What Every New Jersey Business Owner Should Do Immediately After Getting Sued: The Litigation Hold Explained

Key Points for Business Owners 

• Act immediately once a dispute escalates. The duty to preserve evidence can begin before a lawsuit is filed, so hesitation can create risk.

• Pause all data deletion or destruction systems right away. Emails, shared folders, and automated backups must be protected to avoid spoliation claims.

• Notify the right people inside your company. Managers, HR, and IT teams should receive clear written instructions on preserving relevant materials.

• Keep a record of everything you do to preserve evidence. Courts view documented good-faith efforts favorably if questions arise later about your process.

• Consult a New Jersey business lawyer early. Legal counsel can confirm when the duty to preserve begins, define its scope, and help issue a compliant litigation hold notice.

When a lawsuit reaches your door, it’s rarely the start of a problem. More often, it’s an escalation in a chain of events that’s already in motion. Perhaps a supplier accused your company of breaching a contract, a partner raised allegations of misconduct, or an employee threatened legal action. Once litigation becomes reasonably foreseeable, New Jersey law imposes a duty to preserve evidence.

That duty is met through what’s called a litigation hold. A process to preserve documents and prevent the alteration or destruction of relevant evidence before the court becomes involved. This article outlines what a litigation hold notice requires, how to implement it properly, and what failing to comply can mean for your business.

What a New Jersey Litigation Hold Means

A litigation hold is a straightforward rule that requires you to stop deleting, overwriting, or discarding any information that could relate to a reasonably foreseeable lawsuit. 

If a former employee has threatened to sue after termination, for example, the hold directs you to preserve evidence like:

• Letters

• Employment agreements

• Performance records

• Internal communications

• And other relevant documents.

The duty extends to both paper files and electronically stored information (ESI), including emails, shared folders, and cloud systems. Once the obligation is triggered, routine document destruction policies must be paused until the matter is resolved.

The purpose of a litigation hold is to prevent the loss or alteration of relevant evidence before a New Jersey court becomes involved. Implementing it correctly shows good faith compliance with the law and protects your business from accusations of spoliation - destroying or tampering with evidence.

When Is a New Jersey Litigation Hold Triggered?

A litigation hold in New Jersey is triggered not by the lawsuit itself, but by the moment it becomes clear that litigation is likely. You do not wait until a summons and complaint are served to act. The duty to preserve documents and relevant evidence begins as soon as a reasonable person would expect a dispute to turn into a formal case.

This could be after receiving a demand letter or cease-and-desist letter, during heated negotiations, or once internal discussions reveal that legal action may follow. From that point, you are legally obligated to preserve evidence and pause any ongoing document destruction or data retention cycles.

Because “reasonably foreseeable” is a fact-specific standard, the timing varies with each matter. Courts will review the nature of the dispute, prior communications, and all surrounding circumstances to decide whether a party should have known litigation was coming.

What a New Jersey Litigation Hold Looks Like in Practice

Here’s what implementing a litigation hold looks like in practice for a New Jersey business:

• Pause automatic deletions

Suspend systems that automatically delete or archive emails and files. This includes shared drives, messaging platforms, and backup schedules that might lead to document destruction.

• Identify key custodians

Determine which employees or departments have relevant documents or data under their control, such as HR, management, or IT.

• Issue a written litigation hold notice

Send clear instructions to all identified custodians explaining their duty to preserve evidence and comply with the litigation hold process.

• Secure digital and physical materials

Make sure laptops, phones, servers, and paper files containing relevant evidence are safely stored and that access is controlled.

• Document your efforts

Keep detailed records of when notices were issued, who was informed, and what steps were taken to preserve documents. This internal record will help demonstrate good faith compliance if the court ever reviews your preservation process.

How a New Jersey Business Lawyer Can Help

Working with a New Jersey business lawyer places your business in the best position to handle a lawsuit effectively. Determining when a litigation hold begins is a legal judgment, and counsel can help you assess the circumstances that make litigation reasonably foreseeable. Your attorney can confirm when the obligation to preserve evidence arises and ensure that your company issues a properly scoped litigation hold notice.

A lawyer will also help define the scope of the legal hold and make sure those materials are preserved in compliance with court expectations. This approach minimizes the risk of non-compliance and strengthens your position if the court later reviews your preservation process or evidence handling.

Final Takeaway for Business Owners

If you suspect that your New Jersey business is about to be sued, do not wait for formal papers to arrive. Consult a business attorney as soon as possible to determine whether your duty to preserve evidence has already arisen.

In our next article in this litigation series, we’ll cover what happens once a complaint is filed, including how to respond after receiving a summons from the court.

Are you wondering about any of the issues mentioned above? Please email us at Info@staturelegal.law or call (732) 320-9831 for assistance.

At Stature Legal, we give business owners the clarity they need to fund, grow, protect, and sell their businesses. We are trustworthy business advisors keeping your business on TRACK: Trustworthy. Reliable. Available. Caring. Knowledgeable.®

FAQs

What Exactly Does a Litigation Hold Mean for My Business?

A litigation hold is a formal instruction to preserve all documents, emails, and other relevant evidence that could relate to a potential or ongoing lawsuit. It means suspending normal document destruction or data deletion policies until the court process concludes. Think of it as pressing “pause” on anything that might erase or alter information that could later become part of the case record.

When Should I Issue a Litigation Hold Notice?

The duty to preserve evidence begins as soon as litigation becomes reasonably foreseeable, not when you receive formal papers. For example, if you receive a demand letter, an employee threatens to sue, or a business dispute escalates, those are warning signs that a litigation hold should be implemented. Acting early demonstrates good faith compliance and helps protect your company from later claims of spoliation.

Do I Need a Lawyer to Implement a Litigation Hold?

While a company can take initial steps on its own, determining when the duty begins and defining its scope are legal judgments. A New Jersey business lawyer helps you identify what must be preserved, draft a clear notice, and maintain defensible records of your actions. Legal counsel also helps protect internal communications through the attorney–client privilege and reduces the risk of non-compliance if the matter reaches court.