When a lawsuit is filed, all parties involved are required to thoroughly search their records and share any relevant documents and witness information with each other. This process, known as discovery, is essential in providing fairness in legal disputes. A business owner being sued is required to sift through their records for anything pertinent to a case. Neglecting this duty could lead to sanctions for failing to engage meaningfully in discovery.
Extent of the Duty to Preserve Records
The extent to which one must maintain records can vary. For example, it may be unreasonable to expect a business to keep 15 years of paper files. However, consider a lawsuit focusing on the beneficiary of a 20-year-old insurance policy. What if a company converted old paper files into electronic ones and then shredded the originals? If there’s a suspicion that the beneficiary’s identity was inaccurately inputted, did the company have an obligation to preserve those original records? It’s a grey area and often depends on the specific circumstances.
Likewise, disorganized files can lead to serious issues. Imagine a situation where a health insurance application is misplaced, leading to accusations of nondisclosure of health conditions. If a company negligently fails to provide relevant documents, they might be liable for the opposing party’s legal fees and costs.
A California Case Study: Finley v. Hartford
The case of Finley v. Hartford Life and Accident Insurance Company in California highlights the importance of organized record-keeping. Hartford failed to disclose a crucial surveillance tape during discovery, claiming it was an administrative oversight. The court, while acknowledging that it wasn’t a malicious act, still sanctioned Hartford for not finding and disclosing the tape earlier. The key takeaway is that disorganization is not a valid excuse for failing to find and present relevant materials in a reasonable timeframe. In the Finley case, early disclosure of the tape could have significantly impacted the lawsuit’s outcome.
The Risks of Inadequate Record-Keeping
Without threat of sanctions, there’s a risk that parties might “misplace” documents to obscure the truth, undermining the justice process. If a dispute is foreseeable, it’s wise to ensure your records are well-organized and preserved, making them easily accessible for routine searches. Modern courts also expect accurate electronic records, reflecting the current technology-driven environment. To avoid complications in the discovery process, it’s advisable to consult an attorney. Clear Counsel Law Group can provide valuable guidance throughout the litigation process, ensuring compliance with legal obligations. They can also provide information on best practices for managing your records effectively.