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Litigation Holds: Tips to Having an Effective System

It is essential that all organizations and attorneys representing an organization have an effective legal hold system due to the potential risk of court sanctions for spoliation of all evidence. There was a common law duty to prevent spoliation of evidence, and certain statutes or regulations also prevented spoliation. However, since Zubulake v. UBS Warburg, the scope of a party’s duty to preserve evidence including electronic stored information (ESI) when litigation is likely, has been at the forefront. Lawyer’s also have a duty to monitor their clients’ compliance with evidence and electronic data preservation.  Although the 2015 amendments to the Federal Rules of Civil Procedure have reduced the risk of sanctions, organizations and attorneys representing an organization must remain vigilant in their efforts to preserve evidence.   

Litigation Hold

A litigation hold (sometimes called a “legal hold”) is an instruction within a business organization and the responsibility of that organization to notify their employees, custodians, partners, subsidiaries, IT, and anyone potentially involved in the matter to preserve and refrain from discarding documents or deleting ESI that may be related to the subject of a lawsuit or which may become a subject of litigation in the future. Detrimental consequences may result if an organization fails to properly implement the litigation hold including discovery sanctions, striking of pleadings, monetary sanctions, exclusion of evidence, and fines. For example, in Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 501 (D. Md. 2010), the court entered a default judgment against the defendant for failure to preserve an external hard drive containing evidence and for deletion of ESI after the lawsuit was filed.   

Tips to Having an Effective System

  1. Know Your Responsibilities in this Evolving Area of the Law

The law concerning legal holds quickly evolved and is continuing to evolve. Monitor changes in this area of the law in your jurisdiction and ensure your organization is prepared accordingly. At least one court imposed monetary sanctions against in-house counsel for failure to preserve evidence.  See Swofford v. Eslinger, 671 F.Supp. 2d 1274, 1287-88 (M.D. Fla. 2009).  

  1. Prepare Ahead and Have a Written Protocol

Educate yourself on the organization’s data storage capabilities, and abilities to preserve documents and ESI. Promote the necessity of a litigation hold written protocol or policy to educate an organization’s employees’ responsibility to preserve evidence, but also to ensure compliance. Having a protocol will also expedite the implementation of a litigation hold. An effective protocol should identify the purpose of a litigation hold notice and suspend the normal operation of document destruction policies for records that are related to the litigation hold notice. Custodians of records in each department of the organization should be identified in the written protocol along with their corresponding responsibilities.   

  1. Watch for Triggers

What words or actions impose a duty upon an organization or lawyer to preserve evidence?  Generally, any communication threatening litigation or request that evidence be preserved.  In Cognate BioServices, Inc. v. Smith, 2015 WL 5158732, at *2 (D. Md. Aug. 31, 2015), the court found that “[o]nce a party reasonably anticipates litigation, it is obligated to implement a ‘litigation hold’ to ensure that potentially relevant evidence under its control is identified, located, and preserved for use in the anticipated litigation.” Other subtle events like an email from an applicant who was not chosen as the final candidate for a job requesting preservation of evidence may also trigger a duty to preserve. Litigation holds may come from many sources including an opposing party’s request or potential claimant.

  1. Act Immediately – Do not Delay Your Litigation Hold Notice

Act promptly, do not delay your litigation hold notice. Immediately communicate with the custodian of records of your organization with clear instructions to preserve potential evidence.  Make it clear to all employees that will be directed to preserve evidence, to do so at once.  The Litigation Hold should be a priority to ensure that evidence subject to the litigation hold is not destroyed or deleted. 

  1. Identify Documents/ESI to Preserve With a Broad Stroke

Instructions to your client on what evidence to preserve should be painted with a broad stroke.  If opposing counsel served your organization with a very broad litigation hold notice, then request clarification and search parameters for the litigation hold. If opposing counsel is uncooperative, then the organization should propose search terms for preservation and have opposing counsel agree to those terms or be given the opportunity to object to the search terms.  It will be difficult for opposing counsel to support a claim of spoliation of evidence if the search terms were either defined by opposing counsel and/or opposing counsel was given the opportunity to propose their own search terms but failed to do so. Don’t forget to include voicemails, text messages, chat boxes, power points, websites, work and home computers, cell phones, flash drives, and backup tapes that may have information related to the subject matter of the litigation hold.

  1. The Litigation Hold Notice Should be in Writing and Identify Possible Documents

Of course, clear instructions in writing are best. A description of the types of documents to preserve and subject matter of the litigation will be helpful for the custodian of records. The litigation hold should also state the categories of paper documents and ESI that must be preserved in its electronic form so that all information contained within it (including meta data) is preserved.  Explicit instructions to not destroy evidence should be included along with warnings of potential detrimental consequences.  

  1. Hire a Third Party Expert, if Necessary

If the volume of documents and/or ESI is tremendous, do not be afraid to hire third party experts for consultation and/or for management of the litigation hold notice. Outside consultants can streamline the legal hold process for cost effectiveness and defensibility in the event of a spoliation claim. Outside consultants are also helpful in class action lawsuits, and/or when someone in upper management is a named defendant in a lawsuit. 

  1. Follow Up for Compliance

Require written confirmation from each custodian of records acknowledging the receipt of the litigation hold. Written confirmation from each custodian of records should also be obtained from the custodian of records when documents are provided pursuant to the litigation hold asserting that they conducted a good faith search of evidence and all evidence discovered has been provided. Periodically issue reminder notices before the deadline to submit the documents. Effective implementation will assist an organization to comply with the law and create a paper trail to avoid sanctions.   

Practical Tips

Counsel may want to consider organizing a litigation hold team to develop a plan to implement and manage the litigation hold, issue the litigation hold in writing, communicate and distribute the litigation hold, monitor the hold and finally, terminate the hold. Timely terminating the litigation hold allows the organization to return to its normal document retention policy.