Undercover work

The investigators, meanwhile, note much of their work is undercover: monitoring e-mail, tracking financial transactions and dissecting computer forensic evidence. They knock on doors, follow people around and question employees and ex-employees about any problems at work.
'You have to go out and hit the bushes. You have to kick the tires. You can't do it sitting behind the desktop, and a lot of law firms have tried that,' said Ken Springer, a former FBI agent who now runs Corporate Resolutions, a New York-based investigative firm providing investigative services to law firms and corporations.
'We look for 'Deep Throats' --; someone who knows about what happened,' Springer said.
'A lot of law firms tried to do their own investigations in-house ... but in the last three or four years, we're seeing law firms come to firms like ours for litigation support,' he said. 'We're behind the scenes more than anything.'
That's the way clients prefer it, said Erin Nealy Cox, a former high-level Justice Department attorney who now works in the Dallas office of Stroz Friedberg, a digital forensic and investigative firm staffed primarily by former federal investigators and prosecutors.
'Part of our value to our client is being able to work with and solve really big problems without anyone knowing about it,' Cox said. 'We can't go out like law firms that splash their verdicts across the front pages of newspapers. We just can't do that.'
Behind the scenes, she said firms like hers are helping law firms win lawsuits, settle lawsuits and avoid them altogether. They help in-house counsel investigate internal problems, such as data breaches and intellectual property theft, to determine whether legal action needs to be pursued.
'The law firms don't have the forensic labs that we have,' she said. 'They don't have the private investigator experience that we have. We look for that smoking-gun e-mail or document.'
It is true that former federal law enforcement officials can be helpful to lawyers, said Philip Berkowitz, a partner in the employment law practice of Nixon Peabody's New York office. His law firm has hired such 'sophisticated investigators' for help with whistle-blower claims, when an executive is accused of engaging in fraudulent activities or to assist in internal investigations concerning suspected wrongdoing.
Berkowitz stressed hiring PIs can be risky, particularly for surveillance purposes.
'It's very easy to get on the bandwagon and get carried away in a sexy investigation,' he said. 'But employers need to be very cautious about doing this. This kind of thing can blow up in the press, and it can backfire and turn into a [public relations] debacle for the organization.'
A classic example from Berkowitz is the 2006 Hewlett-Packard boardroom scandal, in which detectives allegedly used pretexting to obtain the private phone records of company directors, employees and journalists.
Wal-Mart Stores also made headlines when it fired a top-level executive in 2006 for allegedly having an affair with a subordinate on company time.
The alleged relationship was discovered in private e-mails that were being monitored amid allegations that the executive accepted gifts from advertisers, according to court documents.
The woman sued Wal-Mart for wrongful termination, but dropped the suit last year.
Wal-Mart declined comment. The woman's lawyer, Sam Morgan of Gasiorek, Morgan & Greco in Farmington Hills, Mich., also declined comment. He would say only that corporate spying in general is a growing, widespread practice.
'It's a big business, and they charge good hourly rates to keep track of employees to make sure the company assets are not finding their way to competitors,' Morgan said.
Dave Walton, a management-side attorney and member of Philadelphia's Cozen O'Connor who specializes in trade secrets litigation, won a $7 million verdict in May with the help of a former Treasury official who searched the computers of two employees of a castor oil and derivatives distributor who unexpectedly quit their jobs.
The investigator proved that the pair took confidential information when they left to help a competitor, he said.
'I wouldn't do it with everybody,' Walton said. 'You have to make sure that it's the right case, and you have to be able to say, 'All right, if I'm ever in front of a jury on this, will I ever be able to justify this type of surveillance.''

Tresa Baldas reports for the National Law Journal, an IncisiveMedia affiliate of the Daily Business Review .
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