In today’s business world, corporate directors are involved in many complicated decisions and, for the most part, if a decision (and the board’s decision-making process) is adequate, even if ultimately it is determined to be off the mark or dead wrong, board members are not subject to liability. This aspect of the business judgment rule affords directors a certain amount of freedom to make decisions regarding corporate matters so they can efficiently and effectively govern the complex affairs of the company. Directors cannot be “looking over their shoulder” and worrying whether they might be punished for a misstep.
In today’s electronic world, corporations facing litigation must deal with significant logistical and financial challenges, not the least of which is correctly deciding when the duty to preserve relevant information is triggered. Recent decisions by certain federal courts have sent conflicting messages to corporations as to when they should take action to preserve relevant information in anticipation of litigation. Unfortunately, a failure to “get it right” can have serious ramifications, such as sanctions in the form of adverse inferences, monetary fines and dismissal of actions.
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