Expert Advice for Your Next Internal Investigation

91% of companies expect the number of internal investigations to increase or stay the same in 2012.

Posted by Joe Gerard in on December 21st, 2011

Most employees who file lawsuits against their employers initially reported their concerns internally. According to a study by the National Whistleblowers Center, 89.7% of employees who filed a lawsuit against their employer had originally raised the concern internally. Internal investigation can help companies avoid lawsuits – if they are conducted properly.

Mastering the art of the internal investigation has never been more important. With more companies reporting that they have conducted internal investigations, they need to make sure that investigations are carried out properly to reduce the chance of any additional risks.

A Rise in Internal Investigations

According to the 2011 Fulbright Litigation Trends Survey, almost half (46%) of the companies in the US reported conducting at least one internal investigation in the past year. When it comes to labor and employment litigation, roughly 40% of all respondents claim that discrimination suits have increased the most over the past year, especially in the health care, manufacturing, financial services and insurance industries. The survey found that 91% of all respondents expect the number of internal investigations involving their companies to increase or stay the same in 2012.

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To shed some light on the industries experiencing the greatest number of internal investigations, a press release for the Fulbright survey reports:

The rise in internal investigations is most dramatic when viewed in the context of certain industries: there are three sectors—health care, energy and engineering/construction—for which one-half or more of the respondents have commenced an internal investigation requiring the assistance of outside counsel in the past year. Similar to last year, about one-quarter of all internal investigations resulted in a company reporting the matter to a regulatory agency.

The Costs

According to the press release for the survey, litigation spending (excluding the cost of settlements and judgments) has risen in 2011, with US companies reporting a median spend of $1.4 million.  The press release also mentions that almost ¼ of American businesses surveyed report that their annual spend on disputes is $5 million or higher.

Advice from the Experts

Every company wants to reduce the risks of a lawsuit. It doesn’t look like regulation is going to die down anytime soon, nor does the economic outlook seem much better for 2012, making it highly likely that you’ll have to conduct an internal investigation at some point. Here are some internal investigation tips from the experts we’ve interviewed this year:

Investigations completed professionally can save a tremendous amount of time and money by averting litigation, preserving a company’s reputation, quantifying losses for insurance claims, and maintaining employee morale,” – Maribeth Vander Weele, President of the Vander Weele Group, a corporate investigations firm in Chicago, and founder of the online investigative service, Sagerity Investigative Intelligence.

“The focus should be on getting the right people who have the skill set that you need; people who understand how to handle investigations and how to limit themselves to the scope that they’re focusing on,” – Sheryl Vacca, Senior Vice President and Chief Compliance and Audit Officer at the University of California.

“The presence of video and audio recording equipment in a workplace investigation interview can make people nervous. You won’t necessarily get the same answers you would if it’s not being recorded,” – Greg Caldwell, expert investigator and president of White Hat Solutions Corporate Investigations and Security Consulting.

Challenge the checklist: “The checklist only covers the things you’re thinking of at that particular time. There could be an investigation that covers a whole lot more and the report may never cover it because you’ve limited them (investigators) to a checklist. They’re not thinking beyond where this report is going and what kind of help it is to the organization. It really narrows their thinking,” – Sheryl Vacca

On detecting lies: “The science can be learned, through a mixture of reading literature from credible sources and attending workshops that utilize adult-based learning (i.e. using hypotheticals and role-playing) to demonstrate and allow you to experience the interview process and application of the various proven methodologies in this field. The art comes from actually seeing it done (having a mentor whom you can observe in practice) and then doing it yourself – many, many times,” – John Hanson, The Fraud Guy (published in the CCI article “The Human Lie Detector – A Lie Itself“)

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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