Enhancing Background Checks with Legal Data

on Topics: Business Development | Case Research | Case Tracking | Legal Analytics | Legal Data API

Enhancing Background Checks with Legal Data

A while back I hired a company as an independent contractor to do some work for UniCourt. They seemed like a reputable company that did good work, and I never did a background check because the company came highly recommended from a good friend. It turned out that they did terrible work and ending up not honoring our contract.

In deciding whether I should sue the company for breach of contract, I did a simple search through our court records database to see if they had a litigious history. Turns out they did; they were sued eight times over the last ten years for breach of contract. Had I done my due diligence and searched through UniCourt’s court data, I could have avoided a huge headache and costly litigation. An important but hard lesson to learn.

When making decisions involving hiring or interacting with other companies or people, it’s important to keep in mind that past behavior is often the best predictor of future behavior. Public records in general, and court records in particular, are a treasure trove of past behavior.

The Versatility of Background Checks

The use cases for leveraging legal data in background checks are numerous. Here are a few examples that drive home the point of how powerful court data can be in helping both companies and consumers better assess risk.

  • Attorney recruiting
  • Employee screening
  • Landlord Tenant screening
  • Company due diligence
  • Litigation risk
  • Insurance risk
  • Lending risk
  • Personal relationship risk

Let’s go through a couple of these examples in more detail.

Take the use case of attorney recruiting where a law firm is seeking a new senior litigation associate to help handle an influx of securities litigation. With UniCourt’s Attorney Analytics, a law firm can easily find out how many cases a potential recruit has handled, what types of cases, and before which judges. Even more, the law firm can also review the documents the prospect has filed to obtain a brief writing sample. On the other side of the coin, prospects can also use UniCourt to share cases with potential employers that show off highlights from their litigation portfolio.

In the context of employee screening, there is an obvious and beneficial enhancement to having legal data for background checks. Employers can use UniCourt’s data to discover whether prospective employees have filed wrongful termination claims, have been sued for sexual harassment, or have a history of bad behavior like fraud, not paying their debts, or honoring their contracts with others. Unearthing these potential markers can help companies improve the work environment for their employees and avoid the potential financial and reputational costs of future litigation.

For landlords eager to keep their properties full of paying tenants, performing well-researched background checks is a must. By simply searching for a tenant’s name, a landlord can obtain that tenant’s history relating to evictions and suing other landlords. This not only can save landlords from added litigation, potential property destruction issues, and collecting back rent, but it can also improve the odds of securing paying tenants without long lists of evictions and related lawsuits.

In connection with conducting company due diligence for mergers and acquisitions, it is imperative to perform a financial MRI on the target company by reviewing applicable legal data. Finding out whether the target company and/or any of its affiliates are embroiled in costly litigation can directly help those conducting due diligence to avoid bad acquisitions. Even though some acquisitions are likely to go through regardless of the litigation a target company is involved in, having knowledge of that litigation is key. Knowing about past and ongoing cases, the types of litigation at hand, and any outstanding judgments or future costs of active cases can act as formidable leverage when negotiating a lower takeover price.

Learning more about someone’s litigation history and outstanding debts or judgements, can also be important for title insurance companies. Title insurance companies assessing real property need to know about any and all encumbrances, but most judgments don’t get recorded with the county recorder, and often remain difficult for title insurance companies to locate without looking through court data. Take the example of someone seeking to sell a home, who also has an unrecorded judgment from credit cards they defaulted on before buying the house they are selling, or who was in multiple car accidents, or has outstanding judgments from business disputes. Avoiding risk with legal data can strengthen title insurers’ reputation and also improve their clients’ experience by being able to enjoy their new property without wasting time in unnecessary drawn out legal battles.

One could also imagine the usefulness of being able to perform a background check on someone before taking the next step in a relationship or before going on a first date. If you could do one easy search and find out that who you’re dating has been divorced, was a stalker, fraudster, or has a history of not paying their debts, wouldn’t you want to know? Wouldn’t it be worth a couple moments of your time to find out? While most people will scour the web for anything their partner or spouse has posted on social media, it’s much less common for people to look for the court data showing the real story someone hasn’t put out in public.

The UniCourt Advantage – Automating Decision Making

Developing an automated approach for proactively gathering the data you need requires having the right tools at your disposal. Along with UniCourt’s easy to use single search feature, we also provide you with powerful tracking features, scheduled searches, and a host of helpful Legal Data APIs. More importantly, when these tools are combined together, you can greatly improve your chances of ensuring you know exactly when relevant data you need first becomes available.

Let’s take the example of a lender who has made a sizeable commercial loan to a company for the purposes of acquiring a strip mall with several tenants with ongoing businesses (after performing background checks, of course!). After making the loan, what can the lender do to protect their investment and develop a revolving series of background checks?

First, the lender can create a series of scheduled searches for not only the name of the borrower’s company, but also for all of the businesses of the tenants occupying the strip mall. This means that if any of the tenants declare bankruptcy, are sued by customers, or if the borrower becomes involved in litigation, the lender will be notified of potential changes in their financial health, and can take necessary precautions to protect the lender’s investments.

Next, the lender can take an additional step and track any cases that pop up from the scheduled searches. When any new activity happens in one of the tenants’ or the borrower’s cases, the lender will be the first to know through automated email notifications. More importantly, if the lender does not want to see every notification, but just wants to know when something like a judgement occurs, the lender can tailor the types of notifications he or she receives to set alerts for critical decision making moments.

Now imagine that instead of just the one sizeable commercial loan, the lender has made hundreds, if not thousands, of these loans. Rather than having to login to UniCourt every time to obtain new data, the lender can now leverage UniCourt’s Legal Data APIs to have all of the information they need directly downloaded into their internal databases for immediate use. For enterprise level clients wanting access to thousands of data points, APIs are game changers creating efficiencies through automation, resulting in overall reductions in headcount and human errors associated with manual data entry.

From personal experience, I know that taking the time to perform a background check using UniCourt’s single search function can make a huge difference in your personal and business-related decisions. Whether you are a landlord looking into a potential tenant’s court records, someone interested in finding out if your partner has been divorced before, or a large company seeking to set up a team to review the litigation history of borrowers, UniCourt’s application can help you perform the background checks you need. Information is power, and it not only helps people make smarter, data-driven decisions, but it can also make the legal system more efficient by keeping avoidable litigation out of our courts.