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Know the Law: Is Your Company Ready for a Litigation Hold?

Written by: Jennifer L. Parent

Published in the Union Leader (1/4/2016)

Q. My company got a strongly worded letter from a vendor contesting that we may have acted in violation of our supply agreement. I disagree and absolutely believe there is no proof of any wrongdoing, but now have to get a lawyer involved.  The letter demands “no destruction of documents” – what does that mean?

A. Destruction of evidence found not only in formal contracts but in emails, photos, texts and the like is a serious legal infraction, whether the destruction was intentional or accidental, and may lead to court sanctions such as fines or payment of the other side’s attorneys fees in a lawsuit.  The duty to preserve documents and information usually falls on the shoulders of the business managers who address the issue before counsel is involved.  These individuals must understand when the company has a preservation obligation and be able to assess what internal steps to take. 

A company’s obligation arises when it has notice that the information is relevant to litigation or when it should have known that the information may be relevant to future litigation.  In other words, preservation is required when litigation is "reasonably anticipated."  The usual circumstances kick-starting this duty might be a lawyer’s letter, demand for preservation, or notice of a complaint filed with a state agency or a court.  At other times, it may be more subtle and less apparent such as a contentious dispute or when there is a real chance of litigation.

In this case, you want to contact all key employees who are likely to have relevant information. Keep in mind that the information may be stored in hardcopy or electronic forms and mediums (desktop, laptop, server, thumb drive, audio, camera, smart-phone, etc.).   Identify relevant electronic documents and place them in a secure location and stop any automatic destruction processes.   Litigation hold notices should be sent to the key players advising them of the scope of information they must preserve.  Consider consulting with counsel on the scope of the preservation or the content of a litigation hold issued to key players.  

Supplier disagreements happen more often than you might suspect.  You may feel that the contention of violation is unjustified, but you need to recognize your duty to preserve any relevant documents pertaining to the situation. 

Jennifer Parent can be reached at [email protected].

Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association.   We invite your questions of business law.  Questions and ideas for future columns should be addressed to:  McLane Middleton, 900 Elm Street, Manchester, NH 03101 or emailed to [email protected].  Know the Law provides general legal information, not legal advice.  We recommend that you consult a lawyer for guidance specific to your particular situation.

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