What Is a Litigation Hold Letter and What Must My Company Do?

What a litigation hold letter is

Two kinds of letter carry the name. The first comes from an opposing party or its lawyer, often inside a demand letter or a cease and desist letter, and asks you to preserve specified categories of documents and data. The second is internal: a notice your own counsel drafts and your company sends to its employees telling them what to keep and how. Both rest on the same legal duty, and the first should prompt the second.

Neither letter is a court order. You cannot be held in contempt for failing to follow a letter. What you can face is a finding, later, that you had a duty to preserve evidence, breached it, and must suffer the consequences in the lawsuit. The letter is the proof that you knew.

When the duty to preserve begins under Texas law

The duty does not wait for a letter. The Supreme Court of Texas, in Brookshire Brothers, Ltd. v. Aldridge in 2014, confirmed the framework Texas courts apply: a party has a duty to reasonably preserve evidence when it knows or reasonably should know that there is a substantial chance a claim will be filed and that evidence in its possession or control will be material and relevant to that claim. The court must find that the duty existed and that the party breached it, intentionally or negligently, before any remedy is considered.

That standard is met by many events short of a lawsuit: a demand letter, a cease and desist letter, a customer's written threat to sue, a serious injury on your premises, a departing employee's accusation, or an internal discovery of misconduct. Receiving a letter titled "litigation hold" removes any doubt. If you are the one about to assert a claim, the duty applies to you as well, which is covered from the plaintiff's side in what evidence to save before suing.

What the duty covers

Everything that is relevant to the anticipated dispute, in whatever form, that is in your possession, custody or control. For a typical business dispute that means:

• Email, including mailboxes of former employees that have not yet been deleted, and archived or backup copies.
• Messaging: Teams, Slack, WhatsApp, iMessage and SMS, including on personal phones used for work. Ephemeral messaging features that auto-delete must be turned off for the people involved.
• Documents and files on servers, laptops, shared drives and cloud storage, including drafts and prior versions.
• Accounting and transaction records, invoices, payment data, and the systems that generate them.
• Databases and applications, including CRM entries, project management tools and time records, where the content is relevant.
• Physical items: paper files, signed originals, product samples, equipment, and the devices themselves when the device is at issue.
• Metadata. The dates a file was created, modified and accessed can matter as much as its content. Copying files in a way that changes metadata, or printing them to PDF and deleting the originals, can itself be a loss of evidence.

The duty is to preserve, not to produce. Nothing has to be sent to the other side until a court rule or order requires it. It also does not require freezing the whole company; it requires reasonable steps aimed at the relevant material and the people who hold it.

What your company should do, in order

1. Identify the dispute and its scope. What is it about, what period does it cover, who was involved, and which systems hold the related data. Write this down; it becomes the scope of the hold.
2. Suspend deletion. Turn off automatic email purging, retention-period deletion and auto-delete messaging for the identified people and systems. Tell IT, or the vendor, in writing and keep the confirmation.
3. Issue a written hold notice to the custodians. Name the dispute in general terms, list the categories of material to preserve, say that the duty covers personal devices and accounts used for work, instruct recipients not to delete, alter or move anything, and ask each person to confirm receipt. Keep the notice and the confirmations.
4. Secure departing and departed employees' data. If a relevant employee has left, preserve the mailbox and devices before any routine wipe. If one is leaving, image the device before it is reissued.
5. Collect where loss is likely. Personal phones, laptops that travel, and cloud accounts under one person's control are the places evidence disappears. Forensic imaging by a qualified vendor preserves content and metadata without altering either.
6. Document everything. When the hold was issued, to whom, what systems were changed, what was collected. If evidence is later found missing, the question will be whether your steps were reasonable, and the record answers it.
7. Repeat the notice periodically and update it as the dispute's scope becomes clearer.

Example

Suppose a Dallas logistics company receives a demand letter from a former customer alleging that a shipment was mishandled and demanding $85,000, with a paragraph asking the company to preserve all records relating to the account. The company's email system deletes messages older than 18 months; two drivers involved use personal phones for dispatch texts; the warehouse security video overwrites itself every 30 days. The company immediately suspends email deletion for the five employees on the account, instructs the drivers in writing to preserve their texts and arranges for the messages to be exported, exports the 30 days of video that still exist, and writes a one-page record of what it did and when. Eleven months later, in the lawsuit, the customer argues that the company destroyed video of the loading. The company's record shows the video had already been overwritten before the letter arrived under a routine 30-day cycle, and that everything existing on the date of the letter was kept. Without the record, the same facts look like concealment.

What happens if evidence is lost

Texas trial courts have a range of remedies, and Brookshire Brothers sets the limits. Lesser remedies include excluding evidence, awarding costs and fees, and allowing the other side to present evidence about the loss. The most serious remedy, a spoliation instruction telling the jury it may presume the missing evidence would have been unfavorable to the party that lost it, is reserved for cases where the party acted with intent to conceal or destroy discoverable evidence, or, in a narrow exception, where negligent loss irreparably deprived the other side of any meaningful ability to present its claim or defense. The court also has sanctioning power over discovery abuse under Texas Rule of Civil Procedure 215.

Negligent loss is therefore not the end of a case, but it is expensive: the court may let the jury hear about it, and the party that lost evidence spends the trial explaining itself. Intentional deletion after a hold letter is close to the worst thing a litigant can do. The consequences in the specific context of email and data are covered in deleted emails and lost data: spoliation in Texas.

How long the hold lasts

Until the dispute is finally resolved, including appeals, or until counsel confirms in writing that no claim will be made and the risk has passed. A hold cannot be lifted because the demand letter went quiet; many disputes resurface within the limitations period, which for most Texas contract claims is four years. When the hold is released, document that as well, and only then resume ordinary deletion for the affected material.

Common mistakes

• Treating the hold as an IT task and never telling the people who actually hold the data.
• Forgetting personal phones, home computers and personal cloud accounts used for work.
• Wiping a departed employee's laptop on schedule two weeks after the dispute began.
• "Cleaning up" files before handing them to counsel.
• Letting an executive delete a text thread because it was embarrassing rather than relevant. Embarrassing and relevant are usually the same thing.
• Issuing the hold and never confirming receipt, so there is no proof anyone read it.

When to involve a litigator

At the moment the letter arrives, and before any data is touched. Scoping a hold too narrowly loses evidence; scoping it too broadly paralyzes a business. A litigator who knows the likely claims decides what matters, writes the internal notice, arranges collection where needed, and builds the record that later shows the company acted reasonably. That record is also the foundation for the discovery phase of any lawsuit, described in what discovery involves in a business lawsuit. Tina Wysk advises Dallas businesses on preservation from the first letter forward, on both sides of commercial disputes.