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What is a "litigation hold" and what does it mean for your business?
June 1, 2007

A "litigation hold" is a suspension of a company’s document retention/destruction policies for those documents that may be relevant to a lawsuit that has been actually filed, or even one that is "reasonably anticipated." A "litigation hold" ensures that relevant data is not destroyed and that key employees are notified of document preservation requirements. Even informal procedures for managing print or electronic documents, such as recycling e-mail backup tapes, must change when a company is sued, or even threatened with suit.

When does the duty to preserve arise and what does it cover?

The duty to preserve arises, in general, when a party is alerted that certain information is likely to be sought in discovery. This may occur, for example, upon receipt of a complaint, upon receipt of a demand letter; or upon receipt of a "preservation letter" expressly requesting that certain documents be preserved.

Generally, all information relevant to the claims or defenses of any party in a lawsuit or which is relevant to the subject matter involved is covered, including print or electronic copies of documents, copies in a document storage system, on computer hard drives, or on e-mail backup tapes. It also covers documents in existence at the time the duty to preserve arose, and those created after the duty to preserve arises.

Does a company have to keep everything?

No party has to go to "extraordinary measures" to preserve all potential evidence, or preserve every single scrap of paper or beeping electron in its business, just evidence that is relevant in the action or materials that are reasonably likely to be the subject of a discovery request.

Will my attorney assist in the litigation hold?

Yes, and what’s more, if you are served with a complaint, or even think that you or your business may be sued, an attorney should be consulted immediately. The attorney has a vital role in advising the client to on when and how to suspend document retention polices, determining the scope of the potential investigation or lawsuit and the source and location of possibly relevant documents. The attorney might circulate a "litigation hold memo" addressed to the key employees and IT personnel outlining which information would be relevant to the litigation and preferred methods for preservation.

What are the consequences of non-compliance with obligations to preserve documents?

Coping with a litigation hold may sound costly, but the consequences of failure to meet these obligations can be much more costly. Courts have imposed penalties such as large monetary fines, reimbursement of an opponent’s litigation costs, or, in extreme cases, giving instructions to juries that permit them to draw damaging inferences against a party that failed to meet discovery obligations.

The posts on this blog reflect the personal views of Jeffrey D. Neuburger, in his individual capacity, and do not necessarily represent the views of his law firm or his clients, and are not sponsored or endorsed by them. The information contained in this blog is provided only as general information for educational purposes, and no warranty or representation is made about the accuracy of the information provided. Blog topics may or may not be updated subsequent to their initial posting. This information is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice. This blog should not be used as a substitute for competent legal advice from a licensed attorney in your state.

Posted by Jeff Neuburger on June 1, 2007 | Comments (0)