the law, ethics and common sense of private investigations
TRANSCRIPT
The Law, Ethics and Common Sense of
Private Investigations
1
Matthew Lafferman, Dentons US LLP
Mark Califano, Dentons US LLP
Brian O’Blennes, Dentons US LLP
Michael Ramos, Partner, Nardello & Co. LLC
July 29, 2021
2
Presenters
Mark Califano
Partner,
Dentons US LLP
Washington, DC
Link to Bio
Mark is a member of Dentons' Litigation
and White Collar and Government
Investigations practices, and served as
the GC of a global investigations firm.
Mark has deep business experience and
an extensive background in complex
litigation, investigations, corporate
governance, criminal law, cyber security
and compliance. He held senior
positions at American Express and GE
Capital, and served as a decorated
federal prosecutor. He is an experienced
trial lawyer and litigator of high-profile
national and international investigations,
trials and appeals. He has successfully
defended billions of dollars of claims and
challenges to business practices and
financial products up to the Supreme
Court.
Michael Ramos
Partner & Sr. Managing Dir,
Nardello & Co.
New York, NY
Link to Bio
Michael Ramos is a Senior Managing
Director at Nardello & Co. in the New
York office. A member of the firm’s
Litigation Support Practice, he also
serves as the firm’s Chief Risk and
Compliance Officer. Michael’s career,
spans over 30 years. A former Assistant
US Attorney in the Eastern District of
New York, Michael returned to
investigative practice, joining Nardello &
Co. after his government service. At
Nardello & Co., Michael has managed
large litigation support investigations
across multiple jurisdictions involving
internal fraud, defense against RICO
actions, libel cases, and criminal defense
matters. He has successfully led several
international asset tracing and forensic
accounting teams.
Brian O’Bleness
Partner, Dentons US LLP
Kansas City, MO /
Washington, DC
Link to Bio
Brian K. O'Bleness Brian O'Bleness is
Co-Chair of the U.S. Competition and
Antitrust group and a member of
Dentons' White Collar and Government
Investigations practice. Brian’s practice
focuses on global internal
investigations, antitrust matters and
defending clients against government
enforcement actions. Brian is dual-
qualified as a lawyer in the US and a
solicitor in England and Wales. He has
led a broad range of cross-border
investigations, including those involving
fraud, antitrust and corruption, and is a
frequent speaker on global legal risk
and remediation.
Matthew A. Lafferman
Senior Managing Associate,
Dentons US LLP
Washington, DC
Link to Bio
Matthew A. Lafferman is a member of
Dentons' Litigation and Dispute Resolution
and White Collar and Government
Investigations practices. He assists US
and foreign multinational companies,
executives, and management in
conducting complex cross-border
investigations and defending related
enforcement actions. He also advises both
domestic and foreign companies on a
variety of cross-border legal matters, such
as data privacy laws, the Stored
Communication Act, and the related
CLOUD Act.
1. Using a Private Investigation Firm
2. Engagement of an Investigator
• Privilege, Data Privacy & Protection, Licensing
3. Planning an Investigation
4. Open Sources
5. People as Sources of Information
• Core Principles
• Litigation Examples
• Gray Markets and Diverted Goods
• Supporting Witnesses in Product Liability Cases
6. Surveillance
3
Agenda
(Why not me or my research department?)
• Investigation firms are used for litigation support, due diligence, personnel onboarding, crisis
management, activist defense, “Me Too” and other internal investigations.
• Investigators can help avoid counsel becoming a witness (which can result in disqualification)
• Investigation v. Research v. Intelligence: Pay attention to staff and the nature of the work.
o Analysts, journalists and investigators.
o Legal professionals (former federal prosecutors, trial attorneys, in-house and public company counsel and experienced
law enforcement).
o Former intelligence operatives.
• Integrity and Ethics
At a minimum, a firm should be properly licensed, operate within applicable laws and rules
(including gathering and using information in a legal and appropriate manner), vet their personnel
and subcontractors, and be willing to work with clients at each step of an investigation.
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Using a Private Investigations Firm
MR
Know your goal(s). This helps manage costs
and avoid mission creep.
Understand your and your client’s parameters
• Time
• Cost
• Confidentiality, Privacy and Privilege
With Litigation--
• Affirmative litigation: identify and collect key
evidence and witnesses before claims are filed and
avoid sanctions for meritless claims, and to help
plan your strategy, and to vet plaintiffs.
• Defensive litigation: investigative firms can collect
admissible evidence to establish and support
defenses, to probe claims, prepare cross-
examination of opposing fact and expert witnesses
and parties.
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Planning an Investigation
MR
• Engagement agreements (investigators as agents of the lawyer and client)
o Subcontractors--the investigation firm should be responsible.
o Limitations of Liability (of investigative firm to law firm and client)
o Insurance & Indemnity (by client to investigative firm)
o Privilege and confidentiality--United States v. Kovel, 296 F. 2d 918 (2d. Cir. 1961)
o Privacy and data security
o Conflicts of interest▪ Waivers
• Under the Rules of Professional Conduct of virtually every state bar and legal
professional organization, lawyers are responsible for the conduct of non-lawyers
they retain.
▪ A lawyer is responsible for conduct of a non-lawyer employed, retained by, or associated with
the lawyer that would be a violation of rules if engaged in by the lawyer, if the lawyer orders
or directs the specific conduct or, with knowledge of the specific conduct, ratifies it.
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Engagement of an Investigator
MC
• Establish basis for assertion of privilege in writing at the outset and
in the investigative process.
• Kovel language--
o retention by counsel, acting at direction of counsel,
o assisting counsel in collecting information so counsel can provide legal advice,
o in furtherance of litigation (work product and litigation privilege)
• Investigations conducted for the purpose of making a business decision
are not privileged. Legal use, particularly where in-house counsel is
involved, must be clear, explicit and information must be treated as
privileged.
• Crime-fraud exception: applies even where counsel may be acting
properly and not involved in criminal or fraudulent activity.
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Privilege & Confidentiality in the United States
RC
• Privilege and confidentiality rules vary greatly outside the United States. Generally,
assume the US privileges are greater and that these may not apply outside the United States.
o Investigation of BNP Paribas by French Magistrate Philippe Courroye
• Common law jurisdictions: UK, Australia, New Zealand, Hong Kong and (in part) Canada
o Legal advice and Litigation privilege
• Civil law jurisdictions: most of EU (e.g., France--professional secrecy) and much of South
America (.e.g., Brazil)
• With GDPR compliance: obtain a clear understanding and agreement as to where and how
privilege applies. Application of privacy exemptions, which include exemptions for privilege, are
strictly construed and limited, particularly in responding to data subject access requests.
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Privilege & Confidentiality Outside the United States
RC
Data Protection and Privacy laws like the General Data Protection Regulation (“GDPR”) and
implementing Data Protection laws are an important consideration when conducting
investigations in EU and other jurisdictions (including some Latin American jurisdictions).
Carefully consider legal and regulatory data protection requirements before starting
your investigation. Jurisdiction of these laws can apply--
• Where personal information is being collected.
• Where investigative work is being done (drafting of reports and presentation of findings).
• Where subjects reside and where they have citizenship.
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Data Protection
JV
United States
• 46 states in the US require investigators to be licensed (including NJ, PA, NY and CA). Idaho,
Mississippi, South Dakota, and Wyoming do not require licenses.
• Investigative firms and counsel should comply with the licensing requirements in the states where they
have offices and wherever they conduct investigations, or they and you could face civil and criminal
penalties.
Foreign Jurisdictions
• Investigators should comply with the licensing requirements in the foreign countries where they conduct
investigations. Most countries restrict private investigators to a greater degree than in the United States.
• The UK does not license investigators, but they are governed by the GDPR and the Data Privacy Act,
and regulated by the Information Commissioner
• Confer with local counsel familiar with licensing requirements and limitations, including labor and human
rights laws.
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Licensing of Investigators
MR
Open Sources
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Open Source Information
A large portion of the work investigation firms will do involves the review of open sources. The scope of data that constitutes open source information will vary according to jurisdiction. In most U.S. jurisdictions it includes--
• Commercial and business databases
• Public filings: PACER/court filings, corporate registrations, real property records, UCC filings
• Regulatory proceedings
• Licensing and disciplinary actions
• FOIA-accessible government records
• News Media
• Social media and Internet sites
In most other jurisdictions, the scope of open source information will be more limited.
MR
• Credit Reports: 15 U.S.C.§1681(q), Fair Credit Reporting Act, limits access to credit
reports unless in connection to the extension of credit or the collection of a debt. Credit
headers, which include a subject’s names and addresses, can be accessed for other
purposes.
• Drivers License and Vehicle Registration records are protected by the Driver’s Privacy
and Protection Act 18 U.S.C. §2721 and may be accessed to verify personal information
or in connection with civil, criminal, administrative or arbitral proceeding.
• Some commercial financial databases, under 15 U.S.C. §6801, et seq., are available
for use in limited situations, including asset verification. Many databases are audited by
Thompsons, Lexis and other companies to prevent abuse.
• Banking, Mobile Phone and Email records are not publicly available and are not
open source information.
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Restrictions on Open Sources in the United States
MR
Obtaining Information from People
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People are important sources of information that provide invaluable perspectives on subjects, including
acquisition targets, joint venture partners, CEO and Board candidates, opposing parties and prospective
witnesses, adding an important third dimension to paper and digital data. Hypothetical examples:
• A key logistics company in sub-saharan Africa is a target for acquisition. It looks to be the strongest market participant on
paper, but inquiries with local sources reveal that the company has been subject to repeated raids by police and labor
enforcement for employing and abusing smuggled labor. Follow-up records research confirms the report.
• A long-time joint venture partner to a global media company is embroiled in a dispute with one of its former principals.
Inquiries with executives and officials familiar with the local industry reveal that the owner is a relative of a high
government official, and that the government official has a stake in the company. Questions directly to the JV partner
confirm the relationship.
• Online articles critical of an energy executive appear during competition for a crucial project. The articles are traced to a
group of political public relations firms. Calls to former PR firm employees identify a subcontractor who has previously
worked for a competitor. Interviews with associates of the contractor confirm that the contractor had been hired by the
competitor to arrange for the drafting and placement of the articles, and information from the posted articles corroborates
this.
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The Value of Human Sources, Properly Used
JV
Open source research and investigations can identify human sources of
information, from people who cover or monitor an industry, to people who
work in the industry, to people who work with and know the subject.
Before conducting this phase of an investigation, you should carefully review
these sources and decide which, if any, an investigations firm can approach
and how that approach will occur. Contact with any source always carries
some risk of alerting the subject, opposing party or the media.
• Confidential Sources: private sector, regulatory and government officials who
serve as market sources information on firms, companies and executives in various
industries who provide information on a confidential basis.
• Third Party Sources: Individuals identified through open source research and
investigation as knowing or having worked with or for a subject who may have
relevant knowledge about the subject or related activity.
• Prospective witnesses: Individuals identified through open source research and
investigation as potential witnesses in a case, arbitration or investigation.
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Human Sources and Witnesses
MC
• Prepare:
o Learn what you can about whom you are contacting and their relationship to your subject.
o Prepare an outline of what you will say and what you will ask, and review with counsel--
▪ Identify yourselves and whom you are working for (firm, client).
▪ Explain why you are contacting and interviewing them.
▪ [if individual is represented by counsel--stop interview and have counsel contact interviewers].
▪ How to close the interview.
▪ Do not give legal advice or comment on case or client.
o Use two interviewers wherever possible: one to take notes and one to lead questioning.
o In person is most effective, but Zoom and telephone have been productive during the pandemic.
• Execute:
o Be polite and courteous
o Never argue
o Thank the interviewee for their time, even if they refuse to be interviewed or are hostile.
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Contacting Prospective Witnesses
MC
Never Lie, Misrepresent or Mislead
• Conduct involving dishonesty, fraud, deceit or misrepresentation is prohibited. N.Y. Rules
of Professional Conduct, Rule 8.4 (c). Lawyers may not violate the rights of third parties when
obtaining evidence. N.Y. Rules of Professional Conduct, Rule 4.4 (a).
• While California has not explicitly adopted Rule 8.4(a), there is “substantial case law that the for
the proposition that the duty of an attorney. . . not to deceive extends beyond the courtroom.” San
Diego County. Bar Legal Ethics Comm., Op. 2011-2 (2011). An investigator is almost always
prohibited from using misrepresentation or dissemblance to obtain information. See Cal. Rules of
Professional Conduct, Rule 4.1 and N.Y. Rules of Professional Conduct, Rules 5.3 and 8.4 (c).
• Most jurisdictions, including Illinios have adopted ABA Rule 8.4(a), stating that an investigator’s
unethical acts may be imputed to the attorney. See, e.g., N.Y. Rules of Professional Conduct,
Rule 8.4 (a); Ill. Sup. Ct. R. 8.4(a) (A lawyer may not knowingly assist or induce another to do so,
or do so through the acts of another.)
Lies, fraud, dishonesty or misrepresentation can immediately and irreparably damage your
case, your client, your reputation, your career, your firm and your company.
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Core Principles for Dealing With People
RC
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Let’s Not Pretend
Uber and its “Journalist”
• In a civil anti-trust case before Judge Rakoff in the Southern District
of New York, Uber’s [former] general counsel reportedly directed
security personnel to hire investigators to investigate plaintiff and
plaintiff’s counsel.
• An investigator telephoned colleagues of plaintiff’s counsel, claiming
that he was a journalist doing research for a story on up-and-coming
labor lawyers.
• Judge Rakoff ordered discovery regarding the investigation,
expressing the concern that the use of false representations by the
investigator in connection with the case could raise “a serious risk of
perverting the process of justice before this Court.
• Judge Rakoff later sanctioned Uber, barring the use of any
information it gathered in the effort. Spencer Meyer v. Travis
Kalanick, 15-CV-09796 (S.D.N.Y.). RC
No Pretexting
• Pretexting may violate federal law:
o You cannot obtain customer’s
information by making false statements.
15 U.S.C. §§ 6821 and 6823.
o It is a crime to use the identification of
another person without authorization. 18
U.S.C. § 1028A.
• 2005: Investigators hired by Hewlett-Packard
use pretexting to obtain board member and
reporter telephone records, resulting in
resignation of CEO and prosecution of GC.
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Core Principles for Dealing With People
RC
Undercover Investigations
In certain limited circumstances, generally based on public policy considerations, investigators can
operate undercover to obtain information. Courts have expressed differing views:
• Some courts have held that there is a sound basis for allowing investigators to pose as members of the public
in cases where the defendants were suspected of violating contracts (palming off other goods), infringing on
trademarks, or gray market sales outside established markets. See e.g., Gidatex, S.r.L. v. Campaniello
Imports, Ltd., 82 F. Supp. 2d 119 (S.D.N.Y. 1999) (investigators posing as interior decorator customers);
Apple Corps Ltd. v. Int’l Collectors Soc. (D.N.J. 1998) (investigators posing as customers). Courts have also
allowed this practice to investigate suspected racial discrimination. See, e.g., Hill v. Shell Oil (D. Ill. 2002).
• Other courts have held differently. For example, the use of undercover investigators was found to violate
South Dakota’s rules against dishonesty and deceit. See Midwest Motor Sports v. Arctic Cat Sales, 347 F.3d
693 (8th Cir. 2003)
• In California, private investigators are generally prohibited from committing any act constituting dishonesty or
fraud. Cal. Bus. & Prof. Code § 7538(b).
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Core Principles for Dealing With People
MR
22
Weinstein and the “Intelligence” Firm
• Harvey Weinstein through his lawyers retained an Israeli investigative firm, Black Cube, which
allegedly used misrepresentations and undercover operatives in an attempt to gather information
about Weinstein’s alleged victims. The investigators claimed that they would only use lawful
methods and that their operational methodologies were approved by three “top-tier” law firms.
• Perhaps the engagement letter should have been a clue. In it, Black Cube said it would
use--
o “Avatar Operators” to obtain information from social networks, and
o “Operations Experts” with experience in “social engineering.”
• Black Cube also employed an undercover agent to get close to one of Weinstein’s accusers.
MR
Investigations Over Social Media
Social Media has become the way in which companies, firms, celebrities, professionals, academics
and people do business and live their lives. Investigations not only pull information from social
media, they must now be able to conduct investigations over social media.
Conducting investigations through social media requires careful planning, care and regular
communication. And legal and ethical guidance is developing--
• New York City Bar Association says investigators may contact unrepresented parties on social
media websites without violating ethical rules provided there are no overt misrepresentations.
See New York City Bar Ass’n., Comm. on Prof’l Ethics, Op. 2010-2.
• California and the Philadelphia Bar Association take a stronger view, requiring that even where
contact or “friending” may be otherwise proper, an attorney should not make contact without
disclosing the affiliation and purpose of the contact. See San Diego Cnty. Bar Legal Ethics
Comm., Op. 2011-2 (2011); Phila. Bar Ass’n., Prof’l Guidance Comm., Op. 2009-02.
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Core Principles for Dealing With People
MC
Some of the most broadly prescribed and used medications and products have side effects that have been alleged to cause
significant damage to a number of patients who use them, even though these have had significant and overwhelmingly
beneficial impact on the quality of live of users.
In this hypothetical, the imaginary prescription diabetes medicine SucresaTM widely and successfully used in the US for
years, has been alleged to be susceptible to abuse and addiction in users.
• Authorities have moved to strictly limit its use and the amounts that can be prescribed. Nevertheless deaths attributable
to abuse have skyrocketed,
• Plaintiffs attorneys and states Attorneys General have initiated suits across the country, the sheer number of which could
bankrupt manufacturers and distributors.
To help establish the beneficial use of this product by patients, counsel have tried to identify users that could serve as
witnesses as to the successful use of the product, who can testify that (i) SucresaTM meets a medical need, and (ii) the side effects
are mitigated through proper use. They identified a few potential individuals, but were unsuccessful finding good prospective witnesses.
Goal: Identify in a transparent and defensible manner qualified potential witnesses who have used SucresaTM have
obtained its benefits and have been able to use it properly and without side effects.
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Social Media Investigation
Product Liability Defense -- Successful Patient Witnesses
MC
Interviewing Represented Parties
• An attorney [or her investigator] is prohibited from interviewing a party that he knows to be
represented without prior consent of the party’s attorney. Ill. Sup. Ct. R. 4.2; N.Y. Rules of
Professional Conduct, Rule 4.2
• In representing a client, a lawyer shall not communicate directly or indirectly about the subject of
the representation with a person* the lawyer knows* to be represented by another lawyer in the
matter, unless the lawyer has the consent of the other lawyer. With corporations, represented
parties may include officers, directors and other current employees “if the subject of the
communication is any act or omission of such person in connection with the matter which may be
binding upon or imputed to the organization for purposes of civil or criminal liability.” CA Proposed
Rule of Professional Conduct 4.2.
• See Weinstein and the “Intelligence” Firm, above.
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Core Principles for Dealing With People
MC
Electronic Surveillance
• Wiretapping and Hacking--Illegal in every jurisdiction
• Consensual recording (telephone and in-person), when one or more parties consent
o National laws vary widely.
o Federal Law requires consent of one party to the conversation 18 U.S.C. §2511(d)
o State laws vary, and across state lines both states matter:
▪ NY--one party consent. N.Y. Penal Law § 250.00(1), (2).
▪ CA--all parties must consent. . Cal. Penal Code § 632(a), (c).
o State ethics rules vary as well. If an attorney is in a one-party consent state, the recording of a
conversation by the attorney without the consent of the other parties to the conversation does not
violate the ethical rules. See ABA Formal Opinion 01-422.
• Global positioning trackers
o The law is developing, but CA prohibits without the consent of the person tracked. . Cal. Penal Code § 637.7
26
Surveillance
Physical Surveillance
• Generally not prohibited in the United States, but some states expressly forbid viewing or
recording where the person has a reasonable expectation of privacy. See, e.g. N.Y. Penal Law §
250.45.
• Regulation of physical surveillance in foreign jurisdictions is generally more restrictive and can
vary widely.
o GDPR jurisdictions should prepare a Data Protection Impact Assessment, where the legitimate interest
supporting the need for physical surveillance and the personal information sought to be gathered (only what is
necessary) is balanced against the privacy interests of the individual whose information is being collected.
o Example: extortion of producer by EU resident. Before planning the surveillance, the DPIA balances the
legitimate interest in identifying and stopping criminal activity (the extortion) against the privacy interest of the
extortionist in not being identified or located. The plan is then formulated to collect only that information that is
necessary.
• Surveillance is a labor intensive effort.
27
Surveillance
Appendix
28
29
Weinstein BlackCube Engagement Letter
Thank you
Dentons US LLP
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