[co-author: Michael Isotti]

Can you identify events that trigger a requirement to implement at a legal hold at your company?  You may be aware of the recent horror stories involving companies that failed to implement a timely hold, failed to preserve evidence, and the resulting sanctions. Waiting until a lawsuit has been filed is seldom the right time to start preserving evidence. Judges have warned litigants of their obligations and punished them for failing to preserve evidence. The “triggering event” for a litigation hold is not always obvious to spot in real-time.

Pop Quiz: When should you implement a legal hold?

1. When you think there might be a possibility that a dispute could lead to a lawsuit?
2. When the company receives a demand letter or cease and desist letter?
3. When a lawsuit is filed against (but not yet served on) the company?
4. When the company is served with the summons and complaint?

The answer is that it could be any of the above, in addition to many other possible situations. Every litigant (or potential litigant) has a common law obligation to preserve relevant information when a lawsuit is “reasonably anticipated.” In other words, if a reasonable person standing in your shoes would anticipate a lawsuit, then you need to implement a litigation hold. This could happen many months before a lawsuit is even filed. Parties may be involved in pre-filing settlement discussions for months, and the obligation to preserve evidence in that situation is triggered long before the filing of any lawsuit. Not all situations are the same. For example, the company might get hit with a lawsuit that it had no reasonable way to anticipate was coming, and in that circumstance the receipt of the complaint would likely be the trigger. 

Practical Tips

• Create a Litigation Hold Policy – A good litigation hold policy will create a defensible guideline that can be used to show a transparent, repeatable process. 
• Create a Litigation Response Team – Determine those within your organization who can help identify a triggering event and can participate in the implementation of a litigation hold.
• Communicate and Identify – Identify the various “triggering events” that may be unique to your company by communicating with department leaders.  Discuss what they think might be typical events that could give rise to a requirement to preserve evidence.  For example, terminating an employee who has credibly threated litigation against the company would likely be a triggering event for the HR department.  Other business units, such as legal or accounting, would have their own kinds of triggers.
• Create a Litigation Response Plan – By developing a plan you can better understand your company’s retention requirements and implement a response that allows for any necessary suspension of routine policies and practices to ensure information is being preserved as required.
• Develop an Effective Litigation Hold Notice – Having a base template from which you can customize to fit each specific situation will enable you to communicate quickly and notify key employees of the need to preserve information.
• Work with counsel and document your analysis for deciding to implement (or not) a litigation hold – This will serve as a written record of your well intentioned, good-faith, and reasonable efforts.