Can records be destroyed during litigation or an audit?

No — not the records relevant to the matter. Once litigation, a government investigation, or an audit is reasonably anticipated or underway, the organization has a duty to preserve records that may be relevant, and its normal disposition must stop for those records. This is enforced through a litigation hold.

The duty to preserve

The obligation to preserve generally begins when litigation is reasonably anticipated — not only when a lawsuit is filed. A demand letter, a credible threat, notice of a regulatory action, or internal awareness of a dispute can all trigger it. At that point, routine destruction of potentially relevant records must be suspended until the matter is resolved and the hold is lifted.

Spoliation and its consequences

Destroying records that are subject to a preservation duty is spoliation of evidence. Courts treat it seriously and can impose sanctions ranging from monetary penalties to an adverse-inference instruction (telling the jury it may assume the lost evidence was unfavorable) to, in severe cases, default judgment. The damage to credibility can be worse than the underlying dispute.

What you can still do

A litigation hold suspends destruction only for the relevant records. Disposition of unrelated records can generally continue on schedule — which is one reason defensible disposition depends on being able to apply holds precisely. The key is a reliable process: promptly identify the custodians and records in scope, issue the hold clearly, suspend automated deletion for those records, and document everything.

The lesson is not “stop destroying everything forever.” It’s that a dependable hold mechanism is what lets an organization keep disposing of records routinely and confidently the rest of the time.