A trend that has developed over the last few years in the United States is for parties involved in litigation to send to the other party a "litigation hold letter," which in essence advises the other party of its obligations to maintain and produce any and all electronic documents and data that may be relevant to the dispute. More and more, this trend is beginning to take root in Canada as well. The following discussion contains some practical tips to help Canadian businesses in responding to a litigation hold letter, in the event they receive one.
Tip 1 – Don't Panic!!
This is precisely what your opponent wants you to do. Litigation hold letters were developed by knowledgeable and aggressive plaintiff's lawyers in the U.S. as a quick way to instill fear and confusion in their opponents. These lawyers understood that, although corporations maintained accurate and comprehensive filing systems when they relied on paper documents, in the electronic age, corporations normally have few controls governing how their electronic data is stored. As a result, whereas paper documents were maintained in an organized fashion, electronic documents usually are stored in a random mess. These lawyers also understood that, given the complexities inherent in gathering and producing electronic documents, it was relatively easy to shift the court's focus away from the merits of the dispute and towards the problems defendants were having in producing their electronic documents. Every time the defendants made a mistake, the plaintiff's lawyers would seize the opportunity to paint the defendants as recalcitrant and dishonest. Ultimately, by manipulating the process of electronic discovery to their advantage, these lawyers began to win large settlements and jury awards from unprepared defendants.
It is important to keep in mind, however, that merely sending a "hold letter" does not create any legal rights or obligations and does not change the rules of civil procedure. Rather, the purpose of sending a "hold letter" is to (i) put the defendant on notice that they are about to be embroiled in a very lengthy, costly, and complicated discovery battle and (ii) to support an argument later on that the defendant was warned from the beginning to produce all of its electronic documents but deliberately chose not to do so. Although, once you have received a "hold letter," it should be clear your company is about to begin a lengthy and expensive battle, this is no time to panic.
Tip 2 – Get Organized!
Now that you have stopped panicking, it is time to get your house in order and begin preparing for the battle ahead. In commercial litigation nowadays, electronic documents – such as email, Word documents, spreadsheets, etc. – are most likely going to be relevant to the dispute. The first step is to figure out what you have, where it is stored, and how it can be transmitted to the other side, if need be. The second step is to figure out what, among all that data, is relevant to the dispute. To accomplish these objectives, most likely, you and your top executives will have to consult with your IT personnel and your legal counsel. It is critical that everyone works together with a common goal to develop a coordinated strategy. The sooner you develop a coordinated strategy the more efficient and cost-effective your strategy will be.
Tip 3 – Consider Writing Back.
Remember that "hold letters" are intended to create an advantage – whether as a scare tactic or to show to the court later on to prove you are trying to hide something. One common element of most "hold letters" is that they tend to make wholly unrealistic demands with respect to the volume and kind of data that must be retained. However, if you take a close look at the data you have available and the factual and legal allegations realistically at issue, you should have a pretty good idea if the scope of the "hold letter" goes beyond your legal obligations. Under those circumstances, consider sending a letter in response that states the measures you are taking and why and stating that you would be happy to take additional measures if it can be shown they are legitimately warranted under the circumstances.
By doing so, you will have established the parameters of what you consider to be relevant and will have placed the burden on your opponent to articulate, if it can, why those parameters should be broader. If there is room for negotiation of those parameters, those negotiations can begin relatively quickly. In any event, in preparing the letter, you will force yourself to focus on taking steps early on to corral all the necessary data and begin organizing it for production. In other words, by preparing a response, you will have begun taking the most important initial steps in establishing your strategy, organizing your team, and preparing for the long road ahead.