Legal holds or litigation holds are a key part of eDiscovery as they involve the entire organization and happen far more frequently than other steps of the eDiscovery process, like data collection or review. Therefore, legal professionals need to have a good understanding of the technological and legal requirements that must be navigated to meet their preservation obligations.
A legal hold, also known as a litigation hold, is the process by which organizations preserve potentially relevant information when litigation is pending or reasonably anticipated. By issuing a legal hold, organizations notify custodians about their duty not to delete ESI or physical documents relevant to a case.
Since under FRCP Rule 37(e) (the section that governs the spoliation of electronic evidence) organizations have a duty to "undertake reasonable actions" to preserve information that is relevant to the case when they anticipate litigation or another type of formal dispute, they need to be able to prove that they have taken "reasonable and good-faith efforts" to ensure that data is not deleted after the triggering event occurs. A triggering event is the event or occurrence that precipitates the party to begin preserving information (for example, when expecting another organization or an employee to initiate litigation.)
Therefore, having a legal hold process in place and using a legal hold-specific tool is crucial to show defensible and good faith efforts to preserve evidence.
Although it's common to think about legal holds as the notification that is sent to custodians in order to preserve information, the legal hold process actually consists of multiple steps:
This is usually the first step in creating a legal hold. The legal team must determine which information could be potentially relevant to a matter. Nowadays, it’s common for this data to be electronically stored information (or “ESI”), but it might also include physical documents, like logbooks and paper files.
A custodian is the person who personally possesses and is in charge of the information that needs to be preserved. Before issuing the hold, legal teams usually work with the IT department to identify all custodians relevant to the case. Custodians can also be “silent custodians”, that is, people in the organization whose data is preserved without getting a notification about it. This type of custodians is frequent in internal investigations, for example.
The legal hold notice is the communication sent to all custodians letting them know that they’re on hold and specifying which information needs to be preserved. This is a key part of the legal hold process that we’ll cover in more detail later.
Reminders should be sent to ensure custodians remember they’re still under a legal hold. Oftentimes, reminders are also needed to make sure custodians acknowledge their legal hold obligations.
Once the legal matter ends, you need to let custodians know that their duty to preserve has ended. Having a sound release process is important so that no custodians are released from their obligations when they shouldn’t, and no custodians stay on hold forever.
Below, we will dive more deeply into all the important aspects about legal holds and best practices in managing them.
In order to minimize the risk of spoliation sanctions, it’s good practice for organizations to have a corporate legal hold policy, where the goals, different steps, and any other aspects of the legal hold process are clearly laid out.
The main goal of the legal hold policy is to ensure a consistent and defensible approach to the preservation obligation. And while this obligation might be well known by legal teams and high-level management, it’s usually not familiar to most employees, including potential custodians of relevant ESI. Therefore, another goal of a litigation hold policy is to help employees understand the duty to preserve information and the potential consequences for the entire organization for failing to comply with this obligation.
A legal hold policy usually covers:
For reference, here’s an example of a legal hold policy from the American Board of Pediatrics.
There is no “one size fits all” solution when it comes to corporate legal hold policies. Each organization needs to find the set of procedures that work best for their specific characteristics like industry, data architecture, retention policies, organizational hierarchy, etc.
However, when developed and implemented the right way, a legal hold policy can significantly improve the organization’s ability to respond and react to its preservation obligations. The key is to keep everyone informed of their role within the organization’s compliance obligations to minimize the risks associated with litigation.
In this insightful webinar, Lindsay Kolar, Corporate Paralegal at Gordon Food Service, goes over the 6 most common challenges legal holds present, and how to meet them successfully with the right processes and tools.
Legal holds arise from a common-law duty to avoid the spoliation of evidence. That duty stretches back to 1722 and the case of Armory v. Delamirie, a dispute between a young chimney sweep and a goldsmith over a found jewel. Since then, the requirements to avoid spoliation have slowly evolved over hundreds of years of case law, which eventually resulted in today’s legal hold requirements.
Although there is no federal rule requiring the implementation of legal holds, and the concept is a fairly recent development, the practical requirements of data preservation have been well fleshed out in case law over the past decade, following Judge Shira Scheindlin’s historic rulings in Zubulake v. UBS Warburg, a case that is regarded as marking the beginning of modern eDiscovery.
In Zubulake, Judge Scheindlin made it clear that parties have an obligation to conduct legal preservation of relevant information as soon as litigation is imminent. However, the process of arriving at that determination—gauging when litigation is “imminent” or "reasonably anticipated" and deciding what qualifies as “potentially relevant information”—can be more complex than it seems…
The most critical step in the legal hold process is determining when the duty to preserve information begins. As established by Zubulake and many other cases, a legal hold is triggered when litigation is “reasonably anticipated.” But what does “reasonably anticipated” actually mean?
Unfortunately, there is no perfect standard for interpreting the phrase. It’s as ambiguous as it sounds. When evidence is lost or the scope of preservation is otherwise questioned, courts tend to weigh other factors, such as whether parties acted with good faith and performed a reasonable evaluation of relevant facts at the time of preservation, to determine whether sanctions are appropriate.
Therefore, it’s important to develop a sound process to identify preservation triggers and issue legal holds accordingly, rather than just wait for litigation to happen, which is a risky practice still followed by many organizations.
On the plaintiff’s side, intentional acts such as sending a cease-and-desist letter are enough to trigger preservation obligations. But the duty may arise earlier than that. In some cases, courts have held that a plaintiff is under a duty to preserve either as soon as they determine that legal action is appropriate or when they decide to bring an action.
The trigger for defendants can seem nebulous at times. Receipt of written notice from the other party would definitely trigger a duty to preserve, but courts disagree on how certain the recipient must be that litigation will actually occur. Generally speaking, the duty to preserve does not require that the threat of litigation be “unequivocal.” A letter threatening litigation could be sufficient to prompt preservation procedures, for example.
In the most clear-cut cases, the duty to preserve is triggered by explicit communication of impending litigation, such as service of process, subpoena, or written or verbal notice. Receipt of notice by an employee or another agent generally triggers preservation for companies.
Additionally, preservation obligations can be triggered by other circumstances, such as local regulations or a preservation order already entered in another case.
However, the threat of litigation must be at least somewhat credible to trigger a duty to preserve. Aimless grumbling shouldn’t bring companies to a grinding halt. As one court explains, “it is not reasonably foreseeable [sic] that every internal employment complaint may result in litigation if not resolved to the employee’s satisfaction.” Courts have long held that, if the notice is merely an “equivocal statement of discontent,” then litigation may not qualify as “reasonably anticipated,” and deletion procedures can continue. (Cache La Poudre Feeds, LLC v. Land O' Lakes, Inc., 2007 WL 684001 (D. Colo. Mar. 2, 2007))
That being said, companies cannot simply ignore vague threats to avoid preservation. If the threat level of litigation is unclear, organizations have an obligation to investigate the situation before purging their files.
Determining exactly when the duty to preserve kicks in can get complicated. But recent amendments to FRCP Rule (37)(e), have brought a new level of predictability to the process—and bestowed renewed power on defensible procedures, such as properly administered legal hold notices. In fact, 2015 amendments to the Federal Rules of Civil Procedure have led to a reduction of 35% in spoliation sanctions.