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The Critical Importance of A Litigation Hold

July 22, 2015

It’s a letter, and the failure to circulate it during the initial stages of a litigation can result in a variety of sanctions from the court, ranging from paying for your adversary’s legal fees to outright striking of your claim or defense.

The letter is called a litigation hold, and it is an internal directive to your company. This directive is utilized regardless of whether your company is the plaintiff or defendant. When there is knowledge of litigation the directive must be sent to the relevant people in the company.

So what is the directive? Simply stated, the litigation hold letter informs key employees of the litigation and directs them that documents, in both electronic and hard copy, are to be maintained and not to be deleted, destroyed, manipulated or otherwise removed from the ordinary course of business. These “key employees” will have a wide range of different responsibilities at the company, from the General Counsel’s office, the IT department, targeted employees of a complaint and executives who will be playing an important part in the litigation.

This letter plays an important part in the litigation process. It will force a discussion with counsel (outside or internal) to identify: (i) individuals with primary and secondary information relating to the litigation; (ii) custodians of the documents at issue, both electronic and hard copy; (iii) key word searches that may be initially conducted to gain a greater understanding of the issues; (iv) parties responsible for disengaging auto-deletes and other electronically stored processes; and (v) who will be responsible for overseeing the litigation hold process.

By gathering this information early in the litigation process, you will be doing two things. First and foremost, you will be complying with the court’s requirements regarding the preservation of discovery. In doing so, however, you will be putting together the beginning stages of your litigation roadmap. This will guide you with respect to the discovery you will be seeking in the case, that which you will be providing to the other side, and that which may or may not be troublesome to you. It is this last point that is a critical to your case. If the proverbial smoking gun document exists in your files, whether it falls in your favor or not, it is something you, your executives and outside counsel must know of from the outset of a case.

Litigation can be a very expensive process. The last thing you want or need is to be sanctioned by a court because you failed to put a litigation hold letter in place. If you detest your adversary, imagine how it will feel to write a check to cover your adversary’s legal expenses associated with your failure to ensure discovery was preserved in your own files.

By instituting a litigation hold directive immediately upon learning of a lawsuit – – or the threat of a lawsuit, you take the first steps to protect your company – – from itself, your adversaries or even the court.