Discovery: Preserving Documents for Litigation

By Barrie Gross

If your company has paid attention to recent legal developments in discovery, you know that e-discovery has become one of the hottest issues in business-related litigation today. Between all the laws that require retention of documents for various periods of time, and the laws that require specific electronic communications backup systems, the burdens on a party to litigation can be immense and very expensive. Once an employer is on notice of a claim against it, the employer has a duty to and interest in preserving evidence, written and electronic. One small part of meeting those obligations is the system you have in place for preserving evidence after you are on notice of a claim.

Failure to have a process in place that preserves documentary and electronic evidence can result in massive penalties, monetary and worse! When parties to litigation have failed to preserve evidence, or allowed its destruction, courts have been willing to impose sanctions such as default judgments or instructing the jury to draw adverse inferences against a party. Criminal charges also can be filed. The lesson is that every company should be prepared in advance of litigation to preserve evidence if and when notice of a claim arises.

Your company should review your electronic communications systems and determine what is stored, where it is stored and for how long, whether too much information is being stored, overwriting issues, accessibility to stored information, etc. And the same thought process should be applied to hard-copy documentation. With that, your company can put together an effective document-retention policy and train all employees on what is expected under the policy. Occasional audits to ensure compliance also are a good idea.

Once you are on notice of claim, the document-retention policies you spent so much time, money, and energy producing mean nothing if you don't have a process in place to ensure the retention of evidence. Litigation hold processes can help. For example, you can prepare several template letters and e-mails for HR and legal to send internally, allowing them to choose the most appropriate for the circumstances (in consultation with counsel). These are sometimes called "litigation hold" letters and are intended to put relevant people on notice to preserve documentation of any kind.

A simple "no shredding" letter will not be sufficient. That's because many managers do not understand that even if his or her notes of meetings with a particular employee are reflected in annual performance reviews, it is not okay to shred the notes once the company is on notice of a claim. Some managers, once they learn that litigation is likely, will try to clean their files and will not realize that in doing so, they could be subjecting the company to legal liability.

"No shredding" letters also are not sufficient because many companies have schedules for automatic destruction of electronic information on a regular basis. Failure to stop those processes so as not to include potentially discoverable evidence can be viewed as willful destruction of evidence. And if your company uses off-site storage, either for hard-copy documents or electronic information, the destruction of those items also must exclude potentially discoverable evidence.

Educating managers and employees on the legal obligations to preserve certain information and documents is best done long before a claim arises. Once document-retention policies are written, the rollout should be accompanied by a comprehensive training program. And training managers on how to document employee performance and conduct will go a long way to keeping control over the document-production process. Followed by an effective litigation hold process, an employer can help minimize the burdens of discovery. Work with legal counsel and the human resources department to review whether your company is ready.