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How to Manage the Cost of Internal Investigations

Better task delegation and time allocation can save companies money

Posted by Dawn Lomer on November 19th, 2015

Every company will need to conduct an internal investigation at some point; and the larger the company, the more investigations will be conducted. For a very large company with global operations, internal investigations can eat up millions of dollars in expenses every year.

Prevention is, of course, the best way to keep costs down. By reducing the number of investigations conducted you’ll reduce the costs associated with that activity. But you can’t prevent everything, and when misconduct is uncovered the company needs to investigate quickly and thoroughly, no matter how much it costs.

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There are ways to keep these costs down, though, and most of them involve pre-planning, says Joan Meyer, an attorney, investigator and chair of the North America Compliance and Investigations Practice Group at Baker and McKenzie’s Washington, DC, office.

“The first thing to do is to scope your investigation,” says Meyer. “That means really to the extent you can, determine from the outset what issues are being presented and stay within those parameters, unless there’s a good reason to go outside,” she says.

Planning is Key

Focusing the scope of the investigation will allow you to put together a good investigative plan, says Meyer. You’ll need to identify what kind of documents you need and what witness interviews you’ll have to do. You’ll also need to identify who should be involved, which may include participants from the compliance department, the legal department and internal audit.

By restricting the scope of the investigation, identifying all the resources needed and putting together a comprehensive investigation plan, you’ll be in a good position to figure out where you can save money as you execute the plan.

Use Resources Wisely

"I’ve been involved in investigations where outside counsel is required to do all scheduling and setup which is a needless expenditure of a company’s resources."
Even when an investigation requires the services of outside counsel or other outside resources, try to do as much as you can in-house.  “You may have great IT assistance, people who know how to use good forensic tools and search the company’s database. In many circumstances they can be used very effectively, even if you are using outside counsel, to reduce the cost of your investigation,” says Meyer.

Avoid using outside resources for administrative tasks. Designate one or two points of contact in the compliance department to check schedules and set up witness interviews so that when outside counsel arrives to do an interview everything is lined up for them. They can locate documents such as personnel files, find people and gather information. “I’ve been involved in investigations where outside counsel is required to do all scheduling and setup which is a needless expenditure of a company’s resources,” says Meyer.

For help with planning your investigation, download the free Investigation Plan Template.

Negotiate Prices

“In-house counsel can talk about various fee arrangements,” says Meyer. “It may be a situation where you don’t know what issue you have so you’d prefer to stage it. And you can actually stage an investigation where potentially the preliminary assessment could be a fixed fee arrangement and if you have a serious problem it may go to an hourly fee with the assistance of outside vendors,” she says.

She also advises getting outside counsel to assist in negotiating prices for the services of outside vendors. “Outside counsel can assist in getting better prices from vendors because they work with a number of vendors and can get volume discounts in many cases. Vendors also have an incentive to work with outside counsel in a company because they want to do work for the company again, work with outside counsel again, or get some sort of specialty experience in a particular area in which you’re investigating. So those are all good reasons for a vendor to want to work with you to reduce costs.”

Monitor Costs

As issues develop, costs may increase, so it’s important to recalibrate your budget continuously and stay within it.
Aside from working with outside counsel and vendors to reduce costs, it’s important to monitor costs continuously. Ask for a budget at each phase of the investigation, not just an initial budget, advises Meyer. As issues develop, costs may increase, so it’s important to recalibrate your budget continuously and stay within it.

“Make sure that you know on a month-to-month basis what your outside counsel and vendors are at in terms of the budget,” says Meyer. “Every month or month-and-a-half, look at the billing and then ask for an anticipated budget based on the investigative plan for the next 60 days.”

By scoping an investigation properly, outlining a detailed investigation plan, using resources wisely and negotiating and monitoring costs, companies can conduct thorough investigations that are also cost effective.

Dawn Lomer
Dawn Lomer

Manager of Communications

Dawn Lomer is the Manager of Communications at i-Sight Software and a Certified Fraud Examiner (CFE). She writes about topics related to workplace investigations, ethics and compliance, data security and e-discovery, and hosts i-Sight webinars.

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