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The Basics of E-Discovery , Chapter 4: Legal Hold

In the world of e-discovery, legal holds might be the most visible part of the entire process. Unlike the more technical elements of e-discovery like data collection and processing, most legal professionals have at least some familiarity with legal holds, how they work, and what they are designed to accomplish. What also distinguishes legal holds from other e-discovery processes is that they extend beyond the walls of the legal department and impact the whole company.

Legal Hold Definition

For those of you who aren't as familiar with legal holds, here is a definition: a legal hold is a notification sent from the legal team to employees instructing them not to delete electronically stored information (ESI) or paper documents that may be relevant to a new or imminent legal matter.

Why Legal Holds?

Legal holds have been around for a long time, but they really came to forefront in the US in 2003 following Judge Shira Scheindlin's groundbreaking rulings in Zubulake v. UBS Warburg. In one of her five influential rulings, Judge Scheindlin wrote, "[o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a 'litigation hold' to ensure the preservation of relevant documents." Since Zubulake, legal holds have become a standard practice among litigants to fulfill their preservation duties, and failure to do so is a common cause of e-discovery sanctions.

Case law precedent aside, legal holds make a lot of sense. It's not reasonable to expect legal and IT teams to go out immediately and collect every bit of potentially responsive data for every matter in order to ensure nothing was deleted. Companies would need teams in the hundreds to pull that off, and the business disruptions would be severe. But it's also not acceptable to just expect parties to collect and produce data only when it's absolutely needed as key evidence. Data would inevitably be lost, and litigants would have little to support their claims and positions. The legal hold is the perfect medium. It ensures potentially responsive data is preserved while imposing the least amount of strain on a company's workforce (although there are plenty of e-discovery practitioners out there who would attest to PLENTY of strain when it comes to dealing with legal holds).

The Legal Hold Process

As mentioned earlier, the legal hold process centers on the legal hold notification. But there is a lot more that goes into a truly defensible legal hold process, meaning one that can stand up to the scrutiny of a court. Here are some other important considerations:

When do you send the legal hold?

In many ways, the legal hold represents your first line of defense against deletion of potentially relevant evidence, commonly referred to as "spoliation." Consequently, it should go out immediately once litigation commences or can be reasonably anticipated, such as an acrimonious employee dismissal or product defect that will almost surely prompt litigation.

Who sends the legal hold?

A lot of large companies deal with dozens, if not hundreds, of active litigation matters at any one time. And each one has at least one legal hold attached to it. Managing the legal hold process can amount to a full time job and is often shared among a team of people. While the legal hold might list a company attorney as the official "sender," the process is often managed by paralegals or e-discovery managers, who specialize in the nuances of day-to-day legal hold management, and who don't need extensive legal training to perform the job effectively.

Who do you send the legal hold to?

The legal hold should go to anyone who might possess potentially relevant ESI. That list is far from static. As legal teams uncover more of the underlying facts of the matter, the list of custodians (legal hold recipients) will evolve. In some cases, new people will be added to the hold. But it's not uncommon for people to be released from a hold as well, as described below.

What goes in the legal hold notification?

There is no specific legal requirement for what goes into a legal hold notification. That being said, an effective legal hold communication will clearly and succinctly establish the specific ESI or paper documents that need to be preserved, using things like names, dates, and underlying issues of the matter. It should also make clear the legal necessity and include an easy way for the custodian to get in touch with the legal team if they have any questions.

How do you ensure custodians comply?

Clearly, legal teams don't have time to go to custodians one by one to make sure that everyone is complying with the request. But a legal hold shouldn't be seen as a total leap of faith either. Tracking acknowledgements of the hold, reminding custodians of their hold obligations, and having a plan for dealing with unresponsive custodians is all part of having a defensible legal hold process.

Is the legal hold process enough to meet preservation obligations?

In most instances, a strong legal hold process will get the job done. However, should a key custodian ignore the hold and delete responsive data, a judge could very easily determine that stronger preservation measures – such as ESI collection – should have been taken. For highly relevant custodians, it may be best to collect right away since you know you'll need the data at some point no matter what.

What happens when the legal matter ends?

Just like the initial legal hold notification is intended to alert the custodian of current or pending litigation, there needs to be a communication that alerts them to when that duty to preserve has ended. You don't want to leave custodians on hold forever or nothing will ever get deleted, but you also want to make sure that custodians involved in concurrent holds aren't mistakenly released from still active ones, which might result in spoliation (more on this below). Your legal hold process should include legal hold release procedures, which you can learn much more about in Exterro's white paper, "Four-Step Guide to Releasing Legal Holds."

Legal Hold Challenges

On paper, the legal hold process looks fairly straight forward. While somewhat true, the devil is in the details. There are a variety of legal hold challenges that legal teams frequently encounter that require strong organization, proactive planning, and more than a little flexibility. Some important things to prepare for when creating a legal hold process include:

Overlapping or Cascading Legal Holds

Simply tracking who is assigned which hold(s) can be an exhausting and highly stressful process. It's not uncommon for large corporations to have hundreds of active legal holds at one time, and that means thousands of custodians, many of whom are on more than one concurrent hold. Consequently, when a legal matter closes, you can't simply release all associated custodians from their legal hold obligations, or you risk jeopardizing preservation efforts tied to other, active matters. As stated earlier, you shouldn't leave custodians on hold forever. That may be the "easiest" workaround, but it's definitely not the smartest. Instead, it's critical that you have a system for legal hold tracking that indicates all the holds to which each custodian is connected. Some organizations do this via spreadsheet. But more and more, companies are moving towards more advanced legal hold systems that automate the tracking and actually have built-in controls that alert, or even disallow, users from releasing custodians who are still tied to active matters. Watch this video clip of David Yerich, E-Discovery Director at UnitedHealth Group, to learn more about the custodian tracking challenge and how his company addressed it.


legal-hold-overlapping
Knowing who to release from holds and when keeps things organized.

Cross-Border E-Discovery

Generally, the United States' legal system places greater emphasis on obtaining evidence than those of other nations, and the U.S. has arguably the most aggressive discovery requirements of any nation in the world. In fact, the mere concept of a legal hold is somewhat alien to practitioners and judges beyond the U.S. For this reason, the seemingly harmless act of issuing a standard legal hold to a foreign-based custodian may itself violate data protection and privacy laws of another country. This risk can be mitigated by tailoring the hold to be consistent with regional and local rules. For example, the hold may give the recipient the option of having their personally identifiable information retracted. Other strategies for developing a globally compliant legal hold process are addressed in Exterro's white paper, "Protecting Privacy in Cross-Border Litigation."

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The U.S. legal hold isn't necessarily met with the same level of recognition and requirements internationally.

Employee Status Changes

It goes without saying that a legal hold is only effective if it actually reaches the desired recipient. That's not always so easy when employees are constantly switching positions, moving offices, going on extended leave, or leaving the company altogether. There are situations when a new employee must be placed on hold immediately: when litigation involves the activities of an entire department or when the incoming employee inherits documents from his or her predecessor. For large, geographically dispersed organizations, it's unrealistic to expect the legal team to track such status changes on their own. For this reason, the HR department is usually a key cog in the legal hold machine. But getting employee status change information to legal in an efficient and timely fashion is a major struggle for many companies. Strategies for identifying employee status changes proactively were discussed on Exterro's recent webcast, "E-Discovery Implications for Employee Movements."

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HR leads the way in communicating employee changes so custodian data can be properly handled.

Unresponsive Custodians

Almost any legal practitioner will tell you that dealing with unresponsive custodians is a frustrating, yet unavoidable, reality of managing the legal hold process. Remember, custodians are regular employees. They have day-to-day responsibilities and aren't typically all that invested in the company's legal affairs. But compliance is everything with legal holds, so dealing with unresponsive custodians has to be part of the overall plan. There are a variety of best practices for improving custodian compliance rates. Some of the simpler steps include making very simple, easy to read, hold notifications so custodians aren't confused and less likely to ignore the email. Developing a consistent reminder schedule and incorporating escalation notices (discussed below) can also keep holds top-of-mind for busy custodians.

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A good legal hold is clear and persistent.

Legal Hold Best Practices Checklist

Fortunately, there are many resources to turn to for legal hold guidance. E-Discovery think tank The Sedona Conference, has put together a great Commentary on Legal Holds. Exterro also provides some good tips in our white paper, "Five Steps to Avoiding Common Legal Hold Mistakes."

For some best practices on the go, here is a checklist to get you started:

Legal Hold Best Practices

Don’t delay issuing the hold

The "reasonable anticipation of litigation" standard for when preservation obligations begin is highly ambiguous. Rather than wait for litigation to commence before issuing the legal hold, which many companies still do, you're better served developing a process for identifying the preservation trigger event and use that as the basis for when to issue the legal hold. Every situation is different, but you should be able to build out some standard protocols. For example, if your company discovers a major defect in one of its products that has the potential to cause physical injury, it's probably a reasonable assumption that litigation will soon follow. The cardinal rule: If a judge might think it, you should be thinking it.

Develop an interview strategy

The duty to preserve potentially relevant ESI applies to all custodians, including those who may have had only a passing encounter with the central issues in the litigation. Zubulake established that legal teams are expected to conduct a reasonable investigation and evaluation of the relevant facts and circumstances surrounding that matter to precisely scope the legal hold – both in terms of relevant custodians and data sources. One of the most effective ways attorneys can rapidly turn up necessary information for legal hold scoping is through custodian interviews. To be effective, the custodian interview process must be conducted in a consistent, repeatable manner to ensure the information that results can be easily processed and acted upon. More on this in the technology discussion below.

Develop carefully defined reminder, update and escalation schedules

You recognize the trigger, identify the custodians, prepare the notice, and send it out. Guess what, you're just getting started! You also have to monitor compliance. What this looks like in practice will vary company to company. At a minimum, reminder notices should be distributed on a regular schedule, which is especially important for legal matters that last a while and require custodians to preserve data for prolonged periods of time. In some cases, the information provided in the legal hold might change as more is learned about the matter. For example, the date range for which ESI must be preserved might need to be expanded. Such changes need to be communicated to custodians in a systematic fashion. But reminders and updates won't do much good if some custodians are simply ignoring the notices altogether. For such scenarios, the escalation notice is a much more powerful tool. It's a communication sent to an unresponsive custodian's direct supervisor, alerting him or her that the custodian's inaction is exposing the company to risk and requesting intervention. If the legal hold doesn't get the custodian's attention, chances are that an email or phone call from the supervisor will.

Utilize templates

When it comes to legal holds, consistency is everything. That applies to everything from the initial legal hold notice, to all reminders and interview questionnaires. Remember, custodians aren't legal experts, so simplicity is critical. Once you find notice language and a format that works, stick with it. Templates not only streamline the hold process by eliminating the need to re-create each legal hold notice, but they also help improve compliance rates as custodians grow accustomed to the same type of communication and what's being asked of them.

Make documentation a priority

At some point, your internal legal hold process and actions may be placed under scrutiny, and you may be asked to produce a record of your activities or answer some specific questions about the process. Rather than rely on memory, keep a log of steps taken, key decision points, and process milestones. With good documentation, you can easily demonstrate to the court that the legal hold process was implemented in a reasonable, good faith manner, even if evidence was lost (remember: courts aren't looking for complete perfection). Documentation need not disclose strategy or legal analysis. Rather, it should be focused on the mechanics of the process: The who, what, when, where, and why of various tasks.

Legal Hold Tools

Littered throughout this section, you've encountered references to legal hold technologies. Many companies with large or even moderate litigation volumes outgrow using basic email and spreadsheet applications to manage the legal hold process. Instead, they bring in legal hold software systems that streamline the creation and distribution of hold notices and support automated tracking of activities. Here are a few to look for:

Custodian Tracking & Automation

As mentioned earlier, tracking custodian status changes is a significant legal hold challenge. If you work for a large organization that deals with hundreds of employee departures or significant status changes per year, consider investing in a specialized application that can integrate your HR systems and automate certain actions based on employee changes. For example, the system might automatically trigger an automated message to an IT administrator to preserve the laptop of a key custodian who has left the company. By removing manual intervention from the process, you can help mitigate the risk of evidence spoliation and keep focused on your core legal hold duties, not constantly chasing after the data of departed employees.

Flexible Interviews

Gathering information directly from custodians about the matter is an excellent way to improve the efficiency of your legal hold process. But interviews can also be a huge nuisance for busy workers. You can help bolster response rates by investing in specialized interview software that enables custodians to respond to interviews via a mobile device or tablet, without having to be logged into the legal hold application. That way a custodian can respond to the request at a time and setting that's most convenient for them. The interview templates should also be flexible, so that creators can include different types of questions and response options and not be stuck with a single, rigid interview format for every legal hold.

Compliance Portal

A custodian compliance portal is designed to serve as a one stop shop for custodians to review all their hold obligations at once and take any needed actions without looking back through individual notices. The whole purpose of a compliance portal is to make life easier on custodians. A lot of legal hold applications simply list all the custodian's obligations in a format that isn't very intuitive or user friendly. A more configurable compliance portal allows custodians to only see what they need to see and not become overwhelmed with various buttons and links that don't correspond with any of their specific obligations.

Legal hold software considerations

Exterro provided a list of important legal hold software considerations in our recent E-Book, "Ten Considerations for Selecting a Legal Hold Software Solution."

Conclusion

It's a mistake to think about the legal hold process only in the context of legal defensibility. Legal holds affect everyone, from the members of the legal team responsible for distributing hold notifications and tracking compliance, to the business leaders who are the frequent recipients of legal holds and entrusted with the responsibility of preserving potentially relevant ESI. While the legal hold process might not require specialized legal knowledge or in depth technical skill, there are a lot of moving parts and plenty of opportunities for mistakes. The key to legal hold success is being prepared, which means having a repeatable process and investing in the necessary tools to support it.

Chapter 3
Data Preservation
Chapter 5
Early Case Assessment