What Is a Legal Hold and Why Is it Important in Ediscovery?
When an organization anticipates litigation, legal holds serve as the foundation for a defensible ediscovery process. Properly carried out, legal holds help to preserve potentially relevant information by alerting key individuals not to delete, alter, or destroy data that may be pertinent to a legal matter. This ensures that key evidence is retained and available for review.
Modern ediscovery technology automates key steps in the legal hold process, letting teams skip the spreadsheets and emails traditionally used to manage all the moving pieces. By preventing the loss or deletion of potentially relevant documents, organizations mitigate the risk of risk data spoliation and non-compliance – and potential penalties and other adverse outcomes.
What Is a Legal Hold?
With litigation, a regulatory investigation, or a legal dispute on the horizon, organizations typically need to take steps to suspend routine data deletion or retention policies.
A legal hold is a notice issued to all affected personnel (custodians) communicating their legal obligation to preserve potentially relevant evidence. This may be in the form of physical or electronically stored information.
Often referred to as a "litigation hold" or "preservation order," a legal hold helps to prevent spoliation (the destruction, alteration, or loss) of potential evidence that may be needed during the course of legal proceedings.
Why Is a Legal Hold Important?
When pursuing or defending a legal claim, or running an investigation, parties need access to evidence. A properly managed legal hold ensures that potentially relevant information is preserved.
Legal holds help organizations and individuals to fulfill their legal duties. Courts expect parties involved in litigation to proactively safeguard relevant information. Failure to comply with legal hold requirements can lead to significant consequences. These include sanctions, adverse judgments, and a weaker legal position in the case at hand.
From a societal perspective, legal holds are essential for upholding the principles of fairness and justice within the legal system. They help prevent the destruction or tampering of evidence that might be unfavorable to one party but vital for the other.
When Is a Legal Hold Necessary?
The need for a litigation hold is triggered when there is a reasonable expectation that certain information may be pertinent to pending or anticipated legal proceedings. It's important to understand that this duty may arise well before a formal lawsuit is filed or before receiving a formal notice of a legal dispute.
A number of scenarios commonly call for the preservation of potential evidence through a legal hold, including when a party:
Receives a demand letter or notice of potential legal action from another party
Becomes aware of facts or events that suggest a dispute is likely to occur
Receives a preservation letter from opposing counsel
Conducts an internal investigation which may lead to legal action
Undergoes significant business changes, such as mergers or restructurings, that can trigger to the need to safeguard relevant data
A legal hold is a preemptive measure aimed at preserving evidence, upholding legal obligations, and ensuring a fair legal process.
What Are Key Steps in the Legal Hold Process?
The legal hold process involves a series of steps to ensure effective data preservation for anticipated or ongoing legal proceedings. These steps are crucial for maintaining compliance and minimizing the risk of spoliation of evidence.
In a defensible and efficient legal hold process, successful legal teams follow best practices that involve:
Identifying the triggering event. The legal holds process begins with an event, such as anticipated litigation or a regulatory investigation, that kicks off the duty to preserve potentially relevant data.
Assessing the scope. Legal teams work closely with relevant stakeholders to assess the scope of the preservation obligation. This includes identifying the custodians who need to be interviewed and the types of documents, electronically stored information (ESI), and data sources that may require preservation.
Notifying custodians. Legal counsel or designated individuals issue formal legal hold notices to custodians of the relevant ESI or documents. These notices inform custodians of their duty to preserve and may include specific instructions on what to retain.
Interviewing custodians. Custodians are a key source of information that will help determine the scope of discovery. Use custodian questionnaires to learn what hardware they use, where they typically save data, whether they use cloud services to store and share work product, and names of other potentially relevant individuals to gain insight into early case assessment.
Suspending regular retention policies. Organizations temporarily suspend routine data management practices that could conflict with the legal hold, such as data deletion, archiving, or recycling policies. This ensures that potentially relevant data is not inadvertently deleted.
Monitoring compliance. Legal teams and IT professionals regularly monitor and audit compliance with the legal hold to ensure that data remains intact and accessible. This includes verifying that no inadvertent changes occur.
Documenting preservation efforts. Maintaining thorough records ensures a defensible legal hold process. It’s important to document the date and time of legal hold notifications, actions taken, and any issues encountered for demonstrating compliance.
Organizing all parties in a centralized platform. Bringing everyone involved into a single software that is easily accessible by key parties, allows for real-time updates, and integrates readily with your other systems lets your team manage all activities more efficiently and with higher visibility. That includes M365 data preservation-in-place within your ediscovery tool and ingesting data straight from common sources such as Slack and Zoom through integrated connector tools.
Reassessing and releasing the hold. Periodic reassessment of a litigation hold ensures timely communications with custodians about the end of their obligation to preserve data. Once the litigation or investigation concludes or when data is no longer relevant, the legal hold is released, allowing organizations to resume routine data management practices.
Who Issues a Legal Hold Notice?
A legal hold notice is a formal document that communicates the obligation to preserve potentially relevant evidence to custodians – the employees and other individuals who own the data – within the organization. These notices are typically issued by the in-house legal department, but may also come from IT, HR, compliance, or other teams.
The process of issuing a legal hold notice involves legal professionals working closely with their clients and IT departments to identify the scope of the hold and to draft a clear and comprehensive notice. The notice will likely specify what data needs to be preserved, provide instructions to custodians, and include a deadline for compliance. Email templates help streamline the process but should be tailored to the situation.
The legal hold notice serves as a legally binding directive, and custodians who receive it are obligated to comply with its instructions. Failure to adhere to a legal hold notice can result in legal consequences, including sanctions, and adverse inferences in court proceedings.
Who Receives a Litigation Hold?
Legal hold notices are typically issued to custodians – the people responsible for the maintenance and custody of documents. Custodians may include employees, executives, IT personnel, records managers, or any individual with control or access to the information.
Communication about legal hold obligations must be prompt and clear. Custodians must be aware of their duty to preserve data as outlined in the legal hold notice, and should take the necessary actions to safeguard that data.
In some cases, legal hold notices may also be issued to third parties who possess relevant data or records, such as external vendors, service providers, or former employees who may still have access to relevant information. These third parties are similarly expected to comply with the legal hold directives.
Ensuring Defensibility and Compliance While Mitigating Risk
Litigation holds are a critical component of the ediscovery process. The legal hold process establishes the framework for preserving and managing electronically stored information defensibly and in compliance with legal requirements.
With a repeatable and defensible legal holds process, organizations and legal professionals can navigate ediscovery efficiently, reduce litigation risks, and ensure the integrity of the evidence presented during legal proceedings.
Get your in-depth look at how legal holds work, the importance of setting up a defensible process, and how your team can mitigate legal hold risks in "Litigation Holds (Legal Holds): A Comprehensive Guide."
