Asset Search for Litigation Support

Pre-litigation asset searches enable clients to evaluate their potential for successful financial recovery against individuals and business defendants. If litigation is successful and results in a sizable judgment for money damages, potential recovery of those funds depends entirely on defendant’s assets and income. If the defendant is broke or bankrupt, collection efforts – and all the time and expense of litigation – may end in frustration. Yet if the defendant has a healthy financial profile, the prospects for future recovery are positive and an informed decision to file suit can be made with confidence.

Asset Search in Anticipation of Litigation or Settlement

The scope of an asset search during pre-litigation or settlement negotiations generally includes the following areas of assets and liabilities:

• Real Property
  (Current Ownership and Mortgage Financing)

• Business Interests
  (Including Shell Corporations and Special-Purpose Limited Liability Companies)

• Personal Trusts and Family Trusts

• Financial Awards and Settlements
  (Divorce, Probate, Insurance and Civil Cases)

• Other Tangible Assets
  (Motor Vehicles, Aircraft and Boats)

• Debt Profile
  (Bankruptcies, Litigation, Liens, Judgments, Foreclosures and Collection Suits)

If the potential defendant is a company, the scope of investigation will also generally include the following additional areas:

• Identification of Parent Company, Subsidiaries, Affiliates and Principals

• Verification and Assessment of Active Operations

• Financed Equipment

• Intangible Assets and Intellectual Property

Analysis is conduced to determine whether the defendant has a history of paying their debts, and how many other litigants and creditors are actively in pursuit of their assets. We also examine the extent of current encumbrances (such as liens on real property) that could affect future collection efforts.

Insights on current holdings, debt behavior, and financial background are combined to create a balanced financial profile. These findings are presented in a final report with supporting documents.

Financial Account Searches

In most cases, we recommend searches for financial accounts — bank, brokerage, investment and retirement accounts — should be postponed until after judgment is awarded. This is typically the most cost-effective approach for clients. A well-informed “go/no-go” decision on whether to proceed with litigation can be based on a financial profile that covers real property, business interests, debts and liabilities. For this reason, financial account searches are typically not included in the standard scope of pre-litigation or settlement-stage asset investigations.

However, for large-dollar claims, or if there are reasonable grounds to believe the defendant might transfer funds to other parties or outside the jurisdiction of the court (e.g., offshore), then it may be appropriate to proceed with financial account searches as soon as possible.

When a civil plaintiff or federal receiver plans to petition the court to freeze the defendant’s assets, then financial accounts must first be located before prejudgment writs of attachment, preliminary injunctions and/or temporary restraining orders can be made effective. These considerations are common in cases of investment fraud and Ponzi schemes.

If the circumstances of your case require an immediate search for financial accounts, then the scope and budget will be equivalent to comprehensive asset searches we conduct for purposes of judgment collection. More information on those capabilities can be found here: Comprehensive Post-Judgment Asset Search.

Asset Search During Settlement Negotiations

Discovery of assets can be highly advantageous during settlement negotiations. Insight on the financial status of other litigants – including their assets, debts and other liabilities – can be leveraged to negotiate the best possible outcome.

Setting an appropriate settlement demand – and evaluating any counteroffer – will depend on the other side’s ability to pay. It is a fairly common tactic for defendants to plead poverty throughout this process. It is important to know whether they are in legitimate financial distress, or whether they are misrepresenting their position in hopes of reaching a low settlement figure. If they are found to have significant assets, then settlement strategy – and amount of the demand – can be pursued more aggressively.

Protection Against Fraudulent Transfers

Conducting a pre-litigation asset search has the added benefit of providing a time-stamped snapshot of the defendant’s assets at the time of the original claim. If those assets are transferred to affiliated parties after a lawsuit is filed, they can be flagged as fraudulent conveyances, and potentially unwound upon entry of judgment.
 

Consult an Investigator

If you would like to discuss an asset search for pre-litigation or settlement evaluation, please complete the form below. You can also speak with an investigator by contacting our offices at 800-580-8755.