The Business/Legal Investigator

April 27, 2010

In This Issue:

Investigator Errors and Omissions Coverage...Really?

The Perfect Employee? Maybe Not!
The insider threat...what to watch for!


Early in April I gave a presentation to Gulf Coast Paralegal Association at Edison College in Fort Myers. My talk was entitled,"Legal Introduction," but its purpose was to draw a clear distinction between the traditional private investigator of yesterday and the legal investigator of today. Just as legal secretaries and "Gal Fridays" have evolved into professional paralegals; the private investigator has grown up and become the Professional Legal Lnvestigator. There is a difference!

In this month's issue we address two issues:

First, I pose a question (..and this is directed more to lawyers on the list): Have you ever thought about Investigator Errors and Omissions Coverage? Think about it!

Next, "The Perfect Employee...Maybe Not!" Something to guard against, as you make your own way through rough economic times.


David B. Watts, CLI, CFE

ALLIED BUSINESS SOLUTIONS, solely owned d/b/a of
Interprobe Affiliates, Inc. a Florida Corporation
(Our twentieth year serving our clients in Soutwest Florida!)
FL Lic. No. A89-00394


by David B. Watts, CLI, CFE, FCI

I have been conducting legal investigations for more than thirty years and in all that time I have never gone without Liability and Investigator Errors and Omissions insurance coverage. Many of my colleagues say, "Why spend the money on premiums? There's nothing requiring E&O coverage in our state licensing, so why bother?"

The answer, of course, is that as careful and circumspect as one can be; a misstep is possible for anyone. The decisions we make, sometimes in the heat of the moment or without the benefit of enough data, can come back at us...even though we had the purest of intentions at the time. That is just what insurance is for: Unintentional mistakes!

Yet, to my continuing amazement, in all this time I have had only two trial lawyers request copies of my E&O policy before engaging our agency! One of them wisely demanded to be named an additional insured, as well. For your information, insurance carriers have no problem complying with such requests and gladly telefax proof of insurance to clients.

There is no arguing that investigators engaged by law firms, businesses or individuals act as agents for their clients. I do not (..and cannot ) dispense legal advice; but it seems clear to me on a basic level that actions of the investigator, no matter how well intentioned, can be imputable to the lawyer and his client. Perhaps, lawyers feel that their own malpractice insurance covers them; but would you really want to count on an insurance company agreeing that the actions of another would extend coverage to you? In any event, wouldn't it be better knowing you have more coverage than less?

Investigators conduct background inquiry on individuals and businesses and provide reports to clients, based on their sources of information. Investigators are also called upon to conduct surveillance, locate and interview witnesses and many other like duties, all of which require coming into contact with the general public. These activities are all undertaken on behalf of the law firm and, ultimately, its client. Usually, there are contending parties, giving rise to less than amenable relationships, to say the very least! All this creates an opportunity for litigation you hadn't planned on.

Investigator Errors and Omissions...just a thought!

by David B. Watts, CLI, CFE, FCI

Employees...the life's blood of every business! Where would we be without them? That has always been my mantra, so don't get the idea that I see criminals at every work station or lurking around the water cooler. To the contrary, it is the loyal and hardworking employee that supports and furthers our business mission at every turn. Having said that, a new phenomenon brought about by a declining economy and additional stress on employees has crept into our work culture. That is, the so-called "model employee" stealing from the company coffers.

"Due in part to the housing crisis, high unemployment and the general economic downturn, many American workers are under a considerable amount of financial stress. The question for the small business owner is, 'Does my employee's financial health and related stress impact my company's net income?'" This is according to R. Dean Piccirillo, CFP, CFPS, AIFA and Principal/Senior Financial Advisor at HBK Sorce Financial , LLC of Fort Myers, FL.

Rachel James, author and Cybercrime Authority at ID Experts, reports that a recent study showed that 60 percent of employees who quit a job or are asked to leave, steal company data on the way out!

So, now I guess we have to worry about all our employees stealing from us? Well... yes and no. There are flags to watch for and pro-active ways to avert this...the ultimate business betrayal. As a business owner/operator, it is your responsiblity to establish your business culture and internal controls. Here are some telltale flags to watch for, according to the experts:

... Refusal to take vacation time or always coming in early and leaving late.

... Volunteering for new projects and duties; particularly in finance, security, processing reimbursement receipts, etc.; wherever the opportunity to steal is better.

... Constantly remaining in touch while on vacation. Doing work while on vacation may be attempts at communicating with someone in collusion with fraudulent activity.

... Insistence on completing all work before leaving for vacation, which would prevent another employee from reviewing what he has been doing.

... Personality shifts and other signs of emotional stress, such as depression, crying, anger outbursts, etc.

... Unexplained new wealth exhibited in the form of: clothes, car, RVs, housing, etc.

... Family problems: Separation/Divorce, illness, spousal job loss, etc.

Many companies are introducing new policies or benefits to help relieve the stress and strain during this difficult economic time. Some of the employee assistance benefits include debt relief counselors, flexible payday borrowing, carpool and mass transit benefits.

R. Dean Piccirillo of HBK Sorce Financial, LLC offers a financial education program for employees that addresses all aspects of financial decision making, the purpose of which is to head off problems, both personal and business, before they happen. Dean can be reached at (239) 482-5522 and his email:

Again from Rachel James, "Even acknowledging stress in meetings and restating your open door policy may be enough to encourage a distressed employee to ask for help, instead of helping themselves to your company's profits."

In short, this is one of those times in life when you should get out ahead of the problem before it happens.

Another way to avoid the unthinkable is to undergo a Fraud Risk Assessment. That is an important service we at Allied Business Solutions offer to our clients. If you find, however, that you already have internal theft indications; our investigation service can root out the transgressers and prevent further losses.

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