Reveal’s Quick Guide to Legal Hold

Alex Chatzistamatis & George Socha
Alex Chatzistamatis & George Socha

Reveal’s Quick Guide to Legal Hold

Legal hold is a crucial process that begins early in the overall eDiscovery workflow. The process consists of a series of steps, which can vary from one case to another. These steps are designed to help you ensure that you appropriately identify and preserve data that could help prove or refute the allegations of the matter in which you are involved.

Once you decide a hold is necessary, you need to determine who should be covered by the legal hold (custodians) and what ESI (electronically stored information) of theirs should be held. You probably also will need to put a hold on data that does not clearly belong to a specific person (non-custodial data). You will need to prepare and issue hold notices, typically written. You will need to decide what information to put in the notices, how to deliver them, how to verify that they have been received and understood, and more. And through all of this, you will need to keep track of what you have done – and what everyone else involved in the process has done. Data is then preserved and collected in a forensically sound manner and prepped for the ensuing Discovery workflow.

The Basics

What is a Legal Hold?

Legal hold is a process organizations use to preserve potentially relevant information when a lawsuit or similar event is reasonably anticipated. The legal hold is initiated by notices or communications from legal counsel to the appropriate people in the organization, and at times to people outside the organization. The notices inform their recipients to suspend the disposition or alteration of data described in the notice. Legal holds might be issued for current or anticipated lawsuits, audits, government investigations, or other such matters.

What Is Inside a Legal Hold Notice?

A legal hold notification should describe the scope of data potentially relevant for a particular matter. Typically, the notice outlines which data should be preserved, potentially to be collected for processing, review and analysis, and potential production and use. The receiver of the legal hold notice, also called the data custodian, should be instructed not to tamper with or delete that data, which commonly includes emails, office files, chat messages and logs, etc. as well hardcopy documents that are deemed likely to be relevant to the matter. Legal holds should also include a way for custodians to contact legal team members if they have questions regarding proper legal hold procedures.

Who Sends a Legal Hold?

Internal corporate legal team members often are the ones who send legal hold notices. Larger corporations might have specialized eDiscovery teams that handle the entire eDiscovery workflow, including sending legal hold notifications. In some situations, a company or other entity needing to send legal hold notices might turn to outside counsel, alternative legal service providers, or similar organizations for assistance.

Who Receives a Legal Hold?

Legal holds can be sent to anyone likely to have data that is potentially relevant to a matter. There is a common misconception outside of the legal industry that only legal professionals can receive legal holds. Anyone with potentially relevant information can receive a legal hold.

When is a Legal Hold Typically Sent?

Once a litigation matter is reasonably anticipated, or has already begun, a legal hold notice should be sent. Failure to properly issue or comply with legal holds can have serious legal and financial consequences, so it is considered a best practice to send a legal hold as soon as a litigation matter is imminent.

How Do I Ensure Custodian Compliance?

It is important that custodians acknowledge receipt of and reply to legal hold notices. They should respond in a timely manner, preferrable in a way that creates a record of their response. The response could be a simple acknowledgement or, depending the on the requirements of a matter, it might require more information from the custodian. For a sounder, more manageable, and more defensible process, you should consider investing in quality legal hold software you can use to track employee legal holds, acknowledgements, and replies, as well as to send built-in reminder notices.

How Do I Ensure Defensibility?

Defensibility is key in the legal hold workflow and the larger eDiscovery workflow as well. As a result, you should implement a legal hold process that follows forensically sound best practices. To that end, many legal teams deploy specialized eDiscovery software. This software should enable them to use an array of capabilities to manage the legal hold process, capabilities such as templates for notifications, surveys to gather information and track progress, and structured and monitored email messages.

Case Closed! Now What?

After a matter has been closed, it is important to release custodians from their legal hold obligations. Even though this step is one of the most forgotten steps in the workflow, it is an important one. Only once the legal hold is released will custodians be able to alter and delete data, and only then will routine retention requirements again come into play.

Why Should I Care About Legal Holds?

As law students tire of hearing, litigation requires lawyers to apply law to facts. Facts, if they are to be used in a lawsuit, they must come from evidence. Evidence, in turn, needs to be available and admissible. The effective use of legal holds increases the chances that you will have the evidence you need to successfully prosecute or defend your case.

The advantages of deploying an effective legal hold process are substantial. They include:

  • Accuracy: You will have a much clearer picture of what happened at every step of the legal hold process, improving your chances of getting the process right.
  • Efficiency: As a result of a more systematic approach, you will increase the likelihood that you have the data you need to handle your matter.
  • Defensibility: With a defined process to follow and consistent tracking of what you did, you will enhance your ability to defend your legal hold efforts in the event of a challenge.
  • Cost control: With a tightly managed legal hold process, you will be less likely to needlessly repeat steps, return to the same custodians more than you really need to, or spend money responding to challenges to your process.
  • Reputational control: Executing a legal hold process poorly, or worse, not using one at all, can damage your reputation. It might cause the judge handling your matter to question your professionalism – never a good thing – or worse, your honesty and integrity. No company wants that reputational hit.

Failing to properly implement legal holds can result in sanctions such as monetary penalties, adverse inferences, and even the outright dismissal of a case. Here are two real-world examples.

  • In Zubulake vs UBS Warburg, the case that brought the idea of legal holds to the attention of many for the first time, U.S. District Court Judge Shira Shindlin concluded that UBS repeatedly failed to adequately find, preserve, and provide key relevant information to the plaintiff – a pattern that continued even after orders from the court mandating action. As a result, the judge ordered that an adverse inference instruction be read to the jury. Zubulake won a $29.2 million verdict from the jury in 2005 and ultimately chose to settle with UBS before the case could be heard by an appellate court.
  • In Sekisui America et al v. Hart et al., the plaintiff failed not only to implement a legal hold in a timely manner, but also to notify a key custodian. The judge ordered that an adverse inference be read to the jury, instructing jurors that missing electronic documents should be considered negatively prejudicial to the plaintiff. The plaintiff's case was subsequently dismissed, and the company was ordered to pay their opponent's legal fees.

Common Hurdles and How to Solve Them

Hold by Spreadsheet

Spreadsheets are often used to track legal holds, but as organizations grow larger or the investigations or lawsuits in which they are involved increase in numbers or size, spreadsheets can become a cumbersome bottleneck. Spreadsheets also only take you so far; they help track what has been done but they are not tools for the actual preservation or collection of data.

Adopt comprehensive legal hold software which can help solicit information directly from your custodians. Include questionnaires and interviews in your legal holds, tools which can help prompt custodians to share more of their data sources or identify other colleagues with relevant data. Look for a platform that can help ensure you undertake all steps in the legal hold workflow, including preservation and collections, in a forensically sound manner.

Too Little Time, Too Much to Do

At the onset of a lawsuit, there is a lot to do. One of those things is issuing holds – something for which there often seems to be too little time.

Issue legal hold notices as soon as a litigation matter becomes imminent. The sooner you are able to start the process, the sooner you will be able to take the additional steps that happen only after a hold has been issued.

When looking to select legal hold software, consider platforms that include workflow automation. With automation, the complex legal hold process can become intuitive, hundreds of clicks can be collapsed into a one-click solution, and the entire process can be sped up.

Unresponsive Custodians

Sometimes emails get lost in inboxes and legal holds go unacknowledged. When this happens, it is important to have a system in place to ensure that custodians are reminded of their legal hold obligations.

Invest in quality legal hold software that lets you send reminder notices to custodians who fail to acknowledge receipt or take other necessary actions. Look for a platform that facilitates escalation: if the legal hold goes ignored even after a preset number of reminder notices, an escalation should be triggered and an escalation notice should be sent to the custodian’s manager who can then remind the custodian to acknowledge and comply with the legal hold.

Litigation matters can be lengthy, ongoing processes where custodians are asked to acknowledge the hold every month, quarter, etc. To ensure legal hold reacknowledgement is not missed, look for legal hold solutions that can reissue legal holds for acknowledgement.

Employee Changes

One of the most asked questions is what to do if a custodian leaves an organization or switches departments.

The best way to ensure that a legal hold reliably reaches the intended recipient is to invest in eDiscovery software that maintains a 24/7 connection with your company’s human resources management system (HRMS). That way, if the status of an employee changes, the HRMS will reflect the change and the legal hold will still reach the desired recipient.

Multiple Legal Holds

Corporations sometimes must send multiple legal holds to multiple custodians at the same time. As legal holds grow in number, the process can feel increasingly overwhelming and complex, especially for smaller corporations. To avoid confusion, avoid manually tracking legal holds and invest in software that will show you all legal holds and their respective statuses within an organization.

Reporting and Dashboards

Using metrics to identify legal hold gaps or to keep leadership apprised of legal hold efforts can be extremely difficult when relying on spreadsheets.

Look for legal hold software that includes visualizations, ones that can quickly provide insights into key areas of the process. Reporting doesn’t have to be complicated – look for software that can give you the details and metrics you are looking for with the click of a button. Important reports to consider are case & custodian details, custodians hold status and details, questionnaires answers, preservation and collections statistics, and employee changes.

Learn More

Historically, the legal hold workflow was labor intensive and repetitive, with legal operations teams relying on heavily manual processes to issue and track legal hold notices. Reveal was designed to consolidate and automate multiple steps in the legal hold workflow, ensuring that legal teams experience a boost in productivity, speed, and accuracy. Reveal’s seamless integration with dozens of modern data sources means consolidated workflows beyond just legal hold – users can easily streamline workflows to tackle hold, preserve, collect and beyond. To learn more, contact us.