Best Practices for Preserving Business Data When Litigation Is Anticipated
Businesses create and store vast amounts of information, including emails, text messages, contracts, financial records, and cloud-based data. When litigation is threatened or reasonably anticipated, preserving that information becomes a legal obligation. Failure to do so can result in sanctions, adverse evidentiary rulings, increased litigation costs, and damage to a business’s credibility.
When Does the Duty to Preserve Arise?
Many businesses assume they only need to preserve records after a lawsuit is filed. In reality, the duty to preserve evidence often arises much earlier, when litigation becomes reasonably foreseeable. This may occur when a business receives a demand letter, becomes aware of a significant dispute, or learns of potential claims against it. Once litigation is anticipated, the business should take steps to ensure relevant information is not deleted, altered, or destroyed.
What Information Should a Business Preserve?
Businesses should promptly identify where relevant information may be located, including but not limited to:
- Digital communications;
- Word processed documents;
- Spreadsheets and tables;
- Accounting Application Data;
- Image and Facsimile File;
- Sound Recordings;
- Video and Animation;
- Databases;
- Contact and Relationship Management Data;
- Calendar and Diary Application Data;
- Online Access Data;
- Presentations;
- Network Access and Server Activity Logs;
- Project Management Application Data;
- Computer Aided DESI and other documents/Drawing Files; and,
- Back Up and Archival Files.
What is a Litigation Hold and Why is it Important?
A litigation hold is a directive instructing a business to preserve potentially relevant information.
An effective litigation hold letter should:
- Explain the nature of the dispute;
- Identify categories of information to be preserved;
- Instruct the business not to delete or modify relevant information;
- Suspend routine document-destruction policies where necessary; and
- Be updated as the matter develops.
Importantly, a business’s preservation obligations may extend beyond information in its direct possession. Businesses should ensure that any current or former employees, agents, contractors, consultants, attorneys, or other third parties who may possess potentially relevant information are notified of their obligation to preserve such information. Businesses should also take reasonable steps to secure compliance with those preservation directives when the information remains subject to the company’s direction or control. Furthermore, businesses should also document their preservation efforts in the event they are later challenged.
Should Automatic Deletion Policies be Suspended?
Many organizations use automatic deletion policies for emails, chat messages, and other electronic records. Once litigation is anticipated, however, business should evaluate whether those policies could affect relevant information and suspend them as necessary. Failing to stop routine deletion processes can lead to allegations of intentional or negligent destruction of information to avoid disclosure, conduct that is referred to as “spoliation.”
How Can Businesses Preserve Data on Employee Devices and Maintain Ongoing Compliance?
Relevant information is often stored on employee laptops, smartphones, tablets, and other devices. Companies should ensure that key custodians preserve potentially relevant data and that devices containing such information are not wiped, replaced, or altered.
Preservation is an ongoing obligation. As a dispute evolves, companies should periodically reassess their efforts, identify additional custodians or data sources, and update litigation hold instructions as needed.
Why Is Coordination Between Legal Counsel and IT Personnel Important?
Legal counsel and IT personnel should work together to identify data sources, implement preservation measures, and ensure that electronically stored information remains accessible and intact. Early coordination can reduce costs, prevent data loss, and help establish a defensible preservation process.
How Can Beattie Padovano, LLC Help?
Preserving evidence can be complicated, particularly when large volumes of electronic data are involved. Engaging counsel early can help businesses implement effective preservation measures, comply with legal obligations, and minimize the risk of sanctions.
Beattie Padovano, LLC regularly advises businesses on litigation holds, electronic discovery, and evidence preservation. If your business is facing a dispute, investigation, or potential lawsuit, our attorneys can help ensure that appropriate preservation measures are implemented from the outset and that critical information is protected.
Gabriella M. Pascarelli, Esq.
gpascarelli@beattielaw.com
201-799-2111
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