Litigation Holds: When the Duty to Preserve Begins

When litigation is filed—or even reasonably anticipated—a business’s obligations around its own records change immediately. The duty to preserve relevant documents and data, commonly implemented through a “litigation hold,” is one of the most misunderstood obligations in commercial litigation, and getting it wrong can carry serious consequences.

When the Duty to Preserve Begins

Many business owners assume the preservation duty starts when a lawsuit is formally filed. In reality, courts consistently hold that the duty attaches earlier—as soon as litigation is reasonably anticipated. A demand letter, a terminated employee’s threat to sue, or even an internal report of a serious incident can be enough to trigger the obligation, well before any complaint is drafted.

What a Litigation Hold Actually Requires

A litigation hold is a formal notice directing relevant employees to preserve documents, emails, and data related to a dispute, and to suspend any routine deletion or destruction policies that would otherwise apply. An effective hold isn’t just a memo—it requires follow-through.

• Identifying all custodians who may have relevant documents or data

• Suspending auto-delete policies on email and messaging systems

• Preserving both electronic records and physical documents

• Issuing the hold in writing, with a clear scope and instructions

• Periodically reminding custodians and confirming compliance

The Cost of Getting It Wrong

Courts have broad discretion to sanction parties that fail to preserve evidence once the duty attaches, ranging from adverse jury instructions to, in serious cases, default judgment. Even inadvertent, good-faith deletion of relevant data can create significant exposure if a company can’t show it took reasonable steps to preserve evidence once a dispute was on the horizon.

Building a Preservation-Ready Process

The businesses that handle litigation holds well are the ones that have a process in place before a dispute arises—clear internal protocols for issuing a hold, a designated point of contact, and IT systems that can suspend deletion quickly when needed. Waiting until the first hint of litigation to figure this out is rarely enough time.

If your company doesn’t have a litigation hold protocol in place, or you’re facing a dispute that may require one, Ashford & Rowe’s litigation team can help you build a defensible preservation process before it’s tested in discovery—contact us to discuss your situation.