Learn more about what a Notice of Litigation is in business.
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What is a Notice of Litigation? Many small business owners will find themselves involved in a lawsuit if their business is operational for long enough. Ultimately, it’s better to know the Notice of Litigation business definition before getting served with a lawsuit.
The definition of a Notice of Litigation is that it’s a legal document that informs the recipient of an impending lawsuit. The notice instructs the recipient to preserve certain business information for use during the lawsuit.
In 2022, much of a business’s information is electronically stored. Naturally, electronically stored information (ESI) is easy to destroy. This is a huge disadvantage for business owners or other parties preparing for a lawsuit. One of the Notice of Litigation advantages is that the sender legally requires the recipient to preserve certain evidence for future use. Many cases rely on business documents generated by the opposing party to prove their case.
Although a Notice of Litigation is not sent directly from the court, it is still an official document. One of the Notice of Litigation disadvantages is that it’s not foolproof. In other words, if the opposing party chooses to disregard the notice, the sender may be out of luck and have to seek sanctions through the court. Additionally, what you do with a Notice of Litigation depends on whether you are the sender or the recipient. A recipient of a Notice of Litigation should:
You’ll need to do all of the above until you receive notice that the matter is resolved. Always be sure to contact an attorney if you are unsure of a directive in a Notice of Litigation. If you need to send a Notice of Litigation, make sure that you do so as soon as possible. Delaying can cause vital evidence to be destroyed.
Notices of Litigation have a few other commonly-used names. Some other names include:
Regardless of the difference in title, they all describe the same legal document.
Depending on your business, there may be many scenarios that cause a party to initiate a lawsuit and send you a Notice of Litigation. For example, if your company recently had an accident occur on its property, there may be an incident report. You may also take subsequent remedial measures to correct whatever defect on the property caused the injury. Any documentation regarding these actions would need to be preserved once the notice is served.
Another example is if your company’s products caused someone injury. You may create discoverable business records by retesting the product to discover how an injury could have occurred. All of this information is discoverable if the injured party decides to file a lawsuit.
A Notice of Litigation is a legal document that directs a potential party to preserve business records, whether hard copy or electronic. The recipient must comply with the terms of the Notice of Litigation and cease the destruction of records immediately.
We offer many business services to help small business owners start and run their companies. And we offer a Registered Agent Service to receive all of your important legal documents — like Notices of Litigation — on your behalf. We strive to make the paperwork and compliance details of running your company a breeze. This frees up your time and energy, so you can spend it where it matters most: running and growing your company.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.