How important are litigation holds for businesses?
A litigation hold, also called a legal hold or document hold, is a directive given to employees in a business organization. It instructs them to preserve and not alter specific records and information (both paper and electronic) that may be relevant to an ongoing or expected lawsuit or investigation. The purpose is to comply with the duty of preserving information, including electronically stored data (ESI), to avoid tampering with evidence and be prepared for legal proceedings.
Why is a litigation hold necessary?
When you foresee a lawsuit or investigation, it is time for a litigation hold. This means preserving all important information that could be relevant to the case. You must do this to follow common law obligations and certain statutes and regulations and to prevent evidence from being tampered with or destroyed.
In legal disputes, every piece of information is crucial. Whether it is documents, emails, financial records or anything else related to the case, preserving it is vital. Failure to preserve evidence can lead to profound consequences, like legal penalties or unfavorable judgments.
Sometimes, the signal to preserve documents is clear. You may get a strong letter threatening legal action. Other times, it might be less obvious. There may be discussions among supervisors about complaints you may be unaware of.
Compliance and risk mitigation
Effective communication is the backbone of successful litigation holds. Properly instruct your employees on which information to preserve. Also, stress the gravity of following the hold order. You must ensure that they understand their role in safeguarding crucial data. Working together can fortify your defense and protect your business from further threats.
Implementing a litigation hold is a testament to your business’s dedication to fulfilling legal obligations. This firm stance can bolster your position in the case. It can help lead to more favorable outcomes.