Hold It! Construction Disputes Require Litigation Holds
Posted on Apr. 28, 2014

Anyone involved in construction knows that projects generate massive volumes of records. From change orders to RFIs, meeting minutes to payment applications, virtually every aspect of a construction project may be documented in some way. Much of this documentation may be generated or stored electronically, through emails and FTP sites. The convenience of electronic communication also means that project participants typically create extensive electronic documentation about their various activities on the project. 

When a dispute or lawsuit arises, companies involved must issue litigation holds to their employees to preserve this documentation, regardless of the form or location. A litigation hold is a prompt and written communication to certain employees (the likely custodians of records relevant to the dispute) and to the company’s IT department that directs the preservation of all records possibly related to the dispute. Preservation must include suspension of normal and automatic e-mail or electronic record deletion.

The failure to issue a litigation hold, even if litigation has not yet commenced, can hurt a company involved in a dispute, even if that party has valid defenses to the underlying claim. This is because courts can penalize companies who let records be destroyed after the dispute arose. Such penalties can include drawing adverse inferences—concluding that the destroyed or missing documents would have hurt the company’s arguments—or simply refusing to recognize certain defenses. Make sure you have a litigation hold policy and that it is implemented whenever required to preserve documents that may be relevant to an underlying dispute. Here are four simple steps you can follow to master the concept of litigation holds:

Identify Potential Custodians: Determine who played a role in the construction project and those who may have assisted them. This will likely be the project team, including those who only briefly worked on the project.

Define the Relevant Time Period: Construction projects can span multiple years from design to a issuance of a Certificate of Occupancy. Determine the time period during which the events underlying the dispute occurred. That time period may be several years and should be liberally estimated.

Identify “Type” and “Location”: Interview IT staff and the potential custodians of records to determine what kinds of documents exist and where inside and outside of the IT system and project files potentially relevant data and records may reside.

Issue and Implement Company-Wide “Litigation Hold”: Circulate a “Litigation Hold” memorandum to all IT staff and the potential custodians of records. This memorandum, likely created by an attorney, should describe the dispute and the scope of the preservation effort, including suspension of all automated deletion. Custodians should acknowledge receipt of the memorandum and gather documents for safekeeping.

Construction Law
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About Adam

Adam
Attorney Adam T. Mow

Adam is a trusted resource for architects, engineers and other members of the construction industry in litigation, risk management, contract negotiations and mechanics’ liens. Adam is also a licensed architect and a past president of the Utah chapter of the American Institute of Architects. He has been elected by his peers to the Utah Legal Elite since 2009.

Awards and Recognition

AV Rating

Excellence in the Study of Architecture, American Institute of Architects Certificate of Merit, 1999

CALI Award for Excellence in Mediation and Advanced Negotiation, 2003

Community Mediator of the Year, Utah Dispute Resolution, 2007

Graduate of the Last Decade, Ball State University, 2008

Utah Business Magazine, Legal Elite, 2009-Present

Mountain States Rising Stars (Construction Litigation), 2009-Present