Mastering the art of the internal investigation has never been more important. 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 – but only if they are conducted properly.
Internal Investigations on the Rise
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.
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 U.S. companies reporting a median spend of $1.4 million. The press release also mentions that almost one-fourth 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. With an increase in regulations and a less-than-stellar economic outlook for the coming year, it’s highly likely that you’ll find yourself (or your organization) conducting an internal investigation at some point. Here are some internal investigation tips from the experts we’ve interviewed this year that can help you improve your internal investigations:
“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,” said 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,” said Sheryl Vacca, senior vice president and chief compliance and audit officer at the University of California.
During investigation interviews, “Ask open-ended, non-specific questions,” says Don Rabon, interrogation expert and author. These are questions that begin with words such as: what, how, could and would. You can learn a lot about a subject from how they answer these questions. “What’s not there is just as important as what is.”
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 also said.
Avoid confirmation bias: according to interrogation expert and author Don Rabon, confirmation bias is one of the biggest mistakes investigators make. They make up their mind about the case either beforehand or too quickly, he says, then they look for facts that line up with their theory, filtering out contrary information without even realizing it.
**********
About the Author
Lindsay Walker is the Corporate Journalist at Customer Expressions Corporation, developers of the i-Sight investigative case management software platform, an integrated and customizable solution for corporate investigations. She maintains the company blog at http://i-sight.com.
PDF 
