Legal hold

A legal hold is a process that an organization uses to preserve all forms of relevant information when litigation is reasonably anticipated.

The legal hold is initiated by a notice or communication from legal counsel to an organization that suspends the normal disposition or processing of records, such as backup tape recycling, archived media and other storage and management of documents and information. A legal hold will be issued as a result of current or anticipated litigation, audit, government investigation or other such matter to avoid evidence spoliation. Legal holds can encompass business procedures affecting active data, including, but not limited to, backup tape recycling.

Recent amendments to the United States Federal Rules of Civil Procedure (FRCP) address the discovery of electronically stored information (ESI) (aka e-discovery), expanding the use of a "legal hold" beyond preservation of paper documents. The amendments were written in anticipation of legal arguments and tactics related to the production of ESI, such as the cost and difficulty of producing such ESI and claims that such ESI was missing, deleted, or otherwise inaccessible when it really wasn’t the case. These changes took effect December 1, 2006 and require organizations to hold all electronic records until each legal matter is formally settled, even if an organization only reasonably anticipates litigation.

Process

There are three main requirements that comprise a legal hold process:

Hold notification

An organization has a duty to preserve relevant information when it learns, or reasonably should have learned of pending or threatened litigation, or of a regulatory investigation. In order to comply with its preservation obligations, the organization should inform records custodians of the respective custodian’s duty to preserve relevant information. The organization should provide instructions for doing so. This traditionally cumbersome process may be automated with workflow to ensure all custodians receive a formal notice and agree to its terms.

This notification and subsequent related reminders should be created and distributed to specific custodians and should require the custodian to confirm receipt of such notification. This is far superior to the traditional use of read receipts reconciliation and follow-up because it allows for an unambiguous custodian response and provides real-time tracking and reporting on custodian responses. Further, automatic logging of all related audit trail information related to the legal hold notification process is also highly recommended.

Organizations that face multiple litigation and regulatory matters at once often struggle to handle the complex moving parts associated with the preservation process. To preserve evidence, organizations must—at a minimum—issue a proper litigation hold at the right time, send it to the right people, and include the appropriate set of data.

In addition, the hold must include precise, clear language that informs all custodians of their responsibilities to preserve evidence. Once the organization issues the litigation hold, the lawyer’s responsibilities toward this data do not end; rather, they must regularly prompt custodians to continue preserving evidence by sending out reminder notices.

To maximize defensibility, a litigation hold program must be grounded in sound, repeatable methodology. The easiest way to ensure consistency in this process is to use templates. Organizations can create litigation hold templates that include, among other things, standard hold language, hold notification text, interview questions, reminder instructions, tags, and release notification text.

In short, the litigation hold itself is the foundation of preservation, and organizations that do not get this process correct endanger their entire litigation portfolio.

Segregated repository for ESI

The process of identifying and eliminating non-relevant documents while identifying and preserving the needed documents out of a set of potentially relevant documents is “culling”. The relevant documents for the case are identified and preserved in a physical repository of relevant or potentially relevant documents subject to the legal hold.

The system must make use of a highly accurate policy-based approach that enables archived and current electronic communications – including e-mail, instant messages, web transactions and communications sent from handheld devices – to be categorized and tagged according to their relevance to specific corporate policy.

Due to the substantial risks associated with deleting, losing, or not having access to such data, this should be a segregated repository to better deal with the unique retention requirements and access needs of this subset of an organization’s stored documents.

Ongoing preservation obligation

Once an organization is served with a litigation notice, all future relevant electronic communication is also subject to the legal hold.

Handling terminated employees on legal hold

When employees leave a company, the fact that their information may be subject to a litigation hold is likely the last thing on their minds. Likewise, IT is probably focused more on redeploying the employees’ technology assets rather than preserving information. Therefore, organizations need a process to ensure that departing employees’ data remains protected. Otherwise, they may be unable to comply with their discovery obligations and could face spoliation sanctions.

Creating a defensible legal hold audit trail

The risks organizations face in e-discovery often correlate directly with their litigation hold practices. Today, most sanctions result from flawed preservation processes that are rooted in the failure to identify all custodians, locate all data sources, or monitor compliance with a litigation hold. Some of the most critical yet most challenging steps in these processes are tracking custodians, the litigation hold notices issued, and the responses received from custodians. When custodians number into the hundreds or thousands, it can be difficult to determine whether they have responded to the initial hold, completed required questionnaires, or reconfirmed their compliance with subsequent hold reminders. Moreover, when companies still rely on manual methods, they may not follow up with custodians once sending out an initial notice, opening their preservation strategy to scrutiny from opposing counsel or the court.

See also

• Electronic discovery
• Electronically stored information
• Records management
• Spoliation of evidence

References

• Applying the Legal Hold
• E-Discovery Advisor Article, Understand Legal Hold Notification Changes
• Litigation Hold Resources -- Understanding eDiscovery Software and Solutions]
• ABA Article on Legal Hold, Are you Litigation Ready
• 6 Legal Hold How-To's

External links

• The Sedona Conference Commentary on Legal Holds, August 2007_{Public Comment Version}
• The Electronic Discovery Reference Model Project (EDRM)
• Legal Holds and Trigger Events
• Electronic Discovery and Litigation Holds