Destroying potentially relevant documents or data, whether intentionally or carelessly, can lead to unnecessary headaches and even dire consequences in litigation. Courts have the power to sanction the offending party for such discovery violations, and in certain circumstances may even instruct the jury that it may infer that the destroyed evidence would have been harmful to the destroying party’s case. One step parties may take to avoid such an undesirable situation is to implement a litigation hold.

A litigation hold is a comprehensive undertaking by a party to identify and preserve documents and data, both in paper and electronic form, in that party’s possession, custody, or control. A typical litigation hold begins with a memorandum or other communication from the company’s management or attorneys instructing employees to preserve certain documents and information. Before implementing a litigation hold, a party must first consider the threshold question of whether its duty to preserve documents and information has been triggered.

Courts hold that the duty to preserve arises whenever litigation is “reasonably anticipated.” Thus, “[t]he obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation.”1 When such a duty exists, a party is obligated to preserve what it knows (or reasonably should know), is relevant or may reasonably lead to the discovery of admissible evidence, or is reasonably likely to be requested during discovery or is the subject of a pending discovery request. This applies with respect to any party’s claims or defenses in the lawsuit or potential litigation.

via Litigation holds and the consequences of failing to preserve evidence – Lexology.