By Tom Kline,Lead Consultant & Founder,Better Vantage Point
(Sing with me here…)
“Gossip and taxes and unpleasant divorces,
Pulling of wisdom teeth, with chronic hoarseness,
Lawyers and penalties which costs money and stings,
These are a few of my unfavorite things.”
Speaking of unpleasantries, here’s another dreaded phrase which involves dealerships all too often. We need to consider and discuss (1) what is a litigation hold, (2) why is it important, (3) what elements of my business should I think about in relation to a potential litigation hold, and (4) what are some preventative measures I can take right now. Here we go.
Litigation hold is “also known as a legal hold... or preservation order. An instruction within a business organization directing employees to preserve, and refrain from destroying or modifying, certain records and information (both paper and electronic) that may be relevant to the subject matter of a pending or anticipated lawsuit or investigation.”
Litigation Hold
A litigation hold includes all electronically stored information (ESI), including all emails related to the litigation as well as other documents which may be relevant.
These are also known as “stop destruction requests.”
Consider that Microsoft has a primer on its website about how to “create a litigation hold” for email boxes.
“When an organization anticipates or becomes a party to litigation, an investigation, or an audit, it must develop and implement a protocol to preserve all relevant information (preservation protocol).”
Failure to comply with a litigation hold request can result in sanctions, accusations of contempt of court, striking of evidence or pleadings, and other general ugliness. It is called spoilation.
Preserving Documents
In addition, lawyers or regulators may issue a document preservation letter for your cloud service providers, as well as sending a request directly to you. They may request include individual cell phone data which may reside on your phone or employee cell phones.
If you have a data retention policy, and your IT director follows that policy, your data routinely should be deleted according to your GLBA Guidelines (remember those?). These deletions must be suspended pending the outcome of any discovery and litigation.
Everything is discoverable: hard copies, text messages, voice mail messages, calendar entries, task lists, social media, blogs, technical drawings, thumb drives, hard drives, laptops, photographs, network activity logs, police reports etc.
Questions to Ask
If you have to comply, it’s very time consuming and very expensive.
In considering the potential future problem of a litigation hold, here are five considerations:
Seven Preventive Measures to Consider
Before you get into a situation where you will be required to implement a litigation hold, consider these problem preventing strategies:
If you think about these issues upfront, and work to prevent problems before they occur, you might not “feel so bad,” as the song says. In my experience, when you apply these principles to your business practices, the severity of the problems is usually greatly reduced and/or even eliminated.
If you’ve braved it to the end of this article, wouldn’t you agree you’d rather be singing about cream-colored ponies and crisp apple strudel? Plan accordingly and you can! Cheers!
Owning and running a dealership can feel like trying to tuck an octopus in bed and the tentacles keep flopping out. Tom Kline appreciates and understands this as, for 30 years, he was a dealership franchise owner. Kline specializes in solving dealership problems through risk mitigation remedies, compliance, and dispute resolution (i.e. tucking in the tentacles). He is the Lead Consultant & Founder of Better Vantage Point, Tuck The Octopus (a new, early efforts governance, risk, and compliance (GRC) program), and AlwaysDoBetter.com, and has worked with both publicly-held and private dealerships. He routinely speaks at national conferences, workshops, 20 groups, presents webinars about risk transferences and risk mitigation topics & techniques, and routinely provides expert witness testimony to defend dealerships.