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Litigation Hold the Phone…Obligations to Preserve Evidence Explained

January 17th, 2018 by David Minces

You’re a business owner. Things are going well until one day you receive a letter that resembles a weekend chore list. This piece of mail has all the components of a nightmare: it is long, it seemingly demands you to do (and not do) certain things and it is signed by an attorney. A litigation hold letter can be daunting, but in reality, the concept is pretty simple and with a few easy to follow directives you can keep yourself and your business compliant and out of trouble.

What is it?

A litigation hold is basically a demand to record holders to retain and not destroy paper documents and electronic information in anticipation of imminent litigation. The documents may not necessarily be evidence that will be used in litigation, but a good lawyer will include categories and statements that encompass all potentially relevant documents that could be used as evidence in the future.

Who can get one?

Any person or entity can receive a litigation hold notice, but in employment-related disputes businesses are more likely to receive them because they are the custodians of those records. Individuals who employ services of others as independent contractors or contract labor can also expect to receive a litigation hold letter in the event a dispute arises. Basically, if you can be sued, you can receive a litigation hold letter.

Who can issue one?

Typically, an attorney representing a potential plaintiff or class of plaintiffs will issue a litigation hold letter, sometimes with a demand. An individual representing themself pro se in a potential lawsuit may also issue a litigation hold notice.

mari-helin-tuominen-38313Photo by Mari Helin-Tuominen on Unsplash

What do I need to do?

In a perfect world, a person or entity that receives a litigation hold letter should do the following:

1.     Immediately take steps to preserve all documents. This means those that the author of the notice mentioned and in an abundance of caution, all others too. Your best bet is to unplug your shredders, hide your garbage cans, and avoid dragging and dropping anything into your computer’s recycle bin. While most courts have held that preserving every document in every format is not required, it is better to be safe than sorry.

2.     If you are an employer, be sure all employees that have access to these records are aware of the procedures in place and abide by the no-waste protocol.

3.     Inform the author of the letter that you are taking steps to comply with their requests. Doing so in writing shows that you take the request seriously, are aware of your obligations and are taking affirmative measures.

4.     Think about all the potential formats the requested data might be in and preserve them in their native formats. Do you have an inter-office messaging service? Company group text? Old hard drives, computers or other storage devices? Ensuring that the data is accessible in its native format is convenient for everyone. If litigation does occur, being able to access the potential evidence in relevant and searchable formats saves you time and money. Be aware that a litigation hold notice does not need to specify every format. Terms like “record”, “data”, and “documents” are usually defined with greater specifics, but a complete enumeration of every possible file type is not required to be enumerated to trigger your obligation to preserve those files.

5.     If you are overwhelmed, seek counsel or technical assistance. Sometimes electronic data or paper files can be daunting to deal with. Don’t sweat these issues alone, reach out to an attorney to better advise you on how to comply with the particular litigation hold you received. Enlist expert record companies to hold or organize your documents and data if it is necessary. If you have a lot of electronically stored information or can’t find certain data, IT services may be necessary. 

What should I avoid doing?

Avoid continuing any destruction routines or procedures, deleting, discarding, or hiding the information. The old saying “the dirt comes out in the wash” is usually true. Business owners have certain responsibilities to keep records ordinarily, but especially when litigation is anticipated. Trying to hide things that may be harmful to you in the event of litigation is never a good idea. Most of the time the documents will be found in one form or another and the destruction and non-compliance alone can invite additional liability (see below).

How long do I need to keep these documents?

Until you are completely certain that a matter is closed you must continue to preserve the documents. In an abundance of caution, preserve an electronic file of the documents you rounded up indefinitely if possible.

What are the dangers of non-compliance?

The possible repercussions for spoliation of evidence vary on a state-by-state basis. In some states, spoliation is punishable as a separate tort in and of itself, meaning that even if you are not held liable for the damages in the potential litigation, an action just for the evidence destruction could be pursued against you. In Texas, this isn’t the case. To determine if spoliation has occurred the court will look to whether there was a duty to preserve the evidence (a litigation hold letter weighs heavily in favor of a duty being present), whether the duty to preserve the evidence was breached and whether the spoliation impacted the other party’s ability to present or defend their case. Spoliation may be found if the evidence was intentionally or negligently destroyed. If spoliation is found, the jury is instructed to view the evidence as unfavorable to the party that was found to engage in spoliation.

The bottom line.

If you have received a litigation hold letter contacting an attorney to advise you is your best bet to avoid future issues and navigate your responsibilities. Minces PLLC is experienced in advising clients of their evidentiary obligations and authoring effective litigation hold letters for those with potential claims.

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