Any good lawyer knows that many cases are won, and lost, long before the client reaches out for assistance. Disputes can arise slowly over time and sometimes it is not clear that the parties will end up at odds or court until a significant amount of time has passed and information that would be useful or necessary has been lost. This blog addresses the concept of a litigation hold- when to do it, when to ask for it, and how to document your response.
A litigation hold, also known as a document preservation notice, is a directive issued to ensure that all potentially relevant documents and electronically stored information (ESI) are preserved when litigation is imminent or reasonably foreseeable. This obligation arises even before a lawsuit is filed if a party is on notice that litigation is likely to commence. The purpose of a litigation hold is to prevent the destruction or alteration of evidence that may be relevant to the case, as failure to preserve such evidence can lead to severe sanctions, including adverse inference instructions, dismissal of claims, or monetary penalties. Sometimes a party or attorney will send a demand to another laying out a list of items and information to be preserved. Other times, it becomes clear that certain information is going to be needed to fully resolve a dispute, and in that case a party may need to effectively put a hold on their own records to make certain that the information they need in the future will be available.
Litigation holds are important because destruction of relevant information, intentional or otherwise, may be held against the party who should have preserved the information. For example, if there is a dispute over whether a contractor properly constructed a wall, an expert’s report on how the wall was constructed should not be destroyed. Similarly, if photos were taken of defective portions prior to the wall’s demolition, those photos should be preserved. Once destroyed or lost this information may not be recoverable in the future, and thus the law requires the party in possession of this evidence to maintain it for future purposes.
To comply with a litigation hold (your own or someone else’s), you need to take several proactive steps. First, you need to put all relevant individuals, including employees and custodians of potentially relevant information, on written notice to preserve information. This notice should instruct recipients to preserve documents in their original form, suspend routine document destruction policies, and halt any automatic data deletion programs. The notice should also identify specific categories of documents that must be preserved, such as emails, contracts, or other records pertinent to the case. For corporate or organizational clients, it is essential to monitor compliance with the litigation hold throughout the litigation process to ensure that no relevant evidence is lost. This sounds complicated, but is fundamentally fairly simple- you need to tell those who likely have information not to get rid of it, intentionally or inadvertently. Depending on how often your organization has turnover, it may be appropriate to send written reminders of the litigation hold obligation more than once so that no one forgets its importance.
North Carolina courts have emphasized the importance of timely and effective litigation holds. For instance, in cases where evidence is lost due to a delayed or inadequate litigation hold, courts may impose sanctions if it is shown that the lost information was potentially relevant to the case. This aligns with federal standards, which require a showing that the failure to preserve evidence resulted in prejudice to the opposing party. Therefore, it is crucial to implement a litigation hold as soon as litigation is reasonably anticipated to avoid such consequences.
Additionally, parties should confer with their clients to discuss discovery obligations, potential sources of relevant information, and the penalties for failing to preserve evidence. This includes identifying custodians of relevant materials, addressing confidentiality concerns, and ensuring that the attorney-client privilege and work product doctrine are maintained. Proper communication and documentation of these efforts can serve as evidence of good faith compliance with preservation obligations, which may be critical in defending against spoliation claims .
A litigation hold in North Carolina is a vital tool to ensure compliance with evidence preservation requirements. By issuing a timely and comprehensive litigation hold notice, suspending routine document destruction policies, and actively monitoring compliance, parties can mitigate the risk of sanctions and uphold their legal obligations before, or during, the litigation process.
If you have any questions about a dispute or situation where a litigation hold may be appropriate, contact any of our civil litigation attorneys at Law Firm Carolinas to discuss further.