Litigation Holds (Legal Holds): A Comprehensive Guide
Managing the litigation holds process is a crucial part of legal work, and complying with related federal and state rules is key to upholding a fair judicial process and avoiding potential sanctions. But the process has become more arduous than it was in the past when legal teams had to simply preserve printed papers, logbooks, and reports. In today’s ediscovery process, legal teams also need to preserve electronically stored information (ESI) such as emails, chat messages, spreadsheets, PowerPoint presentations, and audio and video (A/V) files. If they fail to adapt their methods for issuing and managing litigation holds, litigators face adverse legal outcomes and penalties and risk their ability to remain competitive.
Here, we’ll take an in-depth look at legal holds , why it’s essential for legal teams to implement a successful, defensible process, and what your team can do to follow best practices and mitigate legal hold risks.
What Is a Litigation Hold (Legal Hold)?
A litigation hold, sometimes called a legal hold, is the process by which companies instruct their employees to preserve specific data for potential litigation. Neither an internal employee nor another relevant individual (both referred to as a custodian) can delete or destroy the data — whether it’s electronically stored or on paper — without the risk of the organization facing legal ramifications. Thus it’s absolutely crucial for organizations to implement a legal hold process that is defensible, repeatable, and efficient.
The preservation of evidence can be self-initiated for an internal investigation, court-ordered as part of an ongoing lawsuit, or due to a complaint that might trigger litigation. Regardless of the trigger for the hold, the type of data that needs to be preserved generally includes ESI as well as printed papers, logbooks, and reports.
The Purpose of Litigation Holds
The purpose of a litigation hold is to inform custodians (employees or other relevant parties) that they must preserve their data for anticipated litigation. While legal holds aren’t a new concept by any means, the importance of a strong process was truly emphasized in the United States in 2003. At that time, Judge Shira Scheindlin made five influential rulings that related to ediscovery, one of which was the catalyst for litigation holds becoming standard procedure. Her ruling stated that a party must postpone its regular destruction process and issue a “litigation hold” to preserve any relevant documents once that party anticipates litigation.
That may sound like a whole lot of legal jargon, but — in short — the litigation hold process can save legal teams both time and money while also ensuring the protection of potentially relevant data. Without legal holds, attorneys and IT employees would need to drop everything to spend copious amounts of time tracking down and preserving myriad data that might potentially be deemed relevant. Or they’d need to wait until data was absolutely required for legal evidence, and risk data loss from already-destroyed ESI or documents — a frustrating challenge that could negatively impact a case.
The Litigation Hold Process
When a litigation hold is required, compliance is crucial, so a legal team’s response procedure should be swift, efficient, and effective. Generally, the corporate counsel or the attorney who is handling the matter sends the legal hold notice to an organization’s IT or legal department, depending on the organization, and ultimately to individual custodians who may possess data that could be subject to discovery. However, smaller businesses may lack legal or IT departments, so a legal hold may come from the executives after receiving the advice of counsel.
Ultimately, the organization should ensure that the legal hold is handled by the person or department that is best equipped to defensibly manage the process, given the nature of the organization. That person or department should be sure to follow a consistent process for handling the legal hold, so they don’t risk data spoliation and noncompliance.
Litigation Hold Process: Step by Step
Once a party reasonably anticipates litigation, they should follow a clear process for handling the legal hold:
Identify custodians and information to be preserved: First, legal teams should determine which data (either ESI or physical documents) might be potentially relevant. This may involve working with the IT department to identify any individuals (custodians) who may possess the relevant data.
Issue the litigation hold notice: Next, the sender issues a notification to the relevant custodians to inform them that they have documents that are under a legal hold obligation and let them know which information, specifically, they need to preserve.
Obtain acknowledgment of and monitor the hold, and send reminder notices when necessary: The sending party’s duty doesn’t stop there. They should also continue to remind recipients that they have documents under a litigation hold and ensure that custodians acknowledge their responsibility.
Report on hold responses: Because of the risks involved in legal hold compliance, it’s absolutely vital that legal teams keep detailed documentation of the process. They should note specifics of any actions taken and any communications between parties to ensure nothing falls through the cracks. This documentation helps legal teams provide proof that they followed an adequate process and that they didn’t intentionally spoliate any lost or damaged files.
Release custodians from the litigation hold: Finally, legal teams may notify custodians that their obligation to the hold has ended. It’s essential to have a clear release procedure, so custodians aren’t accidentally released from their duty too soon or, alternatively, so they don’t stay under a litigation hold forever.
Following the legal hold process can be complicated when done manually, which is why today’s successful legal teams rely on cloud-based legal hold software to streamline the process.
Litigation Hold Challenges
While most legal teams understand the procedural and financial gravity of litigation holds, they still face common legal hold challenges in maintaining an efficient, reliable process. Those who still use traditional methods for managing the process face some hefty obstacles, which — if not properly handled — can lead to data spoliation and noncompliance.
Overlapping Litigation Holds
It’s common for legal teams to have numerous active litigation holds at any given time, especially in larger organizations. Tracking and managing the process to ensure each custodian upholds their preservation duties is time-consuming, confusing, and error-prone — particularly for teams that still use manual tools, like spreadsheets, instead of modern legal hold software.
Overlapping litigation holds are cumbersome to handle when legal matters close, too, since each custodian might be tied to multiple holds. If you don’t have accurate, up-to-date, and highly detailed records on each hold and each individual recipient, you risk accidental release and, ultimately, failed preservation.
Tracking Custodians and Terminated Employees
Your team’s legal hold process is dependent upon recipients actually receiving notices, which can be difficult if a recipient changes positions, goes on extended leave, or leaves the company. On the other hand, a new employee may need to be placed on a legal hold upon starting at the company, in instances when the entire department or organization is involved.
Many larger organizations have hundreds (or even thousands) of employees spread across multiple geographic locations. Tracking down this information can be a tiresome and unrealistic feat for already-busy legal teams if their HR department lacks robust tools to track and update this information. Additionally, if HR’s tools don’t integrate with the technology a legal team uses, it can cause process delays or inaccuracies.
On top of that, legal professionals should ensure that custodians both acknowledge and abide by the holds they’ve been placed on. It’s no secret that unresponsive recipients are a common frustration, which can lead to further problems down the road. If your legal team just uses emails or phone calls to remind custodians of their obligations, they risk ignored messages, confusion, and noncompliance. Plus, it’s a heavy burden to place on legal professionals, who need to find ways to track and properly time reminders for each custodian.
Manual Processes
Each individual part of the litigation hold process is crucial to overall compliance, and it can be difficult for legal teams to manage all the moving pieces if they’re doing it manually. They already have a lot of work on their plates, and expecting them to use outdated, disparate tools (like spreadsheets, emails, and paper documents) costs them even more time and frustration. It also makes them vulnerable to mistakes, as these manual methods are subject to human error and don’t offer the accuracy, real-time functionality, and automation required for a strong, efficient process.
Software Fragmentation
Oftentimes, organizations implement a variety of tools with the intention of supporting and empowering their legal teams. But when employees have to use multiple, disparate tools to complete the legal hold process, they end up dealing with workflow inefficiencies, communication issues, and increased noncompliance risks.
Scalability
Manual, traditional methods for managing the legal hold process might work short-term for small organizations, but they just won’t cut it for larger organizations or companies that seek continuous growth. As your company expands, you may face ongoing litigation, which means you’ll need to handle multiple legal holds at once. Administering and organizing the legal holds process is complex, tiresome, and susceptible to costly mistakes if you don’t have the proper tools for support.
Cloud-based ediscovery software can mitigate the main challenges associated with the legal hold process, as it automates the process of sending notifications and reminders, makes it easier to track and interview custodians, simplifies ESI preservation, and ultimately streamlines the legal hold process as a whole.
Litigation Hold Best Practices
Properly managing the litigation hold process is a bit of a balancing act for legal practitioners, who have the burden of ensuring custodians uphold preservation while also completing countless other tasks. When combined with the use of a trusted ediscovery software solution, following some tried-and-true best practices will help legal counsel deal with litigation holds.
Identify Your Most Common Legal Hold Triggers
There’s a lot of confusion surrounding the point at which “reasonable anticipation of litigation” truly begins. If you wait for litigation to actually start before issuing a notice to relevant parties, you risk noncompliance and lost evidence. Instead, implement a clear standard practice for determining what triggers preservation, and define that event as a general protocol. Having that explicit and logical policy in place will also help you prove to the courts that you’ve adopted a strong, thoughtful process, if necessary.
Develop a Consistent Custodian Interview Process
Part of any successful legal hold process is conducting thorough, yet efficient interviews with relevant custodians, who may or may not have prior experience with preservation. Legal teams should use these interviews to determine the scope of the hold — including any relevant facts and circumstances. It’s unreasonable and ineffective, though, to expect each legal professional to build an interview process and develop questions for each individual custodian. This can also lead to haphazard results that negatively impact preservation efforts.
Instead, create a standardized, repeatable interview process that takes pertinent factors into account and helps your legal team streamline their investigations. Since no two legal matters are exactly the same, make sure your interview process not only allows for flexibility but also offers the consistency needed for easy processing and action.
Keep Accurate Documentation of All Steps Taken
Legal matters, by nature, require detailed, accurate documentation, and the legal holds process is no different. Make sure your teams understand the importance of keeping thorough records of their communication and actions regarding any legal holds, and give them the right tools for support. That way, if their work is ever under scrutiny, they can easily provide specific information regarding the steps they’ve taken, decisions they’ve made during the procedure, and proof they’ve acted “reasonably.”
Work from a Centralized Platform
If each member of your organization is working from a different tool or platform, things are bound to get messy. But proper, reasonable data preservation that holds up in a court of law doesn’t allow for that mess. Keep your teams organized with a centralized platform that enables real-time updates, is easily accessible by relevant parties, and integrates with your other existing systems. That way, your team can easily track and manage all activities in a single place, so nothing gets lost in the shuffle.
Use Software to Automate and Streamline Communication
Manual legal hold management requires labor-intensive administrative tasks and hinders communication. That can mean missed hold notifications, misunderstandings, and lost or deleted messages that contain pertinent information. But when you leverage automated software, your legal teams can rest easy knowing relevant custodians are always kept in the loop. These tools automatically issue hold notifications, send reminders and updates to custodians, and alert legal teams when escalation is required for unresponsive individuals. They also help to ensure the accurate, timely release of custodians when a legal matter closes.
Be Clear and Concise When Communicating with Custodians
It’s important not to assume that custodians have prior knowledge of the legal holds process or the obligations they’re under regarding preservation. Your legal holds notices (and any subsequent communications) should be clear, concise, and free of any confusing legal jargon. Make sure you’re completely transparent about what information needs to be preserved, with specific details on document categories, dates, and other key elements.
Follow Up with Custodians to Ensure They Understand Their Obligations
The legal team’s obligation doesn’t end once the legal hold notification is sent. Failure to confirm receipt can make it difficult to prove your preservation efforts if any relevant data is destroyed. To avoid this issue, make your communication expectations of custodians abundantly clear by asking recipients to acknowledge the hold and confirm that they understand their obligations. Everlaw’s legal holds software streamlines this task by allowing you to schedule automatic re-notification and escalation notices, and track custodian acknowledgment.
If custodians don’t respond, continue to follow up with reminders (and escalate the issue, if needed), until they provide confirmation.
Make Sure Your Legal Hold Process Is Defensible
The Federal Rules of Civil Procedure (FRCP) set forth the procedural requirements for civil litigation in federal courts, including the discovery process. Rule 37(e), specifically, is one of the most widely discussed ediscovery rules in the FRCP, as it sets the standard for how spoliated ESI should be treated by the courts and whether reasonable actions were taken to preserve it.
Certain events may trigger the duty to preserve evidence prior to the filing of litigation. Such was the case of Bagley v. Yale University et al., where duty arose when university staff exchanged emails noting the plaintiff’s threat of legal action. Such spoliation cases illustrate how important it is for a legal team to defend its legal hold process. As such, they should consider some key factors that the courts use to determine whether reasonable actions were taken to preserve ESI:
When did the party’s duty to preserve data occur?
Did the party issue a litigation hold to relevant custodians in order to preserve information?
Did the party issue the legal hold at the time their duty to preserve data arose, or was there a significant delay?
What did the legal hold letter state?
What actions did the recipients of the litigation hold notice take once they received the notification?
Did the party take any further action to preserve evidence following the recipients’ responses to the litigation hold notice?
Penalties for Noncompliance With Litigation Hold Requirements
Because failure to preserve key data can have such significant ramifications, legal teams who don’t comply fulfill their litigation hold and data preservation requirements risk severe penalties:
Financial sanctions: The court can impose large financial sanctions on companies that do not preserve key evidence.
Discovery process and trial sanctions: A court may decide to compel discovery or enter judgment for the opposing party for spoliation of evidence.
Adverse jury instruction: A judge may order an adverse instruction to a jury if they conclude that lost or missing evidence has impacted a defendant’s case.
Dismissal of action: A judge may dismiss a case entirely if the plaintiff failed to preserve key data as instructed by the litigation hold.
Default judgment: A judge may issue a default judgment in favor of the plaintiff if the defendant failed to take reasonable steps to preserve key data as instructed by the litigation hold.
One real-life example of noncompliance penalties can be found in the case of Knickerbocker et al v. Corinthian Colleges, Inc., which resulted in a judgment for the plaintiffs (former employees) who sued the college for discrimination. There was a determination that Corinthian Colleges failed to adequately preserve and collect documents relevant to the investigation. The judge thus imposed a financial penalty of $25,000 for Corinthian Colleges and another $10,000 for Corinthian Colleges’ legal counsel.
Litigation Hold Software Streamlines the Process
The process of issuing and managing legal holds has been made more complex by the evolution of ediscovery, which extends far beyond the traditional paper documents of the past to include ESI. Because the stakes of getting it right are so high, many organizations have opted to leverage litigation hold software, which makes managing the process more efficient and effective.
Everlaw offers intelligent software that streamlines the legal hold process, with powerful tools for tracking and managing everything you need in a single platform. With Everlaw, your team can benefit from a variety of key capabilities, including:
Intuitive legal hold creation and deployment: Creating and sending a legal hold notice doesn’t have to be a cumbersome task. Everlaw’s intuitive, user-friendly interface enables legal teams to create and edit legal holds for hundreds of custodians with a few simple clicks, saving them the time and avoiding the potential mistakes caused by manual creation.
M365 preservation-in-place: Integration with Microsoft Purview’s data repository lets users set up a Microsoft 365 data hold directly in Everlaw’s legal hold system, eliminating the need to set holds up in Microsoft Purview. Both the litigation hold notice and the preservation are tracked within Everlaw.
Customizable hold notices: Custodians are far more likely to ignore a legal hold notice if it looks like it was generated from a rigid standardized template. Everlaw allows you to customize each notice as necessary to include emphasized formatting of important text. This provides custodians with more-personalized messages that make it easier for them to understand, acknowledge, and comply with their preservation obligations.
Trackable communication and simple custodian acknowledgment: Using multiple tools and platforms to communicate with custodians opens your team up to security vulnerabilities, missed notifications, and difficulties sending notices and tracking acknowledgments. Everlaw’s software empowers your teams to automatically track and manage all of these communications in a single place, which reduces human error and wasted time.
Active directory (Microsoft Azure, now Microsoft Entra ID): Employee information changes rapidly as workers continually join and leave an organization. Making manual updates to names, emails, phone numbers, and employment status changes can place an administrative burden on already stretched legal teams. Everlaw’s connection to Microsoft’s active directory automates the tracking of all current and former employees, eliminating the need for manual directory updates.
Automated notifications, reminders, and escalations to managers: Instead of wasting time and risking missed or ignored holds notices, arm your legal teams with tools that automate the notification process. The Everlaw platform takes this frustrating issue out of legal practitioners’ hands, with automated reminders for unresponsive custodians, escalation alerts to relevant managers, and schedulable notifications at your desired cadence. Should your process ever be held under scrutiny, Everlaw’s automated tool can help you prove regular, sufficient notification practices.
Seamless custodian release process: For organizations that still use manual tools, the release process is an inconvenient extra step that legal teams may forget to complete. With Everlaw, the process is as easy as a couple of clicks, so employees can release custodians in a timely manner with minimal effort that doesn’t disrupt their productivity.
Admin management center: Organizations often face multiple lawsuits at the same time or litigation that stretches over months or years. Accessing information about the total number of all active holds, or a list of custodians under all holds, can be cumbersome without a central management center. Everlaw’s center streamlines the organization of legal hold tracking and management with enhanced visibility into all holds across the entire company.
Consolidated legal technology: It’s important to remember that not all legal software is created equal. Some don’t offer the consolidation needed to eliminate software fragmentation while still supporting every part of the legal holds process. Everlaw solves this problem with a single solution that handles the end-to-end ediscovery and legal holds processes for more efficient workflows, cost-effectiveness, and secure use. Because it’s so flexible, Everlaw’s software reduces the distribution of data across multiple systems, which, in turn, decreases potential security risks.
To learn more about how the Everlaw platform can accelerate your legal hold process without increasing risk and compromising defensibility, request a demo today.
