Law Times

Page 12 July 21, 2014 • Law Times www.lawtimesnews.com When should companies hire PIs for internal matters? By arshy mann Law Times ost companies are familiar with the sorts of situa- tions that warrant bringing in external counsel. But when should they turn to outside investigators to do some internal snooping? Denis Gagnon, president of BCS Investigations, says an in- creased awareness that investi- gators don't just deal with mat- rimonial issues has led to more and more companies turning to investigative firms. "Our business is just boom- ing," he says. "It's been 15 years now, and the last two years have been the best ones ever because people fi- nally know what we do." According to Gagnon, many companies have been turning to outside investigators to check on certain stores or branches of a business both as a proactive measure and in response to spe- cific concerns. "Covert monitoring of busi- ness practices, that's becom- ing very, very popular," he says. "That's where an agent goes in undercover and it can be as far as even joining the staff." And depending on the firm, private investigators can some- times provide a global reach that's beyond the ability of inter- nal staff. Gagnon says he has agents available around the world, a fact that gives his firm the ability to conduct international operations, sometimes over a period of years. He points to a recent case involving counterfeit Louis Vuitton luggage that resulted in a $2.4-million award. The op- eration involved 17 agents and lasted 18 months. The primary benefits of hir- ing an outside investigator are twofold: expertise and protect- ing against conf licts of interest. Gagnon says a lot of investigative work, especially of the undercover variety, requires technological expertise and ex- perience with covert operations. "This is just not walking in there with a bag and you try to buy something; this is some- body who can run covert re- corders which are very sophisti- cated," he says. And he also warns against the possibility of leaks if compa- nies hire someone internally to conduct an investigation. "They want to keep that re- moved from the company be- cause there is no conf lict of in- terest," he says. "If you work internally, somebody may know somebody at the company who is going to release the information. If you work with an external party, the chance of leaks and the chance of compromises is much less." Another reason more com- panies are choosing to go with external investigations is the issue of liability. In most jurisdictions, including Ontario, private inves- tigators must have a licence. "Let's say you want some- body on your staff to do those undercover buys or whatever or go and check your stores. You're putting yourself at risk because that person is not licensed to do that," says Gagnon. "Once you start using civil- ians, you can be exposed to things like stalking." Many private investigative firms also have malpractice insurance to protect against li- ability. "We have $300-million liabili- ty for malpractice," says Gagnon. "You wouldn't have that with in-house staff." Malcolm Aboud, a litigation associate at Osler Hoskin & Har- court LLP, says there are some additional precautions organi- zations need to take if they hire external investigators. "If you have a private investi- gator undertaking an investiga- tion, then you really better have made sure that you had your le- gal counsel be the one to initiate it and be the primary point of contact," says Aboud. The reason is if they don't do that, any reports from the private investigator or communications with the company could be sub- ject to discovery during litigation. Gagnon says that when his firm is dealing with companies, it generally goes through in- house counsel. "They give us the instruc- tions and then we do the opera- tion," he says. "That's the most common scenario I see from companies." Also, the courts may view hiring an outside investigator as going too far in some cases. In Unifor, Local 433 v. Crown Pack- aging Ltd., a recent B.C. labour arbitration matter, the company hired an external private inves- tigator to find out whether an employee taking sick leave was actually sick. The employee had made multiple vacation requests for that time period, so the com- pany suspected he was planning a trip and wasn't actually ill. The private investigator took video surveillance of the employee. The company then fired the employee, Warren Giesbrecht, for taking fraudulent sick leave and the union filed a grievance. During the arbitration, the com- pany sought to submit the video surveillance as evidence. "The employer submits it is not reasonable to require the employ- er to have confronted or inquired from Mr. Giesbrecht before en- gaging private investigators to un- dertake surveillance outdoors at his home property and in public places," wrote James Dorsey, the arbitrator who heard the case. "There was no other effica- cious alternative to clandestine surveillance." But Dorsey concluded the company had no justifiable rea- son for hiring an outside private investigator. "When simply a suspicion is the basis for under- taking the clandestine gathering of personal information without consent, a consideration of pro- cess efficiency, prudent caution or other benefits to proceed by first hearing the surveillance evidence and later deciding whether it should be excluded is outweighed by the paucity of any basis to have initially undertaken what will be a continuing violation of the employee's right to privacy in the arbitration process." The arbitrator found it would have been much more reason- able for the employer to simply ask for a doctor's note or contact a physician who had been treat- ing the employee instead of hir- ing a private investigator. Gagnon says the best reason to hire an outside private inves- tigator is for work a company can't do internally. "That's what companies would hire our agent for: very, very spe- cialized work," he says. LT FOCUS Innovatio_LT_June2_14.indd 1 14-05-29 1:04 PM M

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