When a dispute arises, you must preserve records that could serve as evidence. In New York, courts expect you to keep both paper and digital information once litigation is reasonably foreseeable. The duty to preserve evidence applies to emails, texts, financial records, cloud-stored files, internal messages, and surveillance footage. The New York State Bar Association notes that electronic evidence often plays a central role in modern disputes, which increases the importance of holding relevant data.
You may need to issue a litigation hold when you receive a demand letter, learn of a contract breakdown, face allegations from a partner, or anticipate a lawsuit. The federal courts that cover New York also treat the duty to preserve evidence as active once you reasonably anticipate litigation (Zubulake v. UBS Warburg LLC / Fed. R. Civ. P. 37).
Your decisions during these early stages can affect how a court views your conduct.
Consequences when you ignore a litigation hold
If you fail to preserve information, your business may face legal and financial consequences. New York courts may order sanctions for “spoliation,” which means the destruction or alteration of evidence. According to the New York Court of Appeals, spoliation sanctions can apply even when the destruction is negligent rather than intentional (Pegasus Aviation I, Inc. v. Varig Logistica S.A., 26 N.Y.3d 543).
Courts may impose several penalties. These include:
- Monetary sanctions for discovery violations
- Instructions that allow a jury to infer the missing evidence would have harmed your case
- Exclusion of certain defenses or testimony
In severe situations, dismissal of claims or entry of judgment against you
Meeting your preservation duties
Compliance requires prompt action. The preservation process includes identifying all data sources, notifying employees who control those records, suspending routine deletion policies, and monitoring ongoing compliance. Establishing these protocols prepares your business to address discovery demands without added risk.