Sam Spade PI goes legal

Law firms in the US use private detectives in a number of diverse areas, including criminal cases, tort actions, divorce proceedings, and sophisticated business transactions. They may even use them to prevent crimes, such as investigating potential and existing employees, conducting a sting or ensuring that prevention programmes are followed.

One major US bank, for example, which had experienced money laundering problems, employed a private investigation firm to approach several branches with illicit, or at least highly suspicious, transactions. The branches that handled the transactions properly received a passing mark. However, disciplinary action was taken against employees in a branch which did not treat the suspicious approaches correctly.

Sometimes PIs are used for their sophisticated equipment and know how. For instance, in a recent extortion threat made overseas, this firm asked the victim to travel to the US and hire a private investigation firm to secretly record the incriminating conversations so that the corroboration could be used to take action against the threatened coercion. In a recent advance fee fraud case, on behalf of a foreign victim suing a Nigerian bank in the US, we employed a private detective in Nigeria to uncover the fraud and trace the money.

In many cases, private investigators are used to trace money which has moved around jurisdictions. Normally, the funds are proceeds of crime, although a spouse or former spouse may use this method to improperly hide money from the other spouse and the court.

Increasingly, PIs are developing specialisations such as environmental work. For example, investigators may work on environmental audits, develop skills and experience in certain toxic materials and chemicals, and investigate cases involving hazardous waste spills.

Many private investigation firms have set up international offices. Some have subsidiaries, branches or affiliations overseas. The global nature of many problems requires a cross-cultural approach and a knowledge of international and comparative investigation styles and correlative legal aspects.

PIs are also used in sophisticated business transactions. When a company needs to find an agent or distributor, or is contemplating a merger, acquisition or joint venture, it is often prudent to hire an investigator in order to check the credentials of prospective businesses. The more important the transaction and contemplated business relationship, the more work the investigator does to verify the due diligence work.

In the US, some investigation firms diversify into lobbying or legislative work. The close connection between law enforcement, national security and the specialised nature of police and enforcement work often requires PIs to cooperate closely with law enforcement agencies. On some occasions, they may need to simply dig for information, while others may require the investigation firm to persuade law enforcement agencies to take action for their clients.

Private investigation firms charge on a similar basis to lawyers, although their fees tend to be somewhat lower, as some of the work is of a less specialised nature. Their rates generally range from $25 to $500 (£15 to £312) per hour.

Lawyers must exercise care in ascertaining the proposed fee structure and in monitoring the work.

The scope of an investigator's work can include accessing and reviewing publicly available databases, accessing and reviewing private records obtained through pretexts, and accessing and analysing complex law enforcement and financial information, as well as the more romantic 'tailing' a suspect and less romantic sifting through trash for clues. Some investigators can even analyse and provide sophisticated forensic explanations of certain transactions in order to identify frauds.

The growing scope of the work of both lawyers and private investigation firms requires that lawyers control investigators' work plans, regularly monitor their implementation, and re-evaluate them regularly.