A Comprehensive Guide to Understand the Need for a Legal Hold

Legal Hold or, as sometimes called, Preservation Orders, is a common reality in these times. Businesses in the modern world may face such legal implications as the threat of litigation from competitors, customers, employees or other unknown factors. Whether paper based or electronically stored information (ESI)—digital files, multimedia, emails & other communications and various other data files—agencies in charge of oversight authority increasingly mandate organizations demonstrate that proper care has been exercised in handling, preserving and collecting of digital evidence.

Even for those organizations that don’t see a lot of litigation, being well prepared with thorough planning and sound methodology is crucial for managing Legal Holds. Failure to prepare for a legal hold is a lot like not buying insurance; if you don’t have it when you need it, it’s too late, and the consequences can be very serious.

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What is a LEGAL HOLD?

Legal or Litigation hold is the process an organization employs when litigation is plausibly anticipated. A company must preserve records when it learns of pending or imminent litigation, or when legal action is anticipated in the foreseeable future. It may also be put into effect to preserve all sorts of relevant information, as a result of current or an expected audit or an investigation.
Whatsoever may be the cause, the Legal Hold mandates preservation of documentation and ESI, pertaining to a grievance or an audit. All processes leading to disposal of data are suspended to ensure data availability for the discovery process prior to actual litigation. The relevant custodians and recipients of information are identified and properly notified. The information must then be preserved and collected for use in discovery, if needed. Recent amendments to the United States Federal Rules of Civil Procedure (FRCP,) specifically addresses use of legal holds for electronically stored information (ESI).

How Companies Manage Legal Holds

According to recent survey results, over 60% of companies still do not have a formal process/automated solution in place for legal holds. Today, with several emerging technologies, electronically stored information (ESI) exists in numerous forms; computer files, emails, voice mails, videos, images etc. This ESI exists in multiple locations, such as servers, desktops, laptops, mobiles, data centers etc. Identification and tracking of all relevant document custodians and locations can be a tedious task. Many organizations rely on manually generated emails to notify data custodians, and depend on spreadsheets to track notifications, responses and progress within legal holds. Needless to say, relying on these methods is time-consuming, and most importantly, risky.

Sanctions and Other Penalties

In accordance with the US Amended Rules of 2006, an organization has the responsibility to preserve the relevant information when it learns of pending or probable litigation, or of a regulatory investigation. In order to comply with its preservation obligations, the organization should inform records custodians of their duty to preserve relevant information. The organization should provide clear instructions for achieving this. This traditionally cumbersome process may be automated with workflow and software solutions to ensure all custodians receive a formal notice and agree to its terms.
Simply put, entire cases can be lost if a legal hold is not properly executed, exposing the organization to significant risk. Even delays in implementing a legal hold can bring serious consequences.

Enforcoing a Legal Hold

In general, organizations go through the stages illustrated in the following figure to enforce legal holds:

1. 1. Identify Trigger Events
      • Filing an administrative claim
      • Organizational knowledge of a potential claim
      • Conversations with supervisors
      • Retainer of counsel and experts
      • Compiling a list of opponents
      • Threat to sue letter
      • Prior events that have led to litigation
      • Industry wide litigation
      • Agency investigation
      • Service of a lawsuit
   2. Analyze Duty to Preserve
      • Who determines whether a legal hold is necessary?
      • Collect facts to make determination
      • Organizational analysis
      • Legal analysis
   3. Define Scope of Hold
      • Scope to be determined on a case-by-case analysis. Such as:
        • Email
        • System log data
      • Possible data locations
      • What is reasonable?
      • Records and other ESI requiring special attention
   4. Implement a Hold
      • Who issues Hold order?
      • Who receives Hold order?
      • Form of Hold orders (notices & content)
      • Coordinating with IT
      • Technical considerations (the Data Map)
      • Interview key witnesses
   5. Enforce and Examine Effectiveness of the Hold
      • Interview key witnesses
      • Get together with IT
      • Consult with Legal Hold Oversight Committee
   6. Modify the Legal Hold
      • Re-check scope of distribution
      • Broadening or narrowing
      • Adding custodians
      • Discussions with potential litigants
      • Court orders
      • Modify scope of records
   7. Monitor & Remove
      • Audits
      • Record hold reminders
      • Issuance to new employees
      • Narrow over time
      • Monitor holds and re-check
      • Management of terminated employees
      • Releasing legal holds
      • The cascading hold dilemma

Best Practices for Creating a Systematic Process for Executing Legal Holds

1. 1. Outline specific notification criteria
   2. Identify custodians
   3. Provide clear, detailed notifications to custodians
   4. Create and use templates
   5. Check relevant info has been dispersed to custodians
      • What relevant documents do you possess?
      • Where are the relevant documents located?
      • Do you know anyone else who possesses relevant documents?
   6. Communicate regularly with custodians
   7. Document, document, document—So prepare/collate documentation that maybe required in a court
   8. Automate the process (wherever possible)
   9. Select a solution that meets your needs. Common characteristics may be:
      • Easy-to-use
      • Real-time updates
      • Mobile
      • Secure
      • High-quality provider

Benefits of an Automated Legal Hold Process

By going through the complexity of the aforementioned process, one can noticeably understand the need for automated mechanisms to enforce and monitor holds within an organization.
By employing a systematic and automated legal hold process, companies can take much of the pain out of the earlier mentioned steps. Additionally, execution speed, repeatability and defensibility can significantly be improved, reducing costs associated with managing legal holds.

Execution speed

An automated legal hold process can be implemented as soon as the need is identified. Notifications are sent instantly to document custodians, helping ensure proper and timely preservation of data. Increased efficiency, fewer errors, tracking responses, interviews and data collection from all custodians can be a highly labor-intensive, time-consuming task. Automated tracking can reduce errors from manually handling and tracking responses, data, etc.

Repeatability

An automated process can be consistently executed multiple times.

Defensibility

Providing documentation to a court on how a legal hold was executed becomes considerably easier. Cost automating the legal hold process can reduce costs through faster execution and fewer manpower requirements. In many ways, it’s best to plan as if litigation is inevitable at some point. And assume that point is closer than anticipated. Waiting until the onset of legal action to develop a defensible, repeatable, efficient legal hold process is a bit like waiting to buy fire insurance until after the house has burned down. Courts have made it clear that legal holds must be executed even if there is only a “reasonable anticipation” of legal action. Legal holds must often be executed with very little advance notice. Even a slight delay can result in spoliation of evidence and the possibility of sanctions.

Best Practices Email Legal Hold

A major part of the hold process depends on communication hold serving as a major chunk of evidence. The sheer number of communication events in a day, pose the biggest challenge in enforcing a hold. There is a fairly significant chance that some of the communications can be missed if the hold is not enforced in a professional manner. Hence, at the core of ESI preservation, Email Legal Hold carries maximum weight.

Many organizations are looking for ways to deal with e-mail being the primary form of communication among employees. One common issue arises with email storage, where with the passage of time various mechanisms are deployed where emails are removed from the central server to tape drives or other solutions where e-mails are not centrally stored on the firm’s network server. Complying with one’s preservation obligations can also get especially complicated for an organization when individuals have archived e-mails in .PST or .NSF files or on removable media.

One proposed solution for reducing an organization’s burdens with respect to e-mail preservation is the implementation of an enterprise-wide E-mail Archiving System. That system may also be associated with an electronic discovery tool that enhances an organization’s ability to locate potentially relevant data as well as to effectively and reliably implement a legal hold that affects electronic data.
Archiving is a storage strategy that automatically offloads certain data (e-mail, instant messaging files, e-mail attachments, and other electronic documents) to a storage server. This allows an organization to remove the ESI from its main or message servers while still storing relevant material at a lower cost. The extent to which data is saved in the archive, how often, and for how long can all be tailored to an organization’s individual needs and the variety of technological solutions offered by archiving vendors.
One important characteristic of an effective e-mail archiving system is its ability to retrieve records based on user-defined searches. The ideal archive will allow for easy, accurate, and fast full text searching. Ideally, the system will also employ intelligent search capabilities that will allow users to perform context searches in their quest to get to the heart of a matter.

Some of the benefits of an email archiving system include:

• Centralized retention of messages—Creates a single, centralized repository that helps to ensure that no data is lost, including PST files and backups.
• Searching and sorting capacities—The ability to automatically search and sort the content of e-mail messages and files eases obligations during legal holds.
• Automation of certain legal hold steps—In addition to centralizing information tracking for each matter, multiple legal holds can be tracked in one place.
• Tailoring of legal hold processes—Application solutions can be used to preserve specific information for particular legal hold needs in a granular manner.
• Documented process— Automated archiving solutions follow documented processes for archiving and can be demonstrated if needed.

Failure to preserve email can expose an organization to severe legal risks such as scrutiny of the organization’s records retention and discovery policies, adverse legal judgments, or fines.
Email Preservation hold (Archiving Solution) can be put in place to accomplish the following desired goals:

• Place user mailboxes on hold and preserve mailbox items without much of user intervention.
• Preserve mailbox items deleted by users or automatic deletion.
• Specialized tools can be used to preserve items matching specified criteria.
• Generally preserve items for a specific duration as stipulated in the regulations for each type of electronic information.
• Keep holds transparent from the end user by not having to suspend automated mail backups.

References:
“Why Your Business Needs a Systematic Approach to Legal Holds” at legalsolutions.com/executing-legal-holds Sept. 2013. 3 BEST PRACTICES FOR EXECUTING LEGAL HOLDS
Fig Pg 2 – referred from ”No Holds Barred! The Real Deal with Litigation Holds”
http://www.slideshare.net/ck23/legal-hold-presentation-no-holds-barred-2013-36606750?qid=69a56487-1871-4511-a933-3c2235d919d1&v=default&b=&from_search=8
Fig 1 & 2. Pg 3 – referred from “Legal Hold & Data Preservation Best Practices”
http://www.slideshare.net/legalholdpro/wp-legal-holdbestpracticesdec12
Fig & text Pg 4 – referred from “Workshop for Developing Litigation Holds”
http://www.slideshare.net/JohnJJablonski/FINAL-LEGAL-HOLD-WORKSHOP
Fig Pg 7 – referred from Exchange 2010 Single Item Recovery Architecture,
http://msexchangeguru.com/2012/09/04/single-item-recovery-architecture/