If you are preparing for litigation, an asset search can answer important questions before you begin:
Is it worth filing a lawsuit?
What's the maximum potential settlement amount?
If we win a large judgment, will the defendant be able to pay?
Hudson Intelligence conducts asset searches for law firms, corporations and private individuals. We work closely with clients throughout the U.S. and internationally.
Pre-Litigation Asset Search
If litigation is successful and results in a sizable judgment for money damages, the potential for 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.
Pre-litigation asset searches enable clients to evaluate their potential for successful financial recovery against individuals and business defendants.
Asset Search During Settlement Negotiations
Discovery of assets is also appropriate 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 settlement award.
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.
Focus of a Pre-Litigation or Pre-Judgment Asset Search
The standard scope of an asset search during pre-litigation or settlement negotiations includes the following areas of assets and liabilities:
- Tangible Assets
(Real Property, Motor Vehicles, Aircraft and Boats)
- Business Interests
(Including Shell Corporations and Special-Purpose Limited Liability Companies)
- Debt Profile
(Bankruptcies, Litigation, Liens, Judgments, Mortgages, Financing Statements, Foreclosures and Collection Suits)
In addition to identifying assets, we examine the extent of current encumbrances (such as priority liens) that could affect future collection efforts. We analyze whether the defendant has a history of paying their debts, and how many other litigants and creditors are actively in pursuit of their assets. 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.
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 other parties as soon as a lawsuit is filed, they can be flagged as fraudulent conveyances, and potentially unwound upon entry of judgment.
Financial Account Searches
We also have the capability of identifying financial accounts (bank, brokerage, and investment accounts) but we generally recommend that account searches be postponed until judgment is awarded. Primarily, this is a cost consideration for our clients, as the time and expense of locating bank and brokerage accounts can double the budget of a pre-litigation asset investigation. Moreover, most clients can make an informed “go/no-go” decision on whether to proceed with litigation based on a financial profile that comprehensively covers tangible assets, business interests, debts and liabilities.
There are some exceptions to our guidance against pre-judgment account searches. If there are reasonable grounds to believe the defendant will transfer funds outside the jurisdiction of the court (e.g., offshore) as soon as they are served notice of a lawsuit, then it may be appropriate to immediately proceed with account searches. If 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 a more comprehensive approach that includes account searches, more information on our capabilities can be found here: Our Process.
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.