You're an in-house legal professional—and there is litigation on the horizon. Your company has been (or is about to be) sued. Or perhaps it has received a communication from a government agency investigating some form of alleged misconduct.
It’s on you to make sure that relevant documents are preserved.
Your company probably has a more or less formalized data retention policy that calls for periodically destroying records. A legal hold, also known as a litigation hold, ensures that data potentially relevant to litigation or other dispute is excluded from this process and is preserved until the hold is released. The goal is to preserve potentially relevant facts and avoid any accusation of “spoliation of evidence”; that is, destroying relevant data, whether documentary or electronic in nature.
But your company has never had a legal hold process, and it has tasked you with creating one. The goal is to create a process that will inform custodians of relevant documents of their duty to preserve those files and to demonstrate a good faith effort to prevent spoliation.
Determining When to Issue a Legal Hold
A legal hold is triggered by some form of notice that litigation is being commenced or an investigation is underway, but the duty to preserve evidence may also arise before the litigation or investigation has begun. Remember that this also applies if your client is planning to sue a third party. The easy case is when litigation has in fact been filed or notice of an investigation is received. The triggering event may also be receipt of a so-called “hold letter” from an opposing party or investigatory body demanding that relevant data be preserved.
But the duty is not always so clear. Factors to be considered in deciding whether to impose a legal hold include whether:
- There has been a specific incident that is likely to lead to a claim against the organization
- There has been a credible threat of litigation by an individual or group
- The organization has discovered internal wrongdoing or a problem that is likely to lead to a lawsuit
- The organization is preparing to bring a claim against another party
Here are some tips for effectively creating, maintaining and documenting legal holds within your organization.
1. Don't Procrastinate
You cannot delay when litigation or an investigation is imminent. This is true whether your company is being sued or plans to sue another party.
Letting days or weeks go by before you institute a legal hold may cause directly relevant data to be destroyed. Err on the side of caution.
2. Identify All Potential Custodians
The first step in a legal hold is to identify those employees (and contractors or third parties, if any) who may be custodians of potentially relevant data. This may include records management, information technology and sales personnel. It may even include the legal department itself.
You will need to understand both your company’s organizational structure and the nature of the litigation. Again, the applicable standard is reasonableness under the circumstances, but it’s wise to initially err on the side of over-inclusiveness.
3. Prepare and Send the Hold Notice
Once you have identified the key people subject to the hold, the next step is to prepare an effective notice. There is no hard and fast formula for what the notice should contain, but, at the minimum, consider including:
- The identity of the person(s) or entity(ies) involved
- A brief description of the dispute
- Examples of the types and sources of information that might be relevant
- Notice of the organization's legal duty to preserve information
- A description of the potentially serious consequences of noncompliance
- Name and contact information for yourself or another individual who can answer questions
- How and by whom the triggering event was identified
- Who sent the litigation hold notice
- When the notice was sent
- What the legal hold notice contained
- When custodians acknowledged the hold
- Supplemental notices due to changes in the litigation
These should be stated in clear, plain language. And because litigation evolves as claims and facts are developed, you will want to promptly send a supplemental notice if and when developments in the litigation or investigation warrant.
4. Request A Response to the Hold Notice
The most efficient way of sending the notice is by email. The notice should clearly request a response from each recipient, acknowledging the receipt of the notice. This helps to drive home the seriousness of the hold—it's not just another routine message from the legal department—and shows that each custodian was made aware of the duty to preserve relevant data.
Automating your acknowledgement process by, for example, including a “confirm notice now” button at the end of your hold notices, can drastically increase the number of confirmations you receive. But however custodians acknowledge the hold, be sure to follow up with any recipient who fails to respond through automatic reminders and, if necessary, escalation to superiors.
5. Send Periodic Reminders
We know that the wheels of litigation usually turn slowly.
Cases can drag on for months or even years.
But only your department is dealing with them regularly. For most of the organization's personnel, these are “out of sight out of mind” matters. After all, they have their day-to-day jobs to do. Yet those same custodians may still have (and may even still be creating) emails, electronic files or other data that relate to pending litigation or investigation.
Sending periodic updates will ensure the custodians know that the hold is still in force. Most experts recommend you do this no less often than quarterly. Be sure to request an acknowledgment comparable to the one described above.
6. Document The Process
If ever your preservation efforts come into question, a well-documented process can be your best defense.
Naturally, you'll want to keep a copy of the notice of hold itself. Be sure the notice includes at least the information set forth above. Maintain records showing how possible custodians were identified and how the notice was sent. Keep a record of who responded to the hold notice (this should of course be every recipient) and what actions and communications resulted from the hold.
At a minimum, documentation of the hold process should include:
- How and by whom the triggering event was identified
- Who sent the litigation hold notice
- When the notice was sent
- What the legal hold notice contained
- When custodians acknowledged the hold
- Supplemental notices due to changes in the litigation
If your organization is a frequent litigant, putting together a reliable, defensible legal hold process can save hours of frustration.
If your company is managing legal holds for the first time, starting off with a consistent, scalable approach can set you on the right path not only for initial matters, but whatever may arise in the future.
Whatever your situation, a well-planned legal hold process can be essential to minimizing risks as litigation advances.
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.
