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The ultimate guide to defensible Legal Hold 

Legal Hold is the practice of ensuring evidence is preserved in anticipation of and during a regulatory or legal challenge. 

The goal is to preserve any possible evidence, both in the form of electronically stored information (ESI) and physical documents

Legal Hold Ultimate Guide

1. What is legal hold, and why does it matter?

What is Legal Hold?

Legal Hold, or litigation hold, is the practice of ensuring evidence is preserved in anticipation of and during a regulatory or legal challenge. In practice, Legal Holds are notifications sent by an organization’s legal team to employees or other owners of data (referred to as “custodians”), instructing employees to not delete information relevant to a legal case. The goal is to preserve any possible evidence, both in the form of electronically stored information (ESI) and physical documents.

In the context of eDiscovery, the focus is on ESI. The landmark ruling for legal hold was Zubulake v. UBS Warburg, heard between 2003 and 2005 in the United States District Court for the Southern District of New York in which Judge Shira Scheindlin handed down five key rulings. Between rulings, the defendant, UBS Warburg, following their usual data retention protocols, deleted database backups that held information needed as evidence. In dealing with this situation, Judge Scheindlin ruled that the data in question had been spoliated and that UBS Warburg had acted deliberately, and therefore, ordered an adverse inference jury instruction against UBS Warburg. Spoliation, is the loss or destruction of potentially relevant information that should have been preserved for a civil litigation matter.

 

Under the Federal Rules of Civil Procedure (FRCP), Rule 37 states that for there to be spoliation, the following conditions must all apply:

  • a party must have had control over potentially relevant ESI;
  • the party must have been under a duty to preserve that ESI;
  • the ESI must have been lost, destroyed, modified, or altered;
  • the loss must be due to the party’s failure to take reasonable steps to preserve the ESI; and
  • the ESI must not be able to be restored, recovered, or replaced through additional discovery.

Ultimately, the Legal Hold process is designed to protect organizations against possible spoliation of evidence and as a result, court ordered sanctions or adverse inference jury instructions.

Why does Legal Hold matter?

What follows from the Zubulake v. UBS Warburg rulings, is that the routine retention policies (these are policies that govern the amount of time that data is stored prior to deletion, or documents are kept prior to destruction), must be suspended for documents relative to the case at hand, starting at the moment a party can reasonably anticipate litigation. In the very simplest of terms: don’t destroy evidence when you can expect to need it again, if you do, the evidence you destroyed will be assumed to be unfavorable towards you.

Legal Hold, or Litigation Hold, in its current form seeks to balance the reasonable need for evidence to be available and the practical impossibility of having the Legal and IT department gather every shred of potential evidence held anywhere in the organization.

The importance of retention policies

Retention policies aim to minimize the amount of data held (after all, storage is finite), so the need to implement some form of protocol to ensure situations like Zubulake case is clear. As we know the cost of maintaining a, corporate legal team can by quite high and having them perform data collection is not a good use of their time and expertise. Thus, legal hold notices are sent out instead, to require employees to preserve the data they have in their possession, so that the data is available should the need arise.

All of that is very reasonable, but that is by no means a guarantee that it is an easy process. Legal Hold doesn’t negate or remove the disruption caused by litigation and eDiscovery. Even in a best-case scenario, Legal Hold reduces disruption and spreads the impact out across a larger group of employees.

To find out why the topic of legal hold tends to be received with a dejected sigh from legal professionals, read on.

Even in a best-case scenario, Legal Hold reduces disruption and spreads the impact out across a larger group of employees.

2. The Legal Hold Process

In theory, the Legal Hold process is exceedingly simple: a Legal Hold order is sent by the organization’s legal department to “custodians” (employees or others who are in possession of data relevant to the case in question), after which the custodian makes sure that this data is preserved. By doing this, no relevant data is lost to deletion or destruction, and no evidence is lost.

In practice, there are a lot of questions that need answering along the way, and although the theory is straightforward, reality is often anything but. Having a Legal Hold policy in place that you can run consistently and defensibly can be challenging. When it comes to executing these policies, ensuring that it is able to withstand scrutiny and stress is key.

When do Legal Hold orders need to be sent?

As discussed in the previous section, Legal or Litigation Holds ought to be activated when litigation commences, or can be anticipated. Legal cases don’t typically materialize out of thin air, so the organization’s legal team should be able to prepare accordingly. Mounting tension with a supplier, competitor or disgruntled employee, past or present? Best to begin preparing for litigation by sending out hold orders to the custodians who have relevant data in place. The Legal Hold process should simply start as soon as reasonable, to avoid being caught by surprise and getting hit with sanctions or adverse jury inference during litigation.

Who sends legal hold notifications?

In theory, Legal Hold notifications are sent out by a company attorney. In practice, it is commonplace for organizations to be involved in a multitude of legal matters at the same time, with each case having at least one, but usually multiple Legal Holds attached to them. As a result, though the notifications will carry the company attorney’s name, the sending of notifications is usually a team job, especially since the day-to-day management of Legal Holds doesn’t require extensive legal training or experience. This team can be staffed by either eDiscovery managers, paralegals or other litigation support or compliance personnel. Of course, it is important that team members have a solid understanding of the nuances of the Legal Hold process itself.

Who should these Legal Hold notifications be sent to?

In overviews of Legal Hold, the receivers of the Legal Hold orders are glossed over, or are hidden behind the phrase “anyone who might possess relevant data.” As part of the eDiscovery process, the legal team in charge of handling the eDiscovery investigation will create a list or overview of possible data sources (custodians). Oftentimes, they will work with the IT department, in order to find out who these sources are and exactly where their data resides. This is an ongoing process, and as it progresses, more custodians can de discovered, who should then be sent a Legal Hold notification. For a more in-depth overview of the entire eDiscovery process, please consult eDiscovery 101, in which the goings-on surrounding the Legal Hold process are discussed in detail.

What are the contents of a Legal Hold notification?

Since Legal Hold itself isn’t a legal requirement, Legal Hold notifications have no mandatory content either, so long as the goal is achieved. Clear, succinct communications with custodians is important, to make sure all recipients understand what is asked of them, what data they need to preserve, and how to get in touch with the legal team if they have questions regarding the notification or their role.

When it comes to specifying what data should be preserved, it is usually smart to include date ranges, names, and key terms associated with the case. Also, make sure custodians understand what types of data you want them to preserve. Legal hold notifications aren’t just for email, so be clear (and, if possible, specific) about the data types you’re asking them to preserve.

How can I be sure custodians comply with a Legal Hold order?

The whole point of having a Legal Hold process in place is to ensure that the preservation of evidence is manageable without having to babysit every individual piece of potentially relevant data. As such, a sound process has ways to track custodian compliance, by allowing (or requiring) custodians to acknowledge notifications, and having a reminder system in place for stragglers. Additionally, having a procedure in place for dealing with unresponsive custodians is important to have a sturdy and defensible process.

Does a solid Legal Hold procedure ensure data preservation?

Generally speaking, having a solid Legal Hold procedure in place creates a system through which defensible results can be produced, but that doesn’t mean it will. As determined by Judge Scheindlin in Zubulake, the onus for data preservation lies with the defendant. That means that if a key custodian is unresponsive, or worse, non-compliant with the Legal Hold Order, in the eyes of the court that means that the defendant hasn’t preserved evidence properly. With this in mind, it’s usually wise to go after the most important custodians (the ones who hold data that will surely be important) first, as to avoid any issues.

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3. The End of Legal Hold

All things must end. In the case of the Legal Hold process, typically no one involved is sad to see the end. Nevertheless, from different points of view the process might end in different ways and for different reasons.

The end of the Legal Hold process for custodians: you can hit delete now

As far as custodians are concerned, the Legal Hold process could have been anything from a minor inconvenience to a significant disruption of their tasks and duties. The degree to which they hold important data is typically the key indicator as to how they experience the process: a custodian with only minor, relatively unimportant information may receive a Legal Hold notice one day pertaining to some data, acknowledge the order, making sure he/she doesn’t delete the data in question for a while by putting it in a separate folder, and eventually receives a notification from legal that the matter has been resolved, which means that data can be made part of their usual retention policies again.

For a more involved custodian (or IT department), they may have to send data over, receive additional requests, deal with those, and end up with a massive backlog of long-overdue retention policies to execute once the hold is finally lifted. What’s more, if the legal team is operating under tight deadlines, custodians holding key information may find themselves having to drop their other tasks to comply with data collection requests from the legal team.

The end of the Legal Hold process for legal team: reassessment and Legal Hold lifting

For the legal team, two types of ‘end’ exist. Reassessments of the existing holds and ending the Legal Hold procedure altogether. Reassessments occur throughout the investigation, and provide an end insofar as specific parts of a case may be resolved, the scope of the case changes, or agreements may be reached amongst the parties. Reassessments lead to the end of the process for custodians where data is no longer considered necessary, but not for the legal team, so long as the entire case has not been resolved.

Reassessment can also follow a ruling, at which point the legal team will have to assess whether or not they can reasonably expect an appeal or some other type of continuation of the process which could lead to them having to rely once again on the possibly related data in the case as evidence. This is the point where, if we’re being charitable, the legal team of UBS Warburg erred during Zubulake.

The end of Legal Hold as a whole should only ever happen if the legal team is confident that they can defend the position that they should no longer expect any more litigation to flow from the case. If they are, a notification should be sent to all the custodians involved in the Legal Hold procedure for that case, instructing them to cease preservation of the data (and thus returning that data to the usual retention policies and procedures).

Like the initial Legal Hold order, this notification should be clear and specific, making sure that custodians understand what data is no longer required, avoiding a situation where a custodian involved in multiple Legal Hold procedures misunderstands and inadvertently stops Legal Holds on other ongoing matters.

The end of the Legal Hold process for IT: a return to the standard retention policy

As is made clear in eDiscovery 101, the IT department is mainly involved in an advisory capacity as they are usually in charge of the retention policies from which the Legal Hold process seeks to exempt data. As such, when the Legal Hold is either reassessed or lifted, IT needs to ensure that custodians cease their data preservation efforts and return the data involved in the Legal Hold process to the normal retention and destruction policies.

In some cases, especially litigation that has dragged on for a while, quite a large amount of the data preserved under the Legal Hold will have exceeded the usual retention period and will have to be deleted in order to comply with those policies. For large cases dealing with sensitive information, legal teams may want to coordinate with IT to ensure that custodians are aware that this data is now once again subject to the retention policy, and (if applicable) their deletion from the company systems is overdue.

The end of Legal Hold should only ever happen if the legal team is confident they should no longer expect any more litigation to flow from the case.

4. Challenges to Legal Hold: chaos, pitfalls, ghosting, and confusion

Without wanting to sound alarmist, the practical reality of Legal Hold is that it’s a miracle it goes well as often as it does. There’s a lot of moving parts involved in a Legal Hold procedure, and a significant number of those parts (read as custodians) have very little to no idea what it is they’re actually a part of. As one may expect, plenty of challenges arise when Legal Hold procedures are triggered, and having it run smoothly requires a lot of proactive planning, clear communication, and smart organizing. Keep your head on and make sure the coffee machine doesn’t break down, you’ll need it.

Chaos, or: the noble art of juggling Legal Holds

As mentioned earlier, it is hardly realistic to assume that legal teams get to focus on a single case with a few custodians. Litigation can go on for years at a time, and it is not unusual for a large company to have dozens or hundreds of Legal Hold procedures active at the same time. That means thousands of custodians to manage, which means that overlap (one custodian involved in multiple Holds) is inevitable. This is why clear communication is incredibly important, especially when it comes to lifting Legal Holds: if unclear, a custodian may end up releasing more information than intended, and could jeopardize other cases by deleting that data if retention policies demand it.

Finding ways to organize this chaotic situation is vital. Previously, organizations would manage these holds in spreadsheets. Nowadays, they are increasingly turning towards more intricate and purpose-built solutions to help them keep better track of matters, but also automate Legal Hold notifications, keep track of custodian acknowledgements and allow custodians to upload their data into the system when needed. Such solutions (including ours) can help legal teams remain organized and helps prevent costly mistakes.

Pitfalls, or: Humans are messy

One major downside to Legal Hold processes is that even a robust, well-organized system can come apart when the recipients of Legal Hold notifications don’t remain in place. As it happens, employees tend to move around, a lot: people change positions, take extended leave, leave altogether… Which is great for them, but means that a lot of the time the HR department get involved in Legal Holds as well, as they need to instruct incoming employees about the Holds they have inherited, and need to continue to respect.

This is especially true for multinational companies or companies that are spread out geographically. As with the previous point, purpose-built tools can certainly be of assistance here, but there’s no way around the fact that keeping active holds intact when custodians are on the move is a difficult challenge that many legal teams struggle with.

Ghosting, or: Left on read, what do we do now? 

Any legal team that sends out Legal Hold notifications will eventually run into an unresponsive custodian. Chasing custodians around is one of the most frustrating parts of the legal hold process, especially since compliance is key and a custodian not responding to repeated notifications to acknowledge that the data they are holding is being preserved.

Unresponsive custodians are common and a plan needs to be in place ahead of time to deal with them as effectively as possible. Oftentimes, custodians simply have a different set of priorities, which explicitly include not keeping a close eye on the company’s legal affairs. Methods of getting (and keeping) busy custodians on board during the Legal Hold process is discussed in more depth below in the best practices section.

Confusion, or: They don't know what we're talking about when we say 'Legal Hold.'

It can be hard for US-based legal teams to imagine, but the concept of Legal Hold is not especially well-known outside of the United States. In fact, issuing a run-of-the-mill Legal Hold notice may in fact be asking a non-US-based employee to break their local data protection and/or privacy laws. The US boasts some of the most aggressive Discovery requirements in the world, and American courts operate with an unusually strong emphasis on evidence gathering.

For legal teams working for multinational organizations, it’s important to tailor Legal Hold notifications to comply with the laws active in those other countries. For instance, the GDPR (versions of which are active in many European countries) means companies will want to allow for redaction of personally identifiable information to ensure GDPR compliance does not become an issue. There are many other examples, so a legal team working to gather evidence from international sources should always be mindful of the differences in the rulebooks.

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5. Legal Hold best practices: a checklist

Checkbox One: start Legal Hold procedures when you should, not when you must

As you may remember, the rulings in Zabulake were highly influential. They also weren’t always as clear as we’d all like. Most importantly, the standard used to determine when you should start sending out Legal Holds is: “reasonable anticipation of litigation” – what does that mean? In practice, organizations tend to start sending out Legal Hold notices to custodians once they have a when served.

Ideally, a legal team has set up a number of procedures that allow them to trigger the start of legal hold ahead of time. This is useful, not only for compliance reasons, but it also allows legal teams to build a better understanding of the case and the data involved: which usually leads to better outcomes. Triggers for anticipatory Legal Holds depends on many factors, but for one, if an employee is terminated and their last words as they exit the door are “I’ll see you in court”, it might be wise to start preparing for litigation. Starting as soon as you’re able to allows for a far sturdier process across the board.

Checkbox Two: don't take your eyes off the ball once the Legal Hold process gets going 

It can be easy to lose track of the goal when you’re in the thick of things. The point of Legal Hold is to defensibly ensure relevant data present at the onset of the Legal Hold process is in place and ready to be used as evidence when it is needed. Nothing more, nothing less. Chasing custodians and keeping track of hundreds of Legal Hold notifications, are just means to that end. Creating a comprehensive data map prior to starting the process of sending out Legal Hold notifications allows teams to prioritize key custodians, and keeps the Legal Hold process as a whole, defensible.

Checkbox Three: keep Legal Hold front of mind

As stated in checkbox two, ensuring relevant data remains available is the primary goal of any Legal Hold procedure. Once the process gets underway, keeping the Legal Hold alive in the minds of custodians becomes important in order to ensure ongoing compliance. To keep custodians involved, sending out scheduled reminders is a useful tool, especially if a matter is taking a long time to be resolved. Periodically checking in and ensuring through acknowledgement that the Legal Hold is still ongoing at the custodian level also helps bolster the defensibility of the process as a whole.

When it comes to unresponsive custodians, either from the onset or at any point during the Legal Hold, a plan should be in place to address the issue. Custodians need to remain active, both for defensibility purposes and possible changes to the amount or types of data subject to Legal Hold procedure following reassessments. Making sure you have ways to get in touch with your custodians’ direct supervisors, to impress upon them that the inaction from the custodian is exposing the organization to risk, and asking for intervention.

Although custodian management can be frustrating at times, especially when chasing after the inactive ones, it’s good to keep in mind that being a custodian isn’t their job, and inaction is often not a product of ill will, but rather a different set of priorities.

Checkbox Four: keep it simple, don't make changes for the sake of it

Consistency and simplicity are key when it comes to the legal hold process. As stated above, legal teams are often juggling dozens or hundreds of cases involving hundreds or thousands of legal holds. Standardization helps maintain a constant level of quality results, as well as make it far easier to keep track of progress. Make use of message templates wherever possible, preserving communications that work for future use. From the custodians’ point of view, the more recognizable a Hold Notice is, the easier it is for them to comply with them. Only change the content of a Legal Hold notification, reminder, or update when it begins to generate negative feedback from confused custodians, or worse, causes custodians to go inactive.

Checkbox Five: logging is the name of the game

It’s been mentioned in checkbox 3, but it bears repeating: the simple goal of Legal Hold is to defensibly ensure relevant data present at the onset of the Legal Hold process is in place and ready to be used as evidence when it is needed. It’s hard to properly emphasize how important defensibility is: documenting steps taken and decisions made. If things go wrong and evidence ends up being removed, a tried-and-tested Legal Hold process and ample documentation will help convince a judge that your organization acted in good faith. A defensible process is not always perfect, but even when it doesn’t produce the desired results, those results are still reasonable and explainable, which is often all a judge can ask for.

The point of Legal Hold is to ensure relevant data is in place and ready to be used as evidence

6. Tools make the Legal Hold process easier

For a process such as Legal Hold, the question isn’t ever really how to get to a point where defensible results are produced. The challenge lies in finding ways to consistently keep quality high while keeping the burden on both the legal team and the custodians as low as possible. In a climate where legal teams are involved in many cases simultaneously, that balancing act means that it’s virtually impossible to imagine an effective legal hold procedure without a lot of planning and standardization.

Ensuring the control, consistency, and defensibility of Legal Hold

In order to consistently log and manage decisions, save and send out templated Legal Hold notifications, reminders and updates, Legal Hold solutions are valuable tools that help legal teams rise to the occasion. It’s tempting to think of such improvements as trivial, but smoothening out the process makes both the process itself and the results it produces more defensible. Having a solution that keeps track of Legal Hold notifications and custodian acknowledgements helps legal teams maintain oversight and confidence nothing is missed. Automating the sending of reminders and updates to custodians makes sure these steps aren’t missed or forgotten, and with tracking activated, you’re immediately aware if a custodian is no longer actively acknowledging the Hold order. Clear, high-quality templates help custodians discern what is expected of them and act accordingly.

Safeguarding the quality and manageability of Legal Hold

If we’re being honest, Legal Hold on its own isn’t that complicated a workflow, and can certainly be performed manually on a small scale. However, as quantity rises, quality inevitably falls, and mistakes tend to be expensive when it comes to litigation. Legal Hold solutions (like ours) offer a way to scale up your Legal Hold efforts without needing a small army of lawyers to do so. Purpose-built solutions help keep the Legal Hold process manageable and defensible. In a worst-case scenario, even if the Hold fails and evidence ends up destroyed, a clear and well-documented Legal Hold process may succeed in delivering a defensible explanation for that failure.

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Mistakes are expensive when it comes to data investigations, which is why automating the process and integrating ZyLAB Legal Hold into the investigative toolkit is so valuable ”

Jeffrey Wolff
Director, eDiscovery Solutions