Independent Investigations

Question: An employee may have stolen a lot of money from our company, but we’re not sure. What should we do?

Answer: This kind of nightmare can come in many forms: An employee may or may not have stolen from you or a customer; your driver may have improperly dumped chemicals; your sales VP may have had “off-the-record” conversations about pricing with your competitor; or an employee alleges serious wrongdoing by her supervisor. The number of potential serious problems is, unfortunately, almost unlimited.

The possible consequences are dire. If the problem is serious enough and your company handles it badly, you could go out of business, people could get convicted of crimes and go to jail, or your company could be successfully sued for a fortune. Knowing what to do can be very challenging, but here are two basic rules to help you initially handle the problem.

RULE NO. 1: Don’t make things worse.

This rule is the one most often ignored. Don’t allow anyone in your company to cover up, create false documents or “dispose” of potential evidence. And don’t act first and think later.

RULE NO. 2: Immediately consult a professional.

You’re very likely to need a complete, thorough and independent investigation.

Talk to your in-house counsel or regular outside counsel immediately. If you don’t have one, seek advice from an attorney who conducts independent investigations.

An employee, your regular lawyer or a private investigator sometimes can appropriately do investigations. Quite often, however, you will want (or need) outside counsel with a proven track record of conducting dif- ficult independent investigations.

Some hallmarks of an appropriate, impartial investigation and response include an unbiased investigator; a thorough examination of the relevant witnesses and facts; prompt action; follow through on recommendations; and prompt government reporting, if needed.

Keep in mind that the problem you face may be so serious that there simply are no good solutions, but your handling of the problem may make the difference between a bad but survivable outcome, and a terminal one. A good independent investigation could save you or your company, if you act quickly.

But, never forget Rule No. 1: Don’t make it worse.


Attorney Mark Bennett
Director of Starn O’Toole Marcus & Fisher
Former Hawaii Attorney General and Federal Prosecutor

Categories: BizWiz, BizX: Advice from Experts, Law