Legal Hold in the United States

Legal Hold and the Obligation to Preserve Electronic Evidence

By Tony Schoenberg. He is a partner at Farella Braun + Martel in San Francisco and the founding member and head of the firm’s E-Discovery Task Force.

Once an organization determines that it is under a duty to preserve evidence, the next step is to implement a legal hold (also known as a “litigation hold”). Implementing a legal hold generally means asking custodians—usually the employees in possession of potentially relevant data—to take steps to preserve the information. Typically, the preservation request comes in the form of a memo circulated to the custodians, providing them with instructions about which materials need to be preserved, and how to proceed. Thus, a preliminary step in any legal hold is to identify the key players: Who, exactly, has control of the information that needs preservation? But don’t start and stop with custodians; it is also important to communicate with IT personnel (or others with similar knowledge) to become familiar with an organization’s data-retention policies and architecture and to understand how information is stored.

Also, legal holds should always be implemented in writing. Judge Shira Scheindlin, one of the nation’s leading jurists on e-discovery issues, stated in a recent decision that failing to implement a written legal hold constitutes gross negligence and supports an award of sanctions when evidence is lost (Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of America Sec. LLC, 685 F. Supp. 2d 456, 464-465 (S.D.N.Y. 2010)).

Though there is no one-size-fits-all formula for drawing up legal-hold memos, some general guidelines are helpful:

BE SPECIFIC. Describe the litigation in a way that is understandable to the recipients of the memo. (“This is to let you know that we have been served with a lawsuit related to Acme’s dynamite rocket pack. The suit alleges that patents owned by Wile E. Coyote are infringed. In light of this lawsuit, it is vital to continue to preserve all documents relating in any way to Project Roadrunner and the dynamite rocket packs currently being sold by Acme International—even if Acme’s records-retention policy calls for their destruction—until you receive written clearance from the Acme Legal Department.”)
DESCRIBE CATEGORIES OF INFORMATION. If appropriate, provide categories of documents covered by the hold. (“All documents that fall broadly into these categories should be preserved: (a) all documents relating to the dynamite rocket pack; (b) all documents relating to Acme’s U.S. Patent No. 20 trillion (methods for formulating dynamite rocket packs); (c) all documents relating to any of the Defendants.”)
BE INCLUSIVE. Mention potential sources of information, and give examples of what needs to be preserved. Err on the side of being broad and open-ended. (“When identifying documents responsive to this notice, the term “document” is expansive and includes, but is not limited to, all forms of recorded communication, such as drafts, notes (handwritten or typed), internal memoranda, reports and tables (either printed or on a computer), tapes, video, and electronic or computer records including emails and attachments.”)
STATE CONSEQUENCES. Refer to potential consequences of noncompliance. (“Failure to preserve these materials could result in the imposition of harsh penalties or sanctions on both the company and/or individual employees.”)
PROVIDE HELP. Tell custodians whom to contact if they have questions. (“If you have any questions about which documents should be preserved as a result of this notice, please contact Clarence Darrow at extension 296.”)
FOLLOW UP. Legal-hold memos should be reviewed periodically and amended as new information comes to light. In addition, custodians should be monitored to ensure compliance. One useful technique is to require custodians to certify in writing that they are complying with a legal hold. Auditing and sampling can also promote compliance. At a minimum, periodic reminders should be sent to custodians, including, as needed, the reissuance of the legal-hold memo. Utilizing these follow-up measures demonstrates the good faith of a party’s retention efforts and will, ultimately, make sanctions less likely.

Electronic Discovery: Preserving Electronically Stored Information (ESI)

The legal and practical challenges surrounding discovery in the age of electronically stored information (ESI) continue to center around the preservation of an ever-growing volume of data and documents. Legal Practitioners note that managing both legal risk and litigation costs are tied to developing effective strategies and processes around records retention and review, and new technologies have been developed to streamline these tasks.

Note: there is a entry about Electronically Stored Information (ESI) in this American legal Encyclopedia and other about Electronic Discovery in this American Encyclopedia.