From the Experts: No Party? No Cry

June 29, 2011Articles Corporate Counsel

The CEO was livid, and justifiably so after being informed that his company's supplier intended to breach its supply agreement. It was evident that the path going forward would lead to litigation, and lawyers were summoned to begin immediate work on a complaint.

Recent case law has clarified a party's preservation obligations in this situation. As detailed in The Pension Committee of the University of Montreal Pension Plan et al. v. Banc of America Securities, LLC (2010), the duty to preserve attaches whenever a party reasonably anticipates litigation.

However, what about the following scenario: The CEO of Company X sits down for a morning cup of coffee, reads her online newspaper and finds that a former business partner is a party to a major lawsuit. Even worse, the subject matter of the lawsuit may well involve the former partner's relationship with Company X, raising a real possibility that its documents and electronic data may be of interest.

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