Forensic investigators can help you in a number of ways. We are often called upon to determine the business facts of a case, allowing you to focus on what you do best. We can also help you determine the basic facts of a business dispute, so that you can decide whether litigation is appropriate.
The Highest and Best Use (HABU) of your time should be your first consideration. In general, you should delegate to someone less expensive than yourself anything that is not the HABU of your time. In most cases, you can delegate to a member of your staff, but in some cases you may have to go outside for the particular skills needed for a particular task.
When you decide to call upon a business forensic investigator, you should generally have specific research goals in mind. I have illustrated below six cases where specific goals helped the attorney to produce a good result for his client.
#1 – Determine what likely caused the plaintiff’s business to fail.
When the owner of a “fine dining” Italian restaurant went through the plate glass window of a Dunkin’ Donuts, he claimed that his injuries were the direct result of an altercation with another patron. Detailed field research indicated at least two other reasons for his restaurant’s failure. One reason was the owner’s irascible behavior toward his workers. The lowered morale was exacerbated by a clearly visible shift in the market from one highway to a competing major road.
#2 – Find out why there are unusual changes in the financial statements.
During a period of rapid growth and profitability, a real estate developer kept getting questions from several of his key lenders about apparent inconsistencies in the developer’s financial statements. A day-long interview with the developer’s accountant showed that deceptions by the accountant were the only cause for substantial changes in the developer’s reported net worth.
A business forensic investigator simply “wore down” the accountant by asking him to produce every single working paper he used.
#3 – Locate any hidden assets of the defendants and their associates.
After fake soil test samples resulted in damages to the purchaser of some industrial land, no hidden assets were found to satisfy any potential judgment against the environmental testing firm. The defendants were just very clever.
#4 – Determine the impact of extensive groundwater contamination in the area.
Despite the apparently obvious connection between an USEPA Superfund site and slow sales results at a nearby housing development, no statistically significant relationship was found. Sales prices and absorption rates for homes in a sub-division near this site were found to be statistically unrelated to proximity to this site.
#5 - Find out why the net present values of damages are so high.
When the plaintiff’s attorney’s expert estimated the net present values of the plaintiff’s damages, the expert presented a complicated formula with multiple variables and several exponents. The algebra presented was obviously intended to be beyond the comprehension of even an experienced business attorney.
A business forensic investigator with strong math skills was able to reverse engineer the complicated formula, solve each one of the terms, and show that the
plaintiff’s expert was compounding the annual damage amounts. The expert apparently did this under the assumption that the defendant’s attorney would assume that the annual values were discounted (as they should have been).
#6 – Document who was responsible for water damage to a shopping center.
Over the course of several years, a large community shopping center grew under a series of owners. Multiple and overlapping roof repairs were made by at least six roofing companies, and at least three insurance companies provided various coverages, before torrential rain caused extensive water damage to the shopping center’s interiors. Extensive finger pointing resulted in litigation.
