The use of technology in Civil Fraud – or how I learned to stop worrying and love technology
Civil fraud cases traditionally require the sifting through of thousands of documents to get to a result. Applications for freezing orders are supported by investigations that, sometimes, have gone on for months before they are launched and require reviews that are more akin to entire disclosure exercises in conventional disputes.
This review only gets you to the point of understanding what has gone on. A case then needs to be formulated by analysing facts and events. Emails are not the preserve of those that are hiding things (its more formal nature now taking the place of letters a few years ago). Instead, whatsapp, Bloomberg and a whole host of social media accounts contain more casual communication and are often the source of the gold dust where individuals have dropped their guard. Even in these formats, fraudsters seek to cover their tracks so, if they commit anything to writing at all, they often do so through the use of code-words and euphemisms.
On the plus side for investigators, everyone now creates many more electronic documents than they did 20 years ago. Some of these are in entirely different formats to those we are used to (voice notes being the preserve of the young and trendy). With this great volume of data, comes the chance to find more nuggets to lead you to discovering a fraud. But, with this increased amount of material, comes the risk that a reasonable search for information will put a civil fraud action outside of the reach of those whose pockets are not so deep.
So, how can computers assist with cost-effective e-discovery?
A few clear steps taken early on can greatly increase the chances of success:
1. Get an electronic disclosure service provider involved at the outset of a case and make sure they are fully briefed and have a realistic budget for work. Clients often baulk at the idea of having yet another name on the case but the cost savings here can be huge. It's about asking the right questions as to where documents are located and what the available electronic platforms can do.
2. Electronic review of documents has moved on drastically from the early days of date searches and laborious plodding through thousands of emails. Almost every platform has technology and add-ons that might just provide an early breakthrough. Discussions with the electronic service provider will tell you what tools the products have and how to use them. Examples I have used in cases are:
- Visual charts that show the volume of communication between individuals. Why is someone in one department regularly emailing another who he/she has no reason to? Does that open up a potential line of investigation?
- Key word "clustering" to uncover codewords. You know that there is one particular problem area that the client is suspicious of, say a property sale on Threadneedle Street. So you search for Threadneedle and you find that a host of words are commonly used when Threadneedle is discussed. Some are easily explainable (bank, for example) others far less so. Is it possible that some of these words are being used in a coded way to hide fraudulent activity?
- Predictive coding/Computer Assisted Review. A small sample set of documents is reviewed by a senior lawyer to "train" the system into working out what documents are relevant and then point you to documents that the system considers to be key. This is often used as a way of discounting obviously irrelevant documents on very large reviews but can also be used at an early stage to save costs and get to the very heart of an issue. I have also seen its use by feeding into the system the very "hot" documents a client already has in order to discover more of the same that the client may not have found. A useful tool when trying to save costs.
- The use of in-built transcription services. One of the most powerful review tools I have seen recently is an add-on that, once a voice recording is uploaded, automatically turns that recording into a written script (with a very high level of accuracy). As a junior lawyer, I once worked on a project that required the listening to hundreds of hours of phone recordings. It takes an age and is inevitably expensive (and tedious).
This is just a representative example of what can be achieved with the right approach and the right electronic service provider. Will it cost the client money? Yes, inevitably there will be upfront costs. Can it save costs in the long term and allow the bringing of cases that might otherwise be deemed too expensive? The answer to this is also a definitive yes – let the trained robots take some of that load.
Having litigated a number of cases recently where the damages, although small in the context of traditional City civil fraud matters, were crucial to the clients involved, I wanted to explore the ways in which lawyers can be thinking creatively about Civil fraud. To that end, I am writing a series of articles that will show how we can assist clients who do not have a vault of assets to spend on legal fees by creatively applying the law and technology.
The first article will come out next week and the subject will be whether it is possible to obtain a freezing order on cases where it might, traditionally, have been dismissed out of hand because of expense.
I am also forming a network of like minded fraud professionals so if you have experience in this area then please do get in touch.
Dan Dodman is a litigator with a wealth of experience in high profile, high value cases in both the commercial litigation and financial regulation sectors. He acts on a broad range of disputes, both nationally and internationally for corporate, individual and institutional clients.
Civil Fraud - Goodman Derrick
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