The Role of Legal Holds, Identification and Preservation Fundamentals Series Part 5

A multi-part series on the fundamentals eDiscovery practitioners need to know about the identification and preservation of potentially-relevant ESI

In “In the Beginning,” we reviewed the importance of effective identification and preservation as well as the triggers for doing so.  In “Legal and Technological Scope,” we reviewed the scope of what must be identified and preserved.  In “Imagining the Possibilities,” we reviewed the first steps for identification.  In “Investigating the Realities,” we reviewed the investigative aspects of identification.  In this Part, we discuss the role of legal holds in preservation.

Once you’ve completed your imagination and investigation activities, once you have identified the potentially-relevant materials within your organization, you are ready to take steps to actually preserve those materials.  The first and most important of those steps is the issuance of a legal hold instructing the custodians of potentially-relevant materials regarding the need to preserve them.

It’s true that “legal holds do not preserve data” themselves, but they are the critical first step in the preservation process, ensuring that materials survive in situ long enough for you and your team to go get them.  You are literally saying to everyone – just as Sam & Dave sang in 1966: “Hold On, I’m Coming.”

Legal Holds and eDiscovery

Formal, written legal holds became the focus of much attention in eDiscovery after the Zubulake V ruling in 2004, in which a party was sanctioned for failing to issue a hold or take other necessary steps to ensure the preservation of relevant materials.  In subsequent years, this decision was cited in numerous others, and written legal holds became central to an effective eDiscovery preservation process.

For a time, the failure to issue a written legal hold was treated as per se gross negligence.  That absolute requirement for a hold in writing was softened by subsequent cases, however, which allowed for the possibility of circumstances in which oral holds or other approaches to preservation may be appropriate.  See e.g. Chin v. Port Authority, Nos. 10-1904-cv(L), 10-2031-cv(XAP) (2d Cir. July 10, 2012).

Issuing a Legal Hold

When preparing a legal hold for issuance, there are five essential elements that should be included.  An effective legal hold should include information regarding:

1. The legal obligations associated with the hold – This should include some explanation of the duty to preserve, the legal consequences for the organization if it is not fulfilled, and any internal consequences for employees who violate it. It is often helpful to point out that a request for individuals to preserve materials is a common legal step and is not an indication recipients are in any trouble.

2. The substantive scope of what must be preserved –This may include describing the underlying events, the relevant individuals inside and outside the organization with whom communication may have taken place, and more. This should also include the applicable time range, if any, and whether the hold applies going forward to newly created materials as well.

3. The types of materials that must be preserved – This should include lists of relevant devices (e.g., laptops, phones, thumb drives), of file types (e.g., email, spreadsheets, text messages), and of example documents (e.g., internal financial reports, contract negotiation messages, annotated contract drafts).

4. The process that is to be used for preservation and collection – These are the specific instructions the recipients of the hold are to follow for handling the materials they possess that are subject to the hold. Should they just preserve them in place?  Take other steps?  When and how will they be contacted about collection of those materials?

5. How and with whom recipients may communicate about the hold – This should include both any prohibitions on communication about the hold or the underlying matter with peers, as well as instructions for who should be contacted with any questions about scope or process.

When drafting, it is important to remember that the hold must cover not only the devices and materials of individual custodians, but also relevant departmental and enterprise systems and any automated janitorial functions that may be running on them.  Additionally, you may consider including: compliance confirmations to be returned; custodian surveys to aid in collection planning; or frequently asked questions to help recipients understand what’s required.

Once you’ve created your hold, you are ready to issue it to the lists of key players, important system managers, and other custodians that you identified during your brainstorming and investigation activities.

Monitoring a Legal Hold

Beyond just issuing a legal hold, it is crucially important that you engage in some form(s) of ongoing compliance monitoring after hold issuance.  As has been 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 taken to ensure ongoing compliance with a legal 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 above, a legal hold is not itself preservation, and if it is not followed by steps to ensure actual preservation takes place – like ongoing compliance monitoring, then whether or not a hold was issued doesn’t really matter.

Upcoming in this Series

Next, in the final Part of this series, we will conclude our discussion of identification and preservation fundamentals with a look at some common pitfalls and key takeaways.