More Legal Hold Processes and Policies – Hold On Series, Part 5

A multi-part series on achieving effective legal holds, including relevant case law, content to include, processes to employ, best practices to follow, available tools to leverage, and more

In the first Part of this series, we reviewed an assortment of recent cases illustrating the potential dangers associated with ineffective or nonexistent legal holds.  In the second Part, we reviewed the duty of preservation and the triggers to that duty and hold issuance.  In the third Part, we reviewed the standard elements of an effective legal hold.  In the fourth Part, we reviewed the importance of defined hold processes and policies and the first two legal activities that benefit from them.  In this Part, we turn our attention to the remaining three activities: recipient identification, compliance monitoring, and hold release.

All Key Players, Please Step Forward

The next activity for which a repeatable process is essential is the identification of the appropriate hold recipients.  Even a timely and well-written hold will not be effective if it does not reach everyone it needs to reach.  So, who does it need to reach?  Does it need to go to the entire company?  To a particular department?  To specific individuals?  What about executive management?  Who is responsible for relevant enterprise information systems?  Are there outside, third-party recipients that need to be added too?

Since Zubulake V in 2004, the phrase “key players” has been used to describe the essential recipients of a legal hold within an organization.  Key players are those with the direct knowledge of the underlying events or those most likely to have relevant information or materials.  This is often, but not always, managers and executives.  Even plant-level employees have been deemed key players when they had relevant knowledge.

It is not always possible to identify all key players in the abstract; you will need to communicate with some or all of the key players and ask for referrals to others.  Depending on the sequence of events, this may mean sending the hold to additional recipients after the initial distribution, as you learn new details.  Other common pitfalls include:

• Enterprise and departmental systems – organizations may have any number of enterprise systems (e.g. email, backup, or document management) and departmental systems (e.g. benefits, payroll, research, or compliance), each with different owners and their own automated janitorial functions (or tape recycling schedules) continually deleting older files, which will need to be suspended if any relevant materials are at risk
  • Each owner responsible for systems containing relevant information will need to be a recipient of the hold to ensure those mechanisms of deletion are halted

• Third-party providers – organizations very commonly outsource one or more business functions, like payroll or benefits (or even email), to specialized third-party providers, and the data they possess on your organization’s behalf is subject to the same duty to preserve, as we discussed in Part 2
  • Third-party service providers in possession of potentially-relevant materials will need to be recipients of the legal hold as well, and your service contracts with them may specify particular notice procedures to follow for each provider

• Employee turnover – employee departure is a common occurrence in organizations of almost any size, and many organizations wipe and reissue employee devices when that happens (and deactivate email accounts, etc.), which is a problem if the individual was subject to a legal hold and unique, relevant materials are lost in the process
  • Whoever in HR or IT typically handles these steps also needs to be a recipient of the hold and be generally kept informed about active holds that should change normal device recycling steps, account deactivation steps, etc.

Once Is Never Enough

Ongoing compliance monitoring after hold issuance is the activity for which it is most important to have a consistent, documented process.  As made clear in case after case, failure to check if individuals are actually complying or to remind them as needed can be just as consequential as failing to issue the hold in the first place.  See e.g. Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, Case No. 05 Civ. 9016 (S.D.N.Y. Jan 15, 2010); Chin v. Port Authority, Nos. 10-1904-cv(L), 10-2031-cv(XAP) (2d Cir. July 10, 2012).

Common steps to ensure ongoing compliance with the hold include:

• Employee verification – having employees sign a document or electronic form, or send an email, confirming that they have received the hold, understood the hold, and will comply with the hold; this is typically covered as part of the hold itself
• System verification – just as individual custodians must confirm their understanding and compliance commitment in writing, so those responsible for suspending janitorial functions on enterprise or departmental systems can be required to do the same

• Recycling verification – the same requirement can be applied to the individuals responsible for the recycling of backup tapes and employee devices

• Spot checking – it also advisable to establish a regular schedule for checking in with at least a sampling of the subject custodians (checking everyone may not be feasible) to check that they are in fact complying and materials are being preserved

• Reissuance – since legal matters and the holds associated with them can continue for months or years, it is also advisable to establish a schedule for periodic reissuance of the hold as a reminder to those it covers (quarterly is common); the specific scope of the hold may also need to be revised as a legal matter evolves and more is learned

As we noted in Part 1, a legal hold is not itself preservation, and if it is not followed by the other steps necessary to ensure actual preservation takes place – like ongoing compliance monitoring, then whether or not a hold was issued doesn’t really matter.

When All Is Said and Done

Finally, it is valuable to have a standardized process, documented in a policy, for the release of legal holds after a matter has concluded.  The Sedona Conference Commentary on Legal Holds includes this in Guideline 11:

Any legal hold policy, procedure, or practice should include provisions for releasing the hold upon the termination of the matter at issue so that the organization can adhere to policies for managing information through its useful lifecycle in the absence of a legal hold.

Having a consistent standard and a defined process for the review of when to release a legal hold can do a lot to demonstrate good faith in your preservation efforts.  The three key factors to consider before deciding to release a legal hold are:

1. Whether there are any remaining court or agency orders requiring retention
2. Whether there is a possibility of related future litigation (e.g. appeal, new suit)
3. Whether the materials being preserved are potentially-relevant to any other matters

If there are no applicable orders, no reasonably foreseeable future litigation, and no reason to preserve for other matters, then a hold can be released and an organization can revert to its default management, retention, destruction, and recycling policies for documents and devices.

Upcoming in this Series

In the next Part of this series, Tools You Can Use for Legal Holds, we will review some of the tools you can use for the execution of these legal hold activities.