Litigation Hold Letters: What Businesses Must Do to Preserve Evidence
When a business becomes aware of a potential lawsuit, government investigation, or regulatory dispute, its legal obligations change immediately. One of the most critical—and often misunderstood—duties is the obligation to preserve evidence.
At the center of this duty is the litigation hold letter (also called a legal hold notice). Failing to issue and enforce a proper litigation hold can expose a business to severe court sanctions, adverse jury inferences, monetary penalties, or even default judgment.
This article explains what litigation hold letters are, when they are required, and what businesses must do to comply with their evidence preservation obligations.
What Is a Litigation Hold Letter?
A litigation hold letter is a formal written notice directing employees, officers, and relevant third parties to preserve all documents, data, and electronically stored information (“ESI”) that may be relevant to anticipated or pending litigation.
The purpose of a litigation hold is to immediately suspend ordinary document destruction practices, including:
Routine deletion of emails
Auto-purging of chat messages
Overwriting backup systems
Disposal of paper files
Device replacement, re-imaging, or recycling
Once litigation is reasonably anticipated, continuing normal deletion practices—even unintentionally—may be treated as spoliation of evidence.
When Is a Business Required to Issue a Litigation Hold?
A litigation hold obligation arises before a lawsuit is filed. Courts require preservation once litigation is reasonably anticipated, which may occur when:
The company receives a demand letter or cease-and-desist notice
A commercial dispute escalates beyond routine negotiations
An employee files an internal complaint likely to lead to litigation
A government agency initiates an inquiry, audit, or investigation
An incident occurs that predictably results in claims (e.g., data breach, workplace injury, product failure)
Waiting until a complaint is formally filed is often too late.
What Evidence Must Be Preserved?
A litigation hold must cover all potentially relevant evidence, whether stored electronically or in physical form.
Common categories include:
Emails (including personal accounts used for business purposes)
Text messages and messaging platforms (Slack, Microsoft Teams, WhatsApp, KakaoTalk, etc.)
Word documents, spreadsheets, and presentations
Databases, CRM systems, and internal tools
Accounting and financial records
Contracts and draft agreements
Calendars, meeting notes, and task lists
Voicemails and call recordings
Metadata associated with electronic files
Importantly, preservation obligations extend to personal devices if they were used to conduct company business.
Who Must Receive the Litigation Hold?
A litigation hold must be issued to all individuals who may possess relevant information, including:
Executives and senior management
Employees directly involved in the dispute
Human resources personnel
IT staff and system administrators
Outside consultants, vendors, or service providers holding company data
Courts expect businesses to take a reasonable and proactive approach in identifying custodians, rather than issuing overly narrow or selective holds.
What Should a Proper Litigation Hold Letter Include?
An effective litigation hold letter should:
Clearly describe the nature of the dispute or investigation
Identify the types of documents and data to be preserved
Instruct recipients to suspend deletion or alteration of information
Apply to both electronic and paper records
Explain the consequences of non-compliance
Provide a contact person for questions
Require written acknowledgment of receipt and understanding
Vague or informal notices are often found inadequate.
Ongoing Obligations: Preservation Is Not a One-Time Task
Issuing a litigation hold is not a single event—it is an ongoing obligation.
Businesses must:
Monitor compliance
Re-issue or update the hold as facts evolve
Add newly identified custodians
Coordinate with IT to ensure system-level preservation
Lift the hold only after the matter is fully resolved
Courts frequently examine whether a company actively enforced the litigation hold, not merely whether it sent an initial notice.
Consequences of Failing to Preserve Evidence
Failure to implement and enforce a proper litigation hold can result in serious penalties, including:
Monetary sanctions
Court orders requiring expensive forensic discovery
Adverse inference instructions to the jury
Exclusion of evidence or defenses
Default judgment in extreme cases
Even unintentional deletion may lead to sanctions if the business failed to act reasonably once preservation obligations arose.
Litigation Holds Apply to Small and Mid-Sized Businesses
Litigation holds are not limited to large corporations. Courts apply the same preservation standards to small and mid-sized businesses.
In fact, courts often expect smaller companies to act quickly, as their data environments are typically less complex and easier to preserve once litigation is foreseeable.
How Legal Counsel Can Help
Implementing a litigation hold requires coordination between legal, management, and IT. Experienced counsel can help:
Determine when preservation obligations are triggered
Draft legally sound litigation hold notices
Identify relevant custodians and data sources
Coordinate with e-discovery and forensic vendors
Defend against spoliation allegations if disputes arise
Early legal guidance often prevents costly downstream litigation problems.
Conclusion
Litigation hold letters are a critical part of legal risk management once litigation or investigation is reasonably anticipated. They are not optional and cannot be treated as mere formalities.
Businesses that act promptly and thoughtfully can protect themselves. Businesses that delay or ignore preservation obligations often face severe consequences.
Disclaimer
This article is provided for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Evidence preservation obligations are highly fact-specific and may vary based on jurisdiction, industry, and the nature of the dispute. Businesses facing actual or potential litigation should consult qualified legal counsel to obtain advice tailored to their specific circumstances.
