Pre-Litigation Documentation Checklist for Texas Businesses

A practical framework for Texas business owners facing — or anticipating — a commercial dispute

Prepared by Prasla Law Firm PLLC · Greater Houston, Texas

When to start using this checklist

This checklist is for Texas business owners in any of these situations:

A business dispute is brewing — late payments, contract performance issues, partnership tensions, vendor problems, employee separations
You have received a demand letter or expect to receive one
You have decided to send a demand letter
A counterparty is threatening litigation
You have just been served with a lawsuit
You suspect you may need to file suit in the next several months

The earliest version of "litigation prep" is rarely about lawyers — it is about preserving the evidence that will determine the outcome. Documents lost in the first 30 days of a dispute often cannot be recovered, and their absence shifts cases against the party that should have preserved them.

This is not legal advice. Reading this checklist does not create an attorney-client relationship. Serious disputes should involve experienced counsel as early as possible.

Section 1 — Trigger event: a dispute is now reasonably anticipated

The moment a party "reasonably anticipates" litigation, a duty arises to preserve documents and information that may be relevant. Failure to preserve can lead to court sanctions — including adverse-inference instructions to the jury — that can be devastating to the case.

A dispute is generally reasonably anticipated when any of the following has occurred:

[ ] A demand letter has been sent or received
[ ] A formal complaint or grievance has been filed
[ ] A material breach of contract has been alleged or has clearly occurred
[ ] A counterparty has retained counsel and counsel has communicated about the matter
[ ] An owner, partner, or member has made a written claim of fiduciary breach, oppression, or accounting demand
[ ] An employee has alleged wage, discrimination, or whistleblower violations in writing
[ ] An adverse government investigation has been opened
[ ] A regulatory letter alleging violations has been received
[ ] You are seriously preparing to file suit yourself

When any of these occurs, move to Section 2 immediately.

Section 2 — Implement a litigation hold

A litigation hold is the process of preserving documents and information potentially relevant to the dispute, suspending any document-destruction routines that would otherwise apply.

Immediate actions

[ ] Identify the people likely to have relevant information ("custodians") — leadership, project managers, sales staff, accounting, IT, anyone who interacted with the counterparty or worked on the matter
[ ] Send a written hold notice to each custodian instructing them to preserve all documents and communications related to the matter
[ ] Suspend any auto-deletion of email, chat, voicemail, or document storage that could affect potentially relevant information
[ ] Identify and preserve text messages, WhatsApp, Signal, Slack, Teams, and other messaging platforms used for business
[ ] Identify and preserve cloud storage (Google Drive, Dropbox, OneDrive, Box) where relevant materials may exist
[ ] Preserve voicemails — especially those from or about the counterparty
[ ] Identify and preserve relevant accounting records (QuickBooks, Xero, journal entries, invoices, payment records)
[ ] Preserve physical files — paper contracts, correspondence, notes, mail, internal memos
[ ] If departing employees have left recently or may leave, preserve their email accounts, devices, and access logs
[ ] Coordinate with IT to suspend any device wipe-and-reissue programs for affected custodians
[ ] Document the hold itself — when implemented, who received notice, what was preserved

Common preservation failures that destroy cases

Auto-deletion of email after 90 days
Wiping a departed employee's laptop and email account
Using personal devices or personal email for business and not preserving them
Destroying paper records under routine retention policies
Allowing custodians to "clean up" their own files in response to a hold
Failing to preserve text messages on mobile devices

Section 3 — Gather the contract and transaction documents

For a contract-based dispute, the underlying paper trail almost always controls the outcome. Gather:

[ ] Executed agreement(s) — signed copies of every contract, amendment, addendum, and side letter
[ ] Drafts of agreements (if relevant to interpretation or course of negotiation)
[ ] Term sheets, letters of intent, and pre-contract correspondence
[ ] Purchase orders, work orders, change orders, and statements of work
[ ] Invoices and payment records
[ ] Delivery confirmations, receipts, and acceptance documentation
[ ] Notices given under the contract (default notices, cure notices, termination notices)
[ ] Performance records (deliverables, milestones, work product, services rendered)
[ ] Inspection reports, defect reports, or quality-control records
[ ] Insurance policies that may provide coverage
[ ] Subcontractor agreements if applicable

Section 4 — Gather the communications

Communications often determine intent, knowledge, and course of dealing. Preserve:

[ ] Email correspondence with the counterparty, organized chronologically
[ ] Internal email about the matter — particularly leadership and management discussions
[ ] Text messages and other mobile communications about the matter
[ ] Slack, Teams, or other workplace messaging about the matter
[ ] Meeting notes, minutes, and recordings
[ ] Phone logs and voicemails
[ ] Letters and physical mail
[ ] Internal memos and reports
[ ] Communications with third parties about the matter (vendors, consultants, lenders)

Important: Do not selectively preserve only the favorable communications. Preserving everything is the rule; production decisions about what is relevant and discoverable come later, with counsel.

Section 5 — Gather the financial records

For damages, valuation, and accounting purposes:

[ ] Profit-and-loss statements and balance sheets covering the relevant period
[ ] Tax returns (typically 3-5 years before the dispute)
[ ] Bank statements and check registers
[ ] Accounting software exports (general ledger, accounts receivable, accounts payable)
[ ] Customer and vendor records
[ ] Invoices and payment records related to the dispute
[ ] Internal cost analyses, budgets, and forecasts
[ ] Audit reports (if any)
[ ] Financial statements provided to lenders or investors

Section 6 — Identify witnesses

Memory fades fast. Identify and document who knows what before stories drift:

[ ] Employees with personal knowledge of the events
[ ] Former employees who may have knowledge (and contact information for them)
[ ] Outside consultants, contractors, or vendors involved
[ ] Other parties to meetings or negotiations
[ ] Witnesses to specific incidents
[ ] Industry experts who may serve as expert witnesses
[ ] Other counsel involved in the underlying transaction

For each witness, capture: name, role at the time, current contact information if known, and a brief description of what they know.

Section 7 — For LLC and partnership disputes specifically

If the dispute involves a business partner, member, or shareholder, gather:

[ ] Operating agreement / partnership agreement / shareholder agreement, current and all prior versions
[ ] Buy-sell agreement
[ ] Voting agreements
[ ] Capital contribution records and member capital accounts
[ ] Distribution history
[ ] Meeting minutes and resolutions (member, manager, or board)
[ ] Tax filings showing ownership percentages and allocations
[ ] All communications among owners about the disputed conduct
[ ] Records of compensation paid to members or officers
[ ] Records of related-party transactions
[ ] Any prior demand for accounting or books-and-records inspection

Section 8 — Things NOT to do

This may be the most important section.

Do not destroy or alter documents

Even routine deletion of email or paper files after a dispute has arisen can be characterized as spoliation, with severe consequences.

Do not communicate with the counterparty without counsel

Once a dispute is mature enough that litigation is anticipated, every communication can become evidence. Casual emails, voicemails, or text messages can hurt your case in ways you cannot anticipate.

Do not communicate with the counterparty's lawyer without your own counsel

If the counterparty is represented, communications should run lawyer-to-lawyer.

Do not post about the matter on social media

LinkedIn posts, Facebook updates, Instagram stories, X/Twitter — anything related to the dispute or the counterparty becomes evidence and can also expose you to defamation claims.

Do not "clean up" files

Any tidying, archiving, or reorganization of documents during a dispute can be reconstructed by forensics and characterized as concealment.

Do not use deleted-message features

Disappearing-message features (Signal, Snapchat, certain Slack/WhatsApp settings) used after a dispute arises can be sanctioned as intentional spoliation.

Do not record conversations without consent

Texas is a one-party-consent state, but recording can still create evidence and credibility issues. Discuss with counsel before recording any conversation related to the matter.

Do not take or share documents you don't own

Removing employer documents to support your claim, downloading company files after a dispute begins, or accessing accounts you no longer have authorization to access can each create separate causes of action against you.

Section 9 — Engage counsel

Once a dispute is reasonably anticipated, attorney involvement protects your position in several ways:

Privilege. Communications with outside counsel about the dispute are typically privileged. Communications with internal personnel about the same dispute often are not.
Litigation hold management. Counsel can issue, monitor, and document the hold in a way that withstands judicial scrutiny.
Strategic preservation. Counsel can assess what is most important to preserve and how, including engaging forensic experts where needed.
Communications with the counterparty. Counsel can manage all substantive communications, including demand letters, responses, and settlement discussions.
Early case assessment. Counsel can evaluate strengths, weaknesses, exposure, realistic outcomes, and budget — early enough to inform decisions.

Engaging counsel does not commit you to litigation. It commits you to making informed decisions.

Section 10 — A practical 7-day plan

If you are starting from a standing start with a dispute that just emerged:

Day 1:

Implement the litigation hold per Section 2
Identify custodians
Suspend auto-deletion

Days 2-3:

Gather contract and transaction documents (Section 3)
Gather communications (Section 4)

Days 4-5:

Gather financial records (Section 5)
Identify witnesses (Section 6)
Engage counsel if not already done

Days 6-7:

Sit down with counsel for a strategy conversation
Decide whether to send/respond to a demand letter
Decide whether to file suit, defend, or attempt resolution
Establish a budget and timeline for next steps

Next step

If you are facing a brewing or active business dispute and want to discuss strategy, we are happy to talk. Initial consultations are confidential.

Schedule a consultation: 713-955-4045 · znp@praslalaw.com

IMPORTANT LEGAL NOTICES

The information in this checklist is for general educational purposes only and is not legal advice. Reading this checklist does not create an attorney-client relationship. Litigation strategy is fact-specific. For advice about a specific matter, consult a licensed attorney.

Prasla Law Firm PLLC · 800 Bonaventure Way, Suite 154, Sugar Land, Texas 77479

Attorney Advertising. Not Certified by the Texas Board of Legal Specialization. Prior results do not guarantee a similar outcome.