A litigation hold notice, legal hold notice, or document preservation notice is an instruction from a company to its current employees to preserve any documents as that term is defined in applicable rules of civil procedure.  It includes the preservation of metadata, electronic data, and any other recording that may be relevant to pending or anticipated lawsuits, government investigations, internal audits, or arbitrations.  The scope of a litigation hold notice may also apply to former employees if the company has such authority.  Failure to issue a timely litigation hold notice can expose a company to extraordinary sanctions including monetary penalties, dismissals of claims, default judgments, or adverse instructions to the jury.  Multiple events can trigger the determination of whether to issue a litigation hold notice.  They include receipt of subpoenas, summons, complaints, cease and desist letters, accidents involving the company’s products, accidents to employees while in the scope of their employment, or a failed or terminated business transaction.  

Generally, counsel for the company draft and issue the litigation hold notice.  However, often the company is aware of the triggering event before counsel.  In such situations, the company should consult with its counsel to determine if a litigation hold notice is required.

Litigation hold notices can be distributed company wide, but if the triggering event is narrow in focus, the litigation hold notice can be limited to those business units generating, creating, and/or maintaining the relevant records.  This could include key employees, managers, the IT department, and the records department.  Care should be taken when creating and distributing a litigation hold notice to thoroughly identify all potential sources and locations of data that may contain relevant information.  Further, preservation of data should be in its original form without any modifications.  Equally important when issuing a litigation hold notice is to specifically suspend automatic deletion of relevant records.

Some tips for drafting a litigation hold notice include making the preservation of data and records mandatory, advising employees that information about the triggering event is confidential and, in some instances, privileged, and that a litigation hold notice takes precedent over any existing company record destruction policy.  The value of a litigation hold notice is to preserve all relevant information to assist the company in responding to the triggering event, to assist the company in understanding the severity of the triggering event, and to efficiently gather information that can either allow for early settlement of any dispute or can mitigate any potential penalty.