into this company. Even a $3,000 investigation taking one to two weeks that could alert you to a big problem constitutes one tenth of one percent of the investment. Doesn’t it make sense to look before you write that check?
If you think you would be able to do it yourself and save money, go right ahead. Subscribe to the databases, find the courthouse retrievers (and pay their copy markups), figure out the many techniques we have for reverse searches based on addresses, phone number and social media handles. Play around on the Secretary of State websites to turn up secret LLCs.
Chances are, someone who does this all the time will think of a few things you did not, which is only natural. This is all we do. In the same way an immigration lawyer would be foolish to handle even a mildly complex bankruptcy matter, we recommend that experienced litigators and transactions lawyers let us help them with this kind of research.
Want to know more about how we work? Our website has a wide range of publications and videos. You can also read my book, The Art of Fact Investigation which is available at bookstores online and for order from independent book sellers. And check out our other blog, The Divorce Asset Hunter.