An interesting thing too you may experience at discovery is that the other party has documented their own parallel but self-serving version of events via emails

An interesting thing too you may experience at discovery is that the other party has documented their own parallel but self-serving version of events via emails to themselves. e.g. "Today Harry repeated his threats to sue us for fraud. Todd and I are trying to work out how to deal with it, its new territory for us." Option #3 leaves you open to this unpleasant scenario.