The Client's Terms: Success Fee, Bank Pretext, and No Paper Trail
A newly licensed solo investigator signs a one-year contract with a 40-employee logistics company for 'workplace integrity services.' The contract is a two-page letter the client drafted. The client insists on four terms: (1) a success fee of 15% of any money recovered from employees accused of cargo theft; (2) a pretext call to those employees' bank to confirm direct-deposit amounts 'for comparison'; (3) no written reports, because 'we don't want anything ending up in discovery'; and (4) the client keeps all files while the investigator keeps none, with the client stating it will 'handle the license paperwork as an in-house department.' The investigator carries a $1M general liability policy. The state requires a $25,000 surety bond, a written client contract, and five-year retention of investigative records. The first invoice is due in 30 days.
1. Identify which terms cannot be accepted, and explain the reasoning for each.
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Three of the four are non-starters; the fourth needs restructuring.
- 15% success fee - cannot accept as drafted. A fee contingent on recoveries from named individuals gives the investigator a financial stake in the finding, which is the first thing opposing counsel will use to impeach testimony and the first thing a licensing board will look at when assessing whether fees were reasonable. It also starts to look like profit-sharing in the client's recovery. Convert to hourly with a not-to-exceed, or a flat per-investigation fee.
- Bank pretext call - refuse. Impersonating an account holder or a bank employee to obtain financial records is likely a criminal impersonation or fraud offense and a financial-privacy violation, and the bank will not disclose to a non-account holder without authorization anyway. Say no in writing and offer lawful substitutes: the employer's own payroll and time records, employee-authorized account reconciliation, a forensic accountant, or records obtained by subpoena in litigation.
- No written reports - cannot accept. The retention rule runs to the licensee; a client cannot contract you out of it, and it cannot take your records. Verbal-only work is also how an investigator ends up in a deposition with nothing contemporaneous to defend accuracy. Keep your own complete file, including instructions, negative results, and the engagement letter.
- 'We'll handle the license paperwork' - reject. The client cannot license the investigator, and working under the client's letterhead as if in-house may be unlicensed activity depending on the state. The bond, the written contract, and the retention duty are the investigator's obligations, personally.
2. Draft the structure of a replacement engagement: how should the fee and the reporting be restructured?
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Keep it short, but make every required element explicit.
- Parties and status: independent contractor, not an employee, with no authority to bind the client.
- Scope: written description of the services, the locations, the employees involved, and what is expressly out of scope.
- Fees: hourly rates for investigative and administrative time, a not-to-exceed per matter, expenses at cost with receipts, and an invoice cycle. No contingent or success-based component.
- Deliverables: written reports at defined intervals, plus a closing report; a statement that findings will be reported whether or not they support the client's theory.
- Lawful-methods clause: the investigator determines method; instructions requiring unlawful or deceptive conduct that violates privacy or impersonation law will be declined in writing.
- Confidentiality and conflicts: who may see the file, how conflicts are screened, and what happens if the matter becomes adversarial to the client.
- Records: the investigator retains a complete copy for the required period, and a litigation hold suspends destruction.
- No guarantee of result and a termination clause with fees for work performed.
On billing: with a contested fee now scrutinizable, the invoice should carry narrative time entries, not just totals.
3. How should the investigator handle recordkeeping, licensing, and the client's request to hold all files?
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- Retain a complete copy for at least the state's five-year period, and longer if a litigation hold is in place. Originals can go to the client only if you keep an exact duplicate; the retention duty is yours and does not transfer.
- The file should include the engagement letter, every client instruction including the ones you refused, the refusal memos, working notes, drafts, recordings, and negative results. The refusals are the most valuable documents in the file if the arrangement is ever questioned.
- Secure storage and access control: locked physical storage, hashed digital copies, an access log, and a defined destruction schedule that stops the moment a hold is received.
- Licensing and bond: verify the license and the $25,000 surety bond are current before the first hour of work, calendar the renewal, and confirm in writing that the client is not providing 'in-house' coverage.
- Disclose the relationship in the report - who retained you, what you were asked to do, and what you declined.
- If the client will not accept the restructured terms, decline the engagement in writing before performing billable work; if work has already begun, get a written termination of the disputed scope and invoice the time performed. Do not accept the terms and quietly work around them.