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Legal Holds: A Primer for Legal Managers

A core tenet of our justice system is that opposing parties share potentially relevant evidence prior to trial. As a corollary to that, each party has a duty to identify, locate and preserve such information as soon as litigation is reasonably anticipated. The purpose is to prevent the intentional or inadvertent destruction of evidence that might be used at trial. The legal term for this is spoliation, which is a bad thing.

This article will provide a brief primer on legal holds and the responsibilities they entail.

WHAT IS A LEGAL HOLD?

As soon as litigation is pending or reasonably anticipated, involved parties must stop deleting potentially relevant data. Organizations comply with this duty by issuing a legal hold to everyone who may be in custody of potentially relevant information.

A legal hold is usually executed by the organization’s legal department in conjunction with its IT department. The typical steps are as follows:

  1. Identify key custodians. Identify key custodians and other data stewards such as IT and records management personnel, division managers, the legal department itself and anyone who might have knowledge or data relating to the anticipated litigation.

  2. Issue a written hold notice. The next step is to notify each custodian to stop deleting emails or other documents that relate to the legal matter. In addition, IT personnel should be notified to suspend any routine document retention and destruction.

  3. Provide basic information about the hold. The notice can be delivered in hard copy, by email or even verbally. The safest practice is to have a written record. The notice should describe the matter at issue and the types and potential sources of information that might be relevant. It should inform recipients of their legal obligations and the potential consequences of noncompliance.

  4. Secure an acknowledgement and agreement to honor the hold. While not strictly required, acknowledgements document that each custodian was aware of the preservation duty. The agreement to honor the hold reinforces the seriousness of the situation and demonstrates good faith in your process.

  5. Send periodic reminders. Litigation can take years to resolve. For that reason, you should send periodic reminders about the nature and scope of the hold. Good practice is to send reminders quarterly.

  6. Document every step. There is always the chance that your efforts to implement a legal hold will later be questioned. Failing to document hold efforts is the surest way to make a judge consider sanctions if evidence is lost.


Failure to preserve relevant data can lead to sanctions to a jury instruction to presume the missing evidence was harmful to your case or even a directed verdict.




WHEN DOES THE DUTY ARISE?

The legal hold duty can arise even before a lawsuit is filed. The duty is triggered when litigation is reasonably anticipated. At that point, a party must take reasonable steps to preserve potentially discoverable information.

What is reasonable anticipation? The answer is sometimes obvious, such as if you are served with a complaint. A letter threatening litigation can trigger the duty if the threat is credible. Conversely, if you plan to initiate litigation, that will also trigger the duty.

In many other situations, the answer is not so obvious. The key word is “reasonable” and the standard is objective. It is not whether you in fact foresaw litigation, but whether a reasonable party in the same circumstances would have reasonably foreseen litigation.

WHAT MUST BE PRESERVED?

The scope of what must be preserved can vary widely, depending on the circumstances. Here are key points to consider:

  1. Focus on key custodians. The touchstone is to focus on key custodians and others managing potentially relevant information. These are the individuals who can preserve data subject to the hold and help prevent losses due to routine business operations.

  2. Identify potentially relevant information. In many cases, the sources of potentially relevant information are obvious. In others, the identification of relevant information is more difficult. Consider forming a team to flesh out the details of possible claims and help determine who to contact and where data might be stored.

  3. Determine the scope of the hold. The hold encompasses data that is potentially relevant to the claims and defenses in the litigation. You need not find every scrap of relevant information. A key concept courts consider is proportionality. Your efforts need only be proportional to the needs of the case.

  4. Use reasonable and good faith efforts. Your job is to identify and notify the sources of information within the organization’s “possession, custody, and control” that are likely to include relevant information. This includes third parties and contractors who act under your direction and may hold relevant data.

  5. Continue to monitor the hold. The scope of a legal hold may evolve during the litigation and those subject to the hold may forget. Monitor the process and send periodic reminders demonstrate to protect against mistakes.

  6. Release the hold when no longer needed. When the legal hold is no longer needed, the company is free to release it and take appropriate steps with the data, including deletion. Those subject to the hold should be notified of its termination.

Failure to preserve relevant data can lead to sanctions, which can range from simple curative measures where you pay to find the data elsewhere to a jury instruction to presume the missing evidence was harmful to your case or even a directed verdict. However, if it comes out, this is a bad thing for your company or client — one that can be avoided through a properly run legal hold.

ABOUT THE AUTHOR

John Tredennick is a former trial attorney and Founder and Chief Executive Officer of Catalyst Repository Systems. He served as Editor in Chief of the book Winning with Computers: Trial Practice in the Twenty-First Century.

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John Tredennick

Chief Executive Officer
Catalyst Repository System