When a New York business becomes aware of potential or pending litigation, one of the most critical — and often misunderstood — legal obligations kicks in immediately: the litigation hold. Also known as a legal hold, this duty requires organizations to preserve all documents, records, and electronically stored information that may be relevant to the anticipated lawsuit. Violating a litigation hold by shredding covered documents can result in severe legal sanctions, adverse inference jury instructions, and even case-dispositive rulings against your company. Yet many businesses continue their routine document shredding schedules without realizing that a litigation hold document shredding pause is now required. Understanding what you can and cannot destroy during a legal hold is essential for any New York business with active litigation risk.
The good news is that a litigation hold does not mean stopping all document destruction indefinitely. It means carefully identifying which documents are covered by the hold and continuing to shred everything else on your normal schedule. A professional shredding partner who understands legal compliance can help your organization maintain efficient document management while fully respecting your legal preservation obligations.
What Is a Litigation Hold and When Does It Apply?
A litigation hold is a formal directive issued by an organization’s legal counsel requiring the preservation of documents and data that may be relevant to actual or reasonably anticipated litigation, regulatory investigation, or government inquiry. The duty to preserve is triggered not when a lawsuit is filed, but when the organization has reason to anticipate litigation — which can be as early as receiving a demand letter, being served with a subpoena, or even learning of events that typically lead to legal action.
In New York, courts have consistently held that organizations are on notice — and thus under a duty to preserve — when:
- They receive a formal demand letter from an adversary
- A government agency opens an investigation or issues a subpoena
- An employee files a formal grievance or complaint that signals potential legal action
- A significant accident, incident, or contract breach occurs that typically leads to litigation
- Litigation is filed in a related matter involving similar issues or parties
Once the duty to preserve attaches, any destruction of relevant documents — even pursuant to a routine shredding schedule — can constitute spoliation of evidence, a serious legal violation.
What Documents Must Be Preserved Under a Litigation Hold?
The scope of a litigation hold is defined by the anticipated claims and defenses in the litigation. Documents that must be preserved are those that are relevant to those claims — broadly construed under federal and New York discovery rules. Typically covered documents include:
- Communications — emails, text messages, letters, and memos related to the subject matter of the dispute
- Contracts and agreements — the agreements at issue and any related documents, amendments, or correspondence
- Financial records — invoices, payment records, and financial statements relevant to damages calculations
- Personnel records — in employment litigation, files related to the employee(s) at issue
- Operational records — incident reports, maintenance logs, or operational documents relevant to the dispute
- Meeting notes and minutes — board or management decisions related to the subject matter
Your legal counsel must define the precise scope of the hold for your specific situation. The key is that when in doubt, preserve the document. The cost of over-preserving is far lower than the cost of spoliation sanctions. Our compliance resources explain how a well-documented shredding program works alongside litigation hold obligations.
What You CAN Still Shred During a Litigation Hold
A litigation hold document shredding pause applies only to documents within the scope of the hold. Your normal document destruction schedule can and should continue for materials not covered by the hold. This is where a professional shredding service becomes particularly valuable — maintaining the discipline to separate hold-covered from non-covered materials.
Documents that can typically continue to be destroyed on schedule (with legal counsel confirmation):
- Routine administrative documents not related to the litigation subject matter
- Ordinary operational records in departments unrelated to the dispute
- Junk mail, marketing materials, and other non-business-record materials
- Records whose retention period has expired and that are not covered by the hold
- Documents from separate business units or projects wholly unrelated to the litigation
The critical rule: always consult with legal counsel before destroying any document category once a hold has been issued. Do not rely on your own judgment about what is or is not relevant — that determination belongs to your attorneys. Contact us to discuss how your shredding schedule can be adjusted to work alongside an active litigation hold.
Consequences of Destroying Documents During a Litigation Hold
The consequences of destroying documents that are subject to a litigation hold — even accidentally, through routine shredding — can be severe:
- Spoliation sanctions: Courts can sanction parties for destroying evidence, including fines, adverse inference instructions (telling the jury to assume the destroyed documents would have hurt the destroying party), or even dismissal of claims or defenses
- Adverse inference instructions: One of the most damaging sanctions — the jury is told to assume the worst about what the destroyed documents said
- Default judgment: In extreme cases, courts have entered judgment against parties who deliberately destroyed relevant evidence
- Attorney’s fees and costs: The opposing party may be awarded legal fees caused by the spoliation
- Criminal contempt: In cases involving court orders, willful destruction can result in criminal contempt charges
These consequences apply even when document destruction was not intentional — courts can find spoliation from negligent failure to implement an adequate litigation hold.
Implementing an Effective Litigation Hold Protocol
New York businesses can reduce litigation hold risks significantly by establishing a written protocol before litigation ever arises. Key elements of an effective protocol include:
- Trigger identification: Define the events that require legal counsel review for hold obligations
- Legal counsel notification: Establish a clear process for promptly notifying in-house or outside counsel when trigger events occur
- Hold notice issuance: Document the issuance of formal hold notices to all relevant custodians
- Shredding schedule suspension: Establish a process for suspending relevant portions of your document destruction schedule promptly when a hold is issued
- Custodian acknowledgment: Require written acknowledgment from hold notice recipients
- Hold monitoring: Assign responsibility for monitoring hold compliance throughout the litigation
- Hold release: Establish a formal process for releasing the hold when litigation concludes — and for resuming normal destruction schedules
Explore our full shredding services to understand how a professional destruction program can be paused, adjusted, and resumed around your litigation hold obligations seamlessly.
Why New York Businesses Choose New York Shredding
For over a decade, New York Shredding Document Destruction, Inc. has helped businesses across New York City, Long Island, Westchester, and the Hudson Valley maintain compliant document destruction programs. We understand that litigation holds are a reality of doing business, and our flexible scheduling and documented chain-of-custody processes make it easy to adjust your shredding program when legal obligations require it.
Whether you need ongoing scheduled shredding or assistance designing a document management program that works alongside your litigation risk management strategy, we serve all five boroughs and surrounding areas. Contact us today for a free consultation and ensure your document destruction program is built to withstand any legal scrutiny.
Ready to build a compliant document destruction program? Contact New York Shredding for expert guidance, or explore our shredding services for New York businesses navigating litigation and compliance challenges.