What may be surprising to many companies is that the obligation to preserve evidence arises long before a lawsuit is filed, and the costs for failing to do so can be staggering. In egregious cases, courts have entered judgment against litigants who failed to preserve, thereby preventing them from defending litigation on the merits. Litigants have also been ordered to pay the opposing party’s attorneys’ fees, which can be substantial in complex commercial litigation.

When must a bank preserve records? A common misconception is that formal legal process (i.e., service of a summons and complaint) triggers the duty to preserve evidence. In fact, the duty arises upon reasonable anticipation of litigation.

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