Your company made a big mistake. They’ve definitely opened themselves up to litigation, but thanks to a ton of digging and a cunning legal strategy, you’re confident that you can help get them off the hook if things end up going to court. In order to fortify your defense, you work urgently to issue a legal hold to several key employees. You’re not going to let a small accident ruin the rock-solid case you built. No way.
The situation above is relatively common in our world. Legal holds aren’t part of the sexy courtroom drama that people see in movies and on television, but they’re a critical layer of protection for your company; one that could prevent them from getting slapped with serious court sanctions.
In fact, failure to issue a legal hold in a timely manner has been ruled gross negligence or even spoliation in some cases, so it’s important that you know when and how to implement one correctly.
A botched legal hold can cost a lawyer his job, or her company millions of dollars. There’s just very little room for error. That’s why today we’re sharing the six most important things you should consider when implementing a legal hold.
While you’ll often hear this described as a “litigation hold”, we’ve elected to use “legal hold” throughout this article because the latter term covers holds in non-litigation circumstances, such as government investigations and tax audits.
Long story short, not all key employees (or “custodians”) are as responsible as they should be when it comes to legal matters.
Some of them may not even read all of their emails. (Shocking, I know.)
But your company is still accountable for their actions relative to the preservation of electronically stored information (ESI), so it’s up to you to make sure they actually acknowledge the hold.
It’s annoying, but someone might need to follow up periodically until they acknowledge, or even reach out to their supervisor directly if they’re non-responsive for too long.
However, you can avoid this headache by using legal hold software to automate the process. These tools, like Logikcull Hold, give you the option to include a simple “acknowledge” button within the hold email. When the custodian clicks it, their acknowledgment gets logged in the system. It’ll even send out periodic reminder emails if they don’t respond right away. That means no more tracking down custodians—and no more manual reminders to remind you to remind all those employees on hold.
One of the tricky parts about ESI preservation is that, more often than not, you’re dealing with people who don’t even understand what ESI stands for, let alone why the hold matters. Because of that, it’s important to make your hold instructions simple and easy to understand.
Give your custodians concise, simple instructions on how to comply with your preservation requirements. For example, you may consider including language such as this in your hold notice:
Please note that our Company has in place a records retention schedule. During the time this hold is in place, you are requested to suspend compliance with the records retention schedule (which might otherwise dictate that you discard records) for those documents and electronically stored information that you determine are relevant. Do not discard documents or electronically stored information that is relevant. Do not delete, overwrite, alter, or destroy such materials.
A good rule of thumb is to pretend you’re writing instructions to a high school student. Don’t treat them like they’re dumb, but assume they know nothing about law. According to the Sedona Conference Journal, a great hold also “identifies individuals who can answer questions about preservation.”
In other words, point them to someone they can talk to if they have questions.
This gets overlooked so often, and it’s such a critical thing to keep in mind when drafting a legal hold. While a hold letter is typically protected under attorney-client privilege, judges have allowed discovery of these letters in some cases where there’s a preliminary showing that a party failed to preserve evidence.
So, keeping that in mind, don’t include anything that’s potentially incriminating in your hold letter. You should also avoid writing anything that would expose your legal strategy.
Keep your legal hold notice simple. Limit its contents to the minimum your custodians need to know in order to comply effectively.
Courts have ruled that a company needs to take “reasonable efforts” to preserve ESI, and only when litigation is “reasonably foreseeable.”
With rare exceptions, parties have a duty to make reasonable efforts to preserve relevant information when a dispute is reasonably foreseeable.
Let’s be clear: If you have doubts, it’s usually better to err on the safe side. But, in a worst-case scenario when a hold goes wrong or an employee goes rogue, you still have options. You may be able to avoid spoliation sanctions if you can show, for example, that you took reasonable steps to preserve ESI, such as through issuing a legal hold, or if you are able to restore or replace lost information from another source.
Indeed, recent changes to the federal rules on spoliation sanctions have led to a significant decline in sanctions, particularly when the most severe sanctions are involved. But that’s never a situation you want to find yourself in—and why issuing a defensible hold is so important.
Pro tip: a great company has standard protocols in place describing precisely when a legal hold is necessary and the right tools to help them issue and administer that hold effectively.
A legal hold is not a “set it and forget it” type of thing. As your liability and your overall case evolve, so should the scope of your legal hold. Track your holds closely in order to ensure your company remains compliant with any and all potential e-discovery requests as you learn more about your situation.
You may have to keep tabs on a hold for multiple years or update it dozens of times to include new custodians and ESI. Don’t get caught napping. A legal hold tool like Logikcull Hold can help you automate this process, allowing you to automatically send regular reminders to custodians that a hold is still in place on a schedule of your choosing. If a custodian no longer needs to remain on hold, you can release the hold with just a single click, even as the hold continues for others.
But if your company is managing multiple matters, spanning across several years, and involving dozens of custodians, keeping track of things can become hard to track.
That’s why it’s so important to have a single source of truth—one place you can look to see what holds are active, what custodians are involved in a matter, when they were placed on hold, when the acknowledged the hold, and if that hold has been released. \
When a legal hold is no longer necessary, it’s to your company’s benefit to remove the burden it imposes and get back to business as usual. A hold should be removed when a) the litigation has been resolved or settled, b) you are no longer under serious threat of litigation, or c) the ESI is no longer relevant to your legal proceedings.
Your company should have precise release procedures in place, including a process for conducting a custodian and data cross-check just in case that information might be subject to other preservation obligations. This can also be done with software to maximize efficiency.
Litigation is never easy, but with the right legal hold tools in place, you can make sure that your legal hold process is defensible, manageable, and virtually automatic.