Would-be plaintiffs who seek redress against a company will generally start the process by a demand letter. They do so either because it is mandated by law, or as a matter of strategy, should the dispute be amenable to quick and favorable resolution. This may seem a boon to businesses. They might avoid being dragged into Court entirely, or have more time to prepare for the fight ahead. But it also comes with substantial obligations.
Those obligations arise as soon as a company receives a demand, which can be long before a lawsuit is filed. Businesses that ignore them may face costly consequences in court later.
A key duty concerns emails and other “electronically stored information.” Those are sometimes deleted in the ordinary course of business. Emails not opened or moved out of the inbox might be automatically deleted after six months or a year, for instance.
But once a demand letter is received, the company is now operating in anticipation of litigation. So all relevant emails and files must be preserved, regardless of standard procedures. Those falling through the cracks and deleted even though they should have been saved expose the company to sanctions. If the deleted information cannot be obtained through different means, the sanctions will be as severe as necessary to cure any prejudice to the other party. (The duty to preserve extends of course to physical as well as electronic evidence, but the former is less likely to be inadvertently destroyed.)
Companies thinking themselves too clever by half and willingly deleting information before the actual lawsuit is filed are courting disaster altogether. The jury will be instructed to assume the deleted information showed a version of the facts favorable to the other side. That is, if the judge did not enter judgment in their favor right away.
Good attorneys (with cooperating clients) will help businesses avoid those pitfalls.