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Do Not Destroy: Optimizing Data Preservation With Automated Legal Holds

by Petra Pasternak

Too many corporate law departments take a risky approach to legal holds. 

A majority (51%) still use email to manage the litigation hold process, and 35% track legal holds using spreadsheets, according to a survey of U.S. in-house legal professionals by the Association of Corporate Counsel and Everlaw.  

This level of manual work leaves significant room for duplication of effort, miscommunication, and error – missing custodians, unsent reminder notices, and ultimately, lost data. 

The failure to identify and preserve the right physical and electronic data sources in an active or pending lawsuit leaves organizations open to serious consequences, including adverse legal outcomes, sanctions, and penalties. It also undermines the strength of a company’s overall legal position.  

In the age of big data, these risks increase exponentially.   

Litigation holds play a critical role in the preservation of evidence. Corporate legal departments must be informed about best practices for preserving evidence defensibly, the risks associated with not doing so, and the advanced automation technologies available to streamline and optimize the litigation process.

Legal holds are a core component of the litigation and ediscovery process. An organization issues a legal hold, also known as litigation hold or preservation order, to notify employees and other custodians of the need to preserve potential evidence in a lawsuit. 

Essentially, a legal hold demands a freeze on all company data – including electronically stored information, or ESI, and physical documents – that contains potentially relevant information in the dispute.

The importance of legal holds cannot be overstated, especially in the digital age where vast amounts of data are created electronically. ESI comes in the form of traditional and emerging formats, including emails and PDFs, mobile phone messages, A/V conferencing recordings, and Microsoft Teams and Slack messages. 

Modern discovery solutions automate risky manual steps in the litigation hold process, including custodian notifications and reminders, to save money and time, and mitigate the risk of non-compliance through deletion or other data loss.

Corporate legal teams have an obligation to manage their company’s litigation risks. To do so effectively, they need to successfully preserve evidence during the discovery process. The legal hold process helps preserve relevant data in its original form, and prevents the destruction or alteration of key ESI.

The legal hold process needs to be defensible, repeatable, and efficient. Proper handling of legal holds is not just a best practice, it’s a legal duty. The requirement for legal holds is established by a wide assortment of case law and differs by jurisdiction. Additionally, Rule 37(e) of the Federal Rules of Civil Procedure (FRCP) mandates that parties to litigation take “reasonable actions” to preserve information that may be relevant to a dispute. Legal teams must take steps to make sure potentially relevant data isn’t lost, destroyed, deleted, or otherwise manipulated. 

Done effectively, litigation holds reduce the risk of spoliation allegations, which can be damaging to the successful outcome, not to mention costly to defend.

Knowing When the Duty to Preserve Data Begins

The legal obligation to preserve data arises as soon as a party reasonably anticipates litigation, or is put on notice of an investigation or legal action. Legal teams need to be proactive in identifying so-called preservation triggers that alert to the possibility of litigation. 

These rules have been established through case law such as Zubulake v. UBS Warburg, a gender discrimination case where proof of deleted emails that contained critical evidence led to a new standard for document retention policies and the scope of preservation obligations.

A lawsuit filing or regulatory investigation are common triggers, as are the receipt of a demand notice or preservation letter from opposing counsel, or a subpoena. But litigation may also be obvious from events such as an employee firing or news of a defective product.

Preserving Data Defensibly 

The goal of a defensible legal hold process is to show that your organization has made a reasonable effort to comply with the obligation to preserve data.

When a legal team anticipates litigation thanks to a trigger event, it needs to move fast to issue a legal hold. It becomes important to know what information needs to be safeguarded, where it lives, and who the relevant parties are. These relevant individuals, commonly referred to as custodians, may be executives, employees, or others who have access to and control over documents or electronic files.

Though it may be tempting to allow custodians to identify, preserve, and collect their own data to save money and time, it’s considered bad practice. Self-collection is an imprecise and subjective effort that can lead to sanctionable discovery failures such as missed, altered, or otherwise spoliated evidence. 

Choosing the right legal hold software makes the process, including the tracking of notifications and custodian acknowledgement, more efficient through automation without raising risks or undercutting defensibility. The most advanced discovery platforms offer preservation-in-place capability that allows users to lock down data in its location so that moving or copying it isn't necessary.

Avoiding Penalties for Failure to Preserve Evidence

Companies that lose, delete, destroy, or otherwise change the data required for litigation – inadvertently or intentionally – face significant consequences. Courts may impose monetary sanctions, discovery process or trial sanctions. If a judge has decided that missing evidence has affected the case, he or she may issue an adverse instruction to the jury. A court may also dismiss a case entirely if key evidence hasn’t been preserved.

Best Practices for Managing Litigation Holds

To increase defensibility, it’s critical that custodians of potentially relevant ESI comply with a legal hold notice. To help employees understand their duty to preserve data and the potential consequences of non-compliance, an organization will create a corporate legal hold policy

There is no legal requirement that mandates what a legal hold notification looks like. But to help bulletproof the process, it’s important to follow best practices that include:

Timely action: Once aware of a duty to preserve, legal professionals must move quickly to implement legal hold notifications. Delays can result in loss or alteration of potential evidence, and spoliation accusations. It can also hurt their case.

Determining the scope: The duty to preserve applies to all data that could be relevant to the case, even if it may not seem immediately significant, but it should not be so broad that it becomes burdensome for custodians. Scope should be reviewed periodically and adjustments made as a legal dispute evolves.

Making reasonable efforts: Parties are expected to make reasonable efforts to identify and preserve relevant data sources. This may involve engaging IT professionals or ediscovery experts to ensure compliance.

Clear communications: Effective communication helps ensure that key players, including custodians and IT teams, understand their responsibilities in preserving data and when their obligation ends after the data is no longer needed. Avoid legalese. 

Monitoring compliance: Once a legal hold notice is sent, regular follow-ups with custodians help ensure they are preserving data as instructed. Document any instances of non-compliance and take appropriate corrective actions. Modern discovery tools make this easy through automated tracking and audit trail reporting.

Documenting the process: Recording the details of each legal hold issuance, custodian acknowledgement, and reminders help ensure data preservation compliance. Advanced discovery software automates the logging of reasons behind each decision to show reasonable efforts in any given moment.

Interviewing custodians: Gathering information about potential witnesses, data sources, and other custodians helps narrow in on relevant data and the scope of the matter.

Centralizing legal holds: Teams don’t need to use a series of different tools for identifying custodians, notifying them of legal holds, preserving their data, releasing holds, and collecting data, today’s teams automate these key steps to scale the process. Everlaw’s integration with Microsoft Purview’s data repository, for instance, allows users to set up a Microsoft 365 data hold directly in Everlaw’s legal hold system for user-friendly preservation-in-place capability. There is no need to move data between M365 and other tools to manage holds from there.

Consolidating discovery in a single modern platform: Advanced ediscovery solutions like Everlaw both streamline legal hold workflows and also automate key steps in the discovery process, letting users cull, analyze, and produce information quickly and efficiently. 

Transforming Results With a Single Discovery Solution

In-house legal professionals are required to combine legal and tech savvy to handle legal holds effectively. These best practices help ensure that an organization's process holds up under opposing counsel scrutiny or in a court of law. 

A single advanced ediscovery solution, such as Everlaw, lets users transform two processes in one go. Centralizing and automating legal holds does away with the tribulations of using emails or spreadsheets to manage such a complex program. In addition, it streamlines each subsequent step in the discovery process, such as data collection, processing, review and analysis, and presentation or production. 

Building a repeatable and defensible litigation hold process is necessary for good information governance, protecting an organization from some of the biggest risks that legal disputes entail.

Check out “Streamlining the Legal Hold Process” to learn why legal holds are important, how to streamline the process, common challenges, and more!