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Top Tips: Document Retention – Do you know when to hold’em?

Recent legal decisions show that courts continue to raise the bar on the requirement to retain, search and produce records relevant to litigation. These court decisions often result in severe sanctions against employers who fail to follow retention rules. They serve as a sobering reminder that employers should take care to preserve potentially relevant information upon becoming aware of a possible claim.

What is my duty to retain records?

An employer has the obligation to preserve potentially relevant records, including electronic records, in its possession or control in connection with reasonably anticipated or actual litigation or to comply with business or regulatory requirements.

When does my preservation obligation arise?

The obligation arises when a party knew or reasonably should have known that its records may be relevant to anticipated or actual litigation.

Is a preservation order from the court required to trigger my preservation obligation?

No. The preservation obligation is not dependent on a court order or any demand by the opposing side. Rather, it arises when a party knew or reasonably should have known that the records may be relevant to anticipated or actual litigation.

What is my inside or outside counsel’s obligation regarding document retention and preservation?

Inside and outside counsel and their clients are required to ensure that records are subject to a “litigation hold” (that they are preserved during the litigation). Counsel also must become familiar with document repositories such as e-mail servers and establish processes to ensure preservation of relevant materials. Counsel may not rely on document custodians to review documents for relevance; counsel must do it themselves.

What happens if we make mistakes or fail to follow these obligations?

Courts are becoming more comfortable sanctioning litigants as well as in-house and outside counsel who do not satisfy these preservation obligations. Other than levying monetary sanctions, which can be substantial, courts also may strike pleadings, exclude witness testimony or even disallow defenses in response to violations of these rules.

The first step to avoid the potentially costly mistake of failing to properly preserve records is to create and then follow a thoughtful, practical records management and legal hold program.