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Observing Best Practices for Your Litigation Response Effort

Created: 14 Jun 2011
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Is your organization adequately prepared for a lawsuit?  Or are you still trying to develop an internal process for addressing document productions in litigation?

Preparing a litigation response effort is an essential aspect of a company’s information governance plan.  Failing to take the initiative in this regard often leads to higher legal costs and increased risks during litigation.  The Vieste, LLC v. Hill Redwood Development (N.D. Ca. June 6, 2011) case from last week is particularly instructive on this issue.

In Vieste, the court sanctioned several real estate developers for submitting inadequate declarations regarding their document preservation efforts.  Those declarations reveal an overall failure to prepare for litigation.  Among other things, the defendant developers did not issue a litigation hold; did not suspend the overwrite function of one of their computer systems; and waited several months to contact – or, in some cases, did not contact – key employee witnesses regarding document collection and preservation.  Despite these glaring shortcomings, plaintiff was unable to establish evidence spoliation.  Sanctions were accordingly limited to $12,000 in attorney fees and costs.

The developers in Vieste were fortunate; some might say lucky.  Had venue for this matter been elsewhere – like the Southern District of New York – the developers could have incurred severe sanctions for their lack of preparation.  See The Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, 685 F.Supp.2d 456, 471 (S.D.N.Y. 2010) (holding the failure to ensure electronic records of key players are preserved is gross negligence and typically merits sanctions).

Organizations can avoid this situation with a thoughtful, proactive approach to litigation.  Such an approach will typically include the designation of company officials who are responsible for

  • Issuing a written hold instruction;
  • Identifying and meeting with key players likely to have relevant documents;
  • Suspending certain aspects of data retention policies; and
  • Supervising document preservation and collection efforts.

By implementing and then observing these simple practices, your organization can be prepared for litigation when it hits.  And being prepared will help reduce the organization’s legal costs and potential exposure to liability.