What is a legal hold?
A legal hold is a collection and preservation process used in law and information governance that protects information relevant to pending or potential legal matters. Litigants put a legal hold on their information on a particular subject so that it is not deleted during the data lifecycle before the matter has been resolved.
Legal hold is a crucial process in the e-discovery and evidence gathering procedure. It’s how parties to a matter go about collecting information of potential relevance to issues in the case . A legal hold request can involve any kind of digital data that can be deemed relevant, from emails to Word documents to text messages.
In an ideal legal hold process, parties comply completely with the hold. Very often, there will be gaps in the hold, for definite reasons or what we call "failures of knowledge," and "failures of behavior."
Failing to implement a full and compliant hold can result in multiple kinds of sanctions. Legal holds are required by law – they are no longer an optional part of the process.
When you should issue a legal hold
Once you determine a reasonable likelihood of litigation, an investigation, or other legal proceedings, it is essential that you act quickly to preserve relevant information, especially since electronic information can be easily altered or lost. If a complaint has been filed or litigation is otherwise underway, a hold should be issued immediately. However, even if litigation has not yet commenced, you must issue a legal hold if you have reason to anticipate a reasonable likelihood of litigation or other legal proceedings and you know of potentially relevant information, systems, or individuals that must be maintained. As a general rule, the legal hold should be issued as soon as you reasonably believe litigation is imminent. Ineffective legal holds typically result from failure to issue a hold on a timely basis. Once notice of possible litigation is known, the duty to preserve information arises; your response to the anticipated litigation should begin immediately.
How to issue a legal hold
The most important purpose of legal hold is to preserve information. At the time the legal hold is placed and communicated to relevant parties, an investigation is typically underway in anticipation or response to litigation; a government agency has started an investigation; or a case has been filed. Based on the company’s understanding of the pending or threatened litigation, the company may choose to take certain proactive and remedial steps that fall under the general heading of "litigation preparedness." For example, and as described below, a company might choose to suspend certain data deletion and destruction policies or implement and maintain a litigation case file that identifies key custodians and custodial location data.
Issuing the legal hold The initial communication is very important. The communication should be clear and is best communicated by email (with storyline and specific instructions). It should clearly describe the dispute or controversy at issue, why there is reason to believe the company or a particular business unit within the company may be affected, what types of materials may be affected, and why those materials may be relevant. Failure to describe the nature and scope of the controversy or dispute may result in parties improperly ignoring the legal hold based on a mistaken assumption that the company is overbroad in its litigation hold. Additionally, overbroad language may also affect enforceability. The communication should be sent by an officer of the company having sufficient authority to command respect and receive compliance, and/or legal counsel (internal and/or external). Whoever sends the communication should be widely known and respected within the company as possessing knowledge about the dispute and the importance of the preservation of relevant materials. Grounding the legal hold in legal advice can also enhance credibility. Affording the recipient the opportunity to have a personal conversation with the sender over the telephone may encourage better compliance. It is also critical that the initial communication include a measure of ownership and responsibility for legal hold compliance. Indefinite assignments of responsibility, coupled with vague terminology such as "you are responsible for [information preservation]," tend to result in individual custodians assuming that someone else will be responsible and that they themselves won’t be subject to responsibility. This may be especially true if there is reluctance to challenge supervisory personnel. By contrast, communications that specifically identify a list of custodians who are required to comply, and/or assign specific custodial responsibilities to specific custodians, are far more effective than a general notice that "everyone in the company" is responsible. For example, rather than vaguely identifying that "custodians of data and devices" are included in the scope of the preservation notice, a carrier might identify the spokesman’s office spokesperson by name. This would be far more effective than simply advising all custodians within the spokesman’s office to take appropriate action.
Notification to relevant custodians and personnel The notice should be widely disseminated to include not only the identified custodians but to all employees who may retain relevant information. In some cases and depending on the company structure, this may mean sending communications to hundreds or even thousands of employees. Ideally, the company’s IT and/or e-discovery support staff should segment the employees to whom the notice is sent to include only those who possess relevant information.
Legal hold notice example
A Legal Hold Notification is a communication, usually in writing, notifying targeted custodians on a matter or litigation that they are required to preserve relevant documents, and electronic documents (or ESI), regardless of where the data resides, and take additional actions to properly preserve potentially relevant data in the scope of the Legal Hold. Following are some sample language that can be utilized in crafting a legal hold notification:
The (company) is involved in litigation. It is critical that we preserve all documents, data and tangible things related to this matter. This is known as a "legal hold." Do not delete or destroy any data requested in the attached Legal Hold Questionnaire. If you do not understand any part of this notice, please contact (name, telephone) immediately.
All electronically stored information that may be deemed relevant to the pending or future anticipated litigation must be preserved and protected from deletion, overwriting or modification. This includes the destruction of any backup tapes, email archives, home computers or other electronic devices that temporarily or permanently store data.
Exceptions: The following document types do not need to be preserved: advertising material, computer software, software documentation and marketing material, subject to separate approval by (name, telephone).
Your Responsibilities
Your cooperation in this is vital. Please take care of the following action item(s):
-Identify all systems, files and e-mail you use and any backup system(s) you use. (Complete the attached Legal Hold Questionnaire.)
-Make a copy of the completed Legal Hold Questionnaire and e-mail it to (name, telephone)
-If you are an evidence custodian, maintain and track any evidence you may have.
-Be ready to assist us in retrieving important documents.
Also if you have any questions regarding this Legal Hold Notice, or if you have specific questions concerning information that is covered under the Legal Hold Notice, please contact (name, telephone) immediately.
Please sign and date below and return this page by (date).
I hereby certify that I will not destroy, modify, delete or otherwise change any data, documents, ESI or tangible things that I have in storage for the company or possesses that pertain to this litigation or are deemed relevant to the pending or future anticipated litigation. This certification will expire after this matter has been resolved.
Best practices for legal holds
The best way for a business to manage eDiscovery is to be pro-active about the legal hold process and ensure that there are adequate policies and procedures in place. This means that decisions should incorporate the organization’s culture; respect privacy; conform to applicable laws, and statutory and regulatory requirements; strike an appropriate balance between the competing costs of preserving data and the risk of sanctions for spoliation.
Depending on the size of the organization, follow-up audits are recommended to ensure that notices were delivered properly and understanding the duty to preserve and that employees are complying with the legal holds. The auditor is encouraged to ensure that custodians understand the importance of the notices delivered to them.
Regular reviews or audits are also important for identifying trends or events that trigger a preservation obligation. A legal hold creates a duty to preserve relevant information when litigation is "reasonably foreseeable." This does not mean that entities must maintain and indefinitely preserve all records regarding a potential claim that has not yet arisen into a full-fledged lawsuit. Nonetheless , routine audits can help highlight departments or data sources that have been the subject of past disputes and can be used to help identify groups that may need to be placed on notice for a current investigation.
Documentation required for any legal hold process should be thorough and should include legal hold notices, material collected in response to the notice and any explanations for exceptions to or deviations from the notices, such as deletions, returns, and modifications, as well as reports and communications with preservation custodians.
Common problems and solutions with legal holds
Implementing an effective legal hold can be a significant challenge. Many factors contribute to the difficulties that organizations face when it comes to issuing and adhering to legal holds. Ignoring these difficulties, or failing to consider the potential ramifications of non-compliance, can be disastrous.
The first inherent challenge to implementing and adhering to legal holds is that the rules governing legal holds are extremely vague. Courts have not developed a clear record for what constitutes a "reasonably diligent" or "reasonable and prompt" effort to implement a legal hold. Additionally, because the duty to preserve is an ever-evolving area of the law, the legal standard for when a legal hold must be issued can change at any moment. As a result, there is no set time frame that an employer must follow when issuing a litigation hold after becoming aware of the potential of future litigation.
The second inherent challenge is the dissemination of a legal hold. Legal holds should be issued as soon as a party reasonably anticipates that it will become involved in litigation. However, the legal hold itself must be expressed in layman’s terms so that employees understand their obligations. Careful consideration should be given to the wording of the hold. In some cases, a broad instruction to "preserve all documents and communications" will be sufficient. In other situations, it may be necessary to specifically identify the types of documents to be preserved.
Once an initial litigation hold is issued, a revision should be anticipated once information regarding the future litigation becomes available. While this might seem like an unrealized opportunity to forget about the legal hold altogether, litigation holds require a commitment to preservation over the long term. Employees should be reminded of their obligation to preserve all potentially responsive electronically stored information and to identify newly created information that is covered by the hold. Where a hold has been issued, it is imperative that adequate controls are put in place to ensure that potentially responsive information is preserved.
To combat the issues of a vague preservation order and disseminating a legal hold, organizations can develop a plan. By putting a plan in place that includes proper processes and procedures, as well as an effective communication plan, the risk of a successful sanctions motion can be minimized. Of course, an organization that fails to implement any sort of plan at all would face the same risk. Therefore, the answer is not that a plan should be avoided; it should simply be executed with care, consideration, and vigilance.
How tech can help with legal holds
Technology plays a crucial role in the effective administration of legal holds. In addition to document management systems and e-discovery software, there are now specialized legal hold solutions that can streamline the preservation process. These tools offer features such as automated notices to custodians, tracking and management of acknowledgments, transfer of folders and files to a secure SharePoint environment and monitoring for violations. Advanced solutions not only help to centralize the process , but also provide clear visibility into the current status of various matters and the legal hold process.
Such systems also integrate experience-based templates that include best practices and built-in compliance triggers to help reduce risk. As a result, firms that have implemented these systems have reported time savings of about 50% in their legal hold process. This increased efficiency can free up resources to allow attorneys to focus on other important aspects of the discovery process. It can also reduce the margin of error by eliminating key staff members from the burden of day-to-day record keeping tasks.