eDiscovery Isn’t Hide and Seek: Legal Hold Best Practices

About 300 years ago, in 1722, the Court of King’s Bench in England issued the first known ruling in a spoliation case. In Armory v. Delamirie, a young chimney sweep found a ring and took it to a goldsmith to have it cleaned and appraised. The goldsmith removed the stones from the setting and returned the ring without its jewels, offering a small sum of money instead. The boy refused the offer and demanded the jewels back, but they were never returned. The court ruled in favor of the chimney sweep, telling the jury to presume that the damages were the highest possible value of the jewels.

This principle, called spoliation of evidence, still holds true today: a party should not be able to profit from their malfeasance in discovery. When a party wrongfully destroys, alters, or withholds evidence, it may be presumed that the evidence was favorable to the opposing party. And concerns over preserving evidence have only grown as the digital landscape has evolved.

Yet, when litigation is on the horizon, not all organizations treat legal holds as an automatic response. So why do so many organizations struggle with it? The answer often lies in underestimating the importance of a well-executed legal hold and failing to appreciate—and follow—the straightforward steps involved.

The six key elements of an effective legal hold

Legal holds are foundational to the eDiscovery process, ensuring that critical evidence is preserved for future litigation. They are essential in today’s fast-paced digital environment where information can be altered or deleted with a few clicks.

Implementing an effective legal hold requires careful attention to several critical components. Each element ensures that the hold is comprehensive, clear, and actionable, reducing the risk of spoliation.

Let’s explore each element in more detail.

1. Clarify legal obligations

The first element of an effective legal hold is clearly communicating the legal obligations involved. The hold notice should begin by explaining the duty to preserve relevant information and the legal consequences of failing to do so. This may include potential sanctions, adverse inferences, or other penalties that a court could impose if evidence is lost or destroyed.

It’s also essential to communicate any internal consequences for employees who do not comply with the hold. This can range from disciplinary actions to termination, depending on the severity of the noncompliance. By setting out these expectations, the hold underscores the seriousness of the preservation process.

Note that it’s often helpful to reassure recipients that receiving a legal hold notice does not imply wrongdoing or that they are in trouble. Instead, it’s a standard precautionary measure to ensure that all relevant information is preserved for legal proceedings.

2. Establish the scope of preservation

The second element is defining the scope of what needs to be preserved. This element ensures that all recipients clearly understand what the legal hold covers, preventing any misunderstandings or gaps in preservation. This includes detailing the underlying events or transactions that are the focus of the litigation or investigation and identifying the relevant individuals—inside and outside the organization—who may have information related to these events. For example, if the litigation involves a specific project or transaction, the hold should mention all key dates, involved parties, and the communications that need to be preserved.

The scope should also specify the time frame when the relevant events occurred. In some cases, the legal hold may apply to existing documents and any new documents created after the hold is issued that relate to the matter.

3. Explain what materials to preserve

An effective legal hold must also clearly identify the types of materials that need to be preserved. It should specify the devices, file types, and document examples that fall under the hold.

For devices, the hold should mention all potential sources of relevant information, including laptops and desktops, mobile phones and tablets, external drives, and company-issued or personal devices used for work.

The hold likely should be expansive in enumerating covered file types. For example, you may need to include the following:

• Emails and attachments
• Chat messages
• Texts
• Word documents
• Spreadsheets
• Presentations
• Databases
• Audio files
• Photos and other images
• Videos
• Social media

Finally, the hold should provide examples of specific documents or records that must be preserved. For example, you might note that the recipient should keep internal reports and financial statements, contract drafts and negotiation notes, meeting minutes, and project plans. By outlining the types of materials in detail, the legal hold ensures that recipients understand the breadth of the preservation duty, covering all potential evidence.

4. Detail the preservation process

You should also provide specific instructions on how to preserve the required information. Here, list the steps that recipients should take to ensure that the relevant materials are preserved. You may want to instruct recipients to take steps like these:

• Preserve in place: Retain documents in their current location and refrain from deleting, modifying, or relocating them
• Suspend automatic deletion: Pause any automated processes, such as email archiving or file deletion, for the duration of the hold
• Document preservation efforts: Record the steps you take to comply with the hold, which can serve as evidence of good faith efforts if preservation is challenged

This section may also include information about when and how you will contact custodians about collecting preserved materials. The clearer the instructions, the easier it is for recipients to follow them, reducing the risk of inadvertent data loss.

5. Set communication guidelines

Effective communication is key to a successful legal hold. The hold notice should explain how and with whom recipients may communicate about the hold. For example, you may need to prohibit certain communications if recipients should not discuss the hold or the underlying legal matter with colleagues or external parties to protect attorney-client privilege and to prevent evidence tampering. You should also designate appropriate points of contact in legal, compliance, or IT if recipients have questions or need further clarification about the hold.

The goal is to prevent any misunderstandings that could lead to noncompliance or inadvertent disclosure of privileged information. This step also ensures that everyone manages and documents all communications regarding the hold appropriately.

6. Verify employee receipt

Legal hold recipients should be required to formally acknowledge that they have received, understood, and will comply with the hold notice. An acknowledgment process creates a record of the distribution of the hold and affords the opportunity to confirm that the message has been delivered and read by the appropriate parties.

Verification can take many forms, such as email confirmations, digital signatures, or return receipt requests. Ensuring that employees sign off on the hold demonstrates accountability and reinforces the importance of the preservation process. It also mitigates the risk of employees claiming ignorance of their responsibilities, which can offer protection in case of later disputes or claims of spoliation.

Steps to take after issuing a legal hold

Issuing a hold is not a one-time event; it requires continuous oversight to be effective. Litigation and investigations often extend over long periods, which means the legal hold must remain in place for months or even years. Throughout this period, your organization must continue to preserve relevant evidence properly.

Without an ongoing review of your legal holds, you face the risk that automatic deletions, software updates, or new developments may inadvertently lead to the loss of key information. Regular reissuance of hold notices, follow-up communications, and periodic reviews are part of maintaining defensibility throughout the lifespan of a legal hold.

Take the following steps to ensure ongoing compliance with legal holds:

• Ensure that IT personnel confirm the suspension of any automated processes that could affect data preservation, such as auto-deletion policies or routine backups.
• Regularly check in with a sample of custodians to verify that they are complying with the hold. You may want to review emails, files, or other records to ensure that nothing has been deleted or altered.
• Periodically reissue the hold notice to remind custodians of their ongoing obligations, especially if the legal matter is prolonged or if new information comes to light that expands the scope of the hold.

There is no excuse for ineffective legal holds

The legal hold process is straightforward—so much so that there’s little, if any, excuse for not doing it right. By understanding and applying the six key elements of an effective legal hold, legal professionals can ensure they’re fulfilling their duty to preserve relevant information in any legal matter.