After years of litigation, your company has secured a judgement that your opponent will not pay. Your borrowers have defaulted, and the value of the collateral has collapsed. Your predecessor in government robbed the state coffers and squirrelled away the money offshore. Or you are advising your clients on whether to sue and want a confident sense that there's something to sue for.
In all these cases, tangible assets need to be traced, the jurisdiction(s) in which they are located found, their value assessed, and their recoverability gauged. Performing all of these highly specialized tasks can seem like an insurmountable hurdle, especially when the organization's main focus is on litigation strategy and the recovery of misappropriated funds. Where can organizations find the specialized skills and capabilities to effect recovery without completely depleting the recovered funds, and when should those skills be deployed?
When to Hire and Why
Entities should consider hiring an asset tracing investigator during different stages in their asset tracing campaign for a variety of reasons, including:
- Pre-litigation. Identifying the adversary's assets and evaluating the likelihood of recovery before going to court can directly influence an organization's legal strategy—and potentially save significant time and expense. Learning about the complexity of an adversary's assets and jurisdictions in which they are located is critical, as it allows the legal team to assess the chances of recovery and adapt their legal strategy accordingly.
- Currently in litigation. Knowing what and where the assets are and monitoring them for dissipation during legal proceedings can make it easier to obtain freezing orders and prevent the assets from mysteriously disappearing. It also might push the adversary to settlement talks sooner. In addition, much like in the pre-litigation phase, understanding the geographical location of the assets can help drive interim freezing orders and legal strategy.
- Post-judgment. Even after an organization has won a monetary judgment, its adversary may try to avoid payment. Identifying and locating the assets involved will help the legal team to craft a more aggressive enforcement approach.
Pure Tracing or Pressure Campaign?
Asset tracing and recovery tends to be more strategic than simply tracing and recovering cash, real estate, or even receivables (which on their own, can be quite complex and challenging): It often is about creatively and developing a strategy and approach that achieves a favorable outcome.
Strategic actions can take several forms. Common examples include seizing an asset to impact the adversary's reputation and ability to conduct business, finding ways to legally interrupt the adversary's operations, and intervening with regulators whose endorsement the adversary needs for an important government approval.
Strategic campaigns and traditional tracing and recovery are most effective in achieving results when used together. Take this example: Asset tracing investigators were hired to find the assets of a private trading company. During the investigation, the team discovered that the adversary conducted its trading through an administrative company that had only two employees. Armed with this information, investigators were able to seize the shares of the company and subsequently close down the company. The timing and sequencing of the team's actions were especially damaging to the holding company, as they incapacitated the adversary's ability to conduct business—resulting in an early settlement by the adversary of all amounts owed.
What Makes an Effective Asset Tracing Investigator?
Methods for concealing assets have become more sophisticated—and harder to detect—than ever. Parties that are successful at hiding their assets are highly adept at using advanced technologies and use in-depth knowledge of multiple jurisdictions, savvy cross-border maneuvering, byzantine ownership structures, and dead-end paper trails to make their assets difficult to recover.
All of this can make asset tracing and recovery a daunting task. But there are firms that do it very well through a powerful mix of experience, specialized skills, and global reach. What makes them successful?
Experience. It is not enough for an asset tracing investigation firm to have been in business for a long time: What counts most is what it has accomplished, how often, and for whom. The best have earned their stripes by consistently taking on the toughest, highest-stakes cases and delivering for clients. They can recognize the methods parties frequently use to hide assets, and they not only know where to look, they also are familiar with the legal nuances of individual jurisdictions.
Specialized skills. A core group of specialized skills separates the best asset tracing investigators from the rest. They include:
- Exclusive focus. Look for providers with personnel who exclusively focus on asset tracing, rather than generalists who may not have the knowledge built by experience.
- Forensic accounting and financial investigations. Considering that so much of asset tracing can boil down to following the money, an experienced asset tracing investigator works in lockstep with seasoned financial professionals to decipher the messages hidden in accounting statements and financial documents.
- Online search. In an age when it seems that anybody can search for information online, relatively few can navigate the deep web and successfully uncover what an adversary does not want to be found. An expert investigator can perform deep dives in multiple jurisdictions and languages and can easily analyze large volumes of data to identify leads for investigation.
- Public records search. There is an art to searching public records. True search artists understand that "needles" are often buried in the haystacks of paper files, found in courthouses, tax assessors' offices, and buildings departments—and know how to find them.
- Data analytics. With so much information available only in digital form and frequently in huge quantities, the ability to sort through the data and find the key facts and patterns can be the difference between success and failure.
Strategic perspective. Asset tracing investigators should add value beyond the investigation. By thinking strategically about what they can do to build the case, communicating well, and putting the strategy into action, they can help to bring adversaries to the negotiating table—and, in the process, provide key strategic advice and resources.
Outside-the-box thinking. Conventional, tried-and-tested approaches to asset tracing do not always work. Asset tracing experts must be willing and able to think outside the box to find the best result for their client.
An eye—and nose—for detail. Asset tracing ultimately is about finding dots and connecting them, requiring extraordinary attention to detail. Investigators must know both what to look for and what is missing; for instance, knowing to compare corporate records with a detailed 300-page legal document and understanding what the comparison reveals. The work requires a combination of diligent desk work, on-the-ground investigation, and advanced interviewing skills.
Global reach. Part of asset tracing's difficulty lies in the simple fact that investigators usually do not know where the assets will turn up. It is thus imperative that the asset tracing team has either its own worldwide presence or ready access to local resources with expertise in their own geographies.
Choose the Partner with the Right Track Record
If you need to trace assets, think carefully about your situation, and ask these questions:
- Does the firm have a team that exclusively focuses on asset tracing?
- What are its level and length of experience?
- Does it have the right people and specialized skills?
- Does it know where to look and what to look for?
- Does it have the geographic reach and resources to find assets anywhere in the world?
- Does it think strategically and act creatively?
- And most of all: Does it consistently deliver for clients? What is its track record?
Choosing the right investigative firm and deploying it at the right time can mean the difference between significant recovery and spending more to find the assets than they are actually worth. The most qualified investigator will help drive strategy and action, working in lockstep with legal counsel to secure the right outcome.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
