Electronic Discovery Institute Course - Class 10 - Conducting Legal Holds

Here's a continuation of my postings about the Electronic Discovery Institute's online e-discovery certification program, that you can subscribe to for just $1. I last blogged about this program on July 29, 2017. Go to https://www.lawinstitute.org/ to sign up for it.

The course I took tonight concerns how the Federal Rules of Evidence and the Federal Rules of Civil Procedure address the discovery of electronically stored information.

This course is taught by Ron Wills, counsel at Intel Security; Robert Owen, the president of the EDI; and Robert Levy, a counsel at Exxon Mobil responsible for electronic discovery issues.

The Duty to Preserve

The duty to preserve is a common law duty. It requires litigants to preserve and not delete documents and ESI that are potentially discoverable.

Information has to be kept for as long as a litigation is pending. All custodians have to be identified immediately and put on notice that they need to protect information. The general doctrine originated centuries ago in England that all parties should have equal access to information.

The duty to preserve is triggered the moment notice of a lawsuit is received, or one becomes aware of a threat of a lawsuit. There is no bright line trigger. Anytime litigation is reasonably anticipated the duty arises. This may lead to over preservation. The duty to preserve also applies when a party is a plaintiff. If a party is sued 40-50% of the time that a kind of incident occurs, it may have to assume that it will be sued.

Wills doesn’t distinguish between federal, state, or regulation matters in assessing how to handle a legal hold.

The vast volumes of information that exist in the business world and at the home on personal electronic storage devices make preserving data covered by holds very expensive.

Case Law

The duty to preserve is defined by case law. The FRCP as amended in December 2015, merely states that reasonable steps must be taken. The rules only apply when the court gets a case.

Companies usually take steps early on to preserve data and make sure it is not lost during the ordinary course of business.

Case law on the duty to preserve developed after 2000. The Remington Arms case addressed the failure to preserve data for a lawsuit. The Zubulake line of cases decided by Judge Scheindlin, addressed the preservation obligation. There were five different decisions in the Zubulake matter. The original decision concerned the prospect of shifting costs. Zubulake V concerned whether or not counsel had carried out their preservation duties. Prior to this time few had focused on the attorney’s duty to preserve data. Judge Scheindlin suggested that attorneys should take physical custody of data, but this is not actually very common.

Failure to immediately implement a legal hold leads to trouble. The hold can be the first opportunity to engage with clients about the case. It should be a call to arms for best practices in discovery.

Legal Holds

Large companies will widely distribute preservation notices. The recipients should understand that they have to take immediate, concrete steps to preserve data. A legal hold notice is usually an email, or a notice produced by a legal hold program. The notice will define the kind of data that needs to be preserved.

The notification will come from the in-house legal team. The notice should discuss the nature of the case and list the steps to be performed to avoid automated erasure of data. There should be a way to contact counsel to ask questions.

Legal holds should be in writing, but may also be re-enforced by verbal conversations.

It may be necessary to prove that a legal hold was issued, so the written notice should be retained. Technically the law doesn’t require written legal hold notices- they can be verbal.

There may be multiple holds which address the same information.

Employee Obligations

Employees usually interpret notices in terms of what they have immediate access to on their computers, and disregard that they also have a responsibility that they need to preserve data that they have custody or control over. The recipient has to appreciate the importance of their obligation. The notices should come from the top down.

The legal hold process should start even if a letter just threatens litigation.

A potential defendant may not know the full scope of issues that may arise in a potential lawsuit.

Preservation Demand Letters

Preservation demand letters may come from a regulator or a private litigant. From a best practice standpoint if someone has listed different categories of information, these should only be viewed as a starting point. A preservation demand letter by itself doesn’t trigger a duty to preserve – litigation must be reasonably anticipated.

Owen advises clients to respond to preservation demand letter over the phone, rather than responding through a letter.

Preservation demand letters are often overly broad in Levy’s experience.

It is difficult to decide what the scope of preservation should be in the absence of a complaint. Owen advises clients to document their steps in a memo to file so they can later explain to a court the basis for their decisions.

Content and Scope of a Legal Hold

Wills immediately tries to figure out which custodians will have responsive data. Early Case Assessment is closely interwoven with determining the scope of a legal hold.

The hold notice should contain a description of the case, and explain how preservation is to be effectuated. The notice should come from a person who commands respect in the organization.

A legal hold will be dated, and will describe the obligation of retention. A time frame will also be given to help define the scope. The information repositories that will be effected will also be named.

The hold notice is simply the instrument that explains to employees the context they need to determine what information should be preserved, and set out the next steps for them to follow.

Maintenance of Legal Hold

A legal hold notice should start a dialogue. A good notice should elicit feedback from prospective custodians.

There is no obligation for a recipient to confirm receipt of a notice, but this is certainly a good idea.

Sending out Legal Hold Reminders

Reminder notices should be sent periodically. The notice should not be sent out once. Owen recommends sending out notices every six months. A judge will evaluate steps taken to ensure that employees remain aware of their obligation to preserve information. It is a best practice to issue reminders that the hold is still in place.

An audit of every recipient’s compliance with a notice is not required. The persons overseeing a system need to be aware of problems with compliance. The process should be defensible, it should not just be a paper exercise. It should not just be a fire and forget notice; individual custodians should be engaged. The continuity of the process should be documented.

If a hold obligation is new, it’s a good idea to reach out to individual custodians in order to confirm that they understand their obligations.

In order to ensure that custodians are following through on the obligations, you shouldn’t rely only on their responses, but should also reach out to system administrators. This will help ensure that data on local and shared devices is captured.

Changing the Scope of a Legal Hold

A complaint can be amended, changing the scope of what must be preserved. Preservation notices should be tweaked. A legal hold is not a one-time document. Knowledge of a case may change over time, and require counsel to re-evaluate what the case is about. Custodians need to be kept advised of the changing understanding of the case.

Email preservation efforts often warrant over inclusive data collection.

Duration of a Hold

A legal hold should remain in place along as the case is alive. If the case is settled, the hold can be released. If a case is dismissed without prejudice, the hold may have to be kept in place.

Data needs to be preserved so long as it may be relevant to an ongoing case.

One may consider leaving a hold in place until the all of the statutes of limitations in each of the 50 states will bar the filing of a claim relevant to a particular incident, but this is an aggressive approach.

After a notice for patent infringement, it may be a long time before a complaint is filed.

Even after a settlement agreement is reached, it may still be a good idea to wait a couple of months before disposing of data. It’s a good idea to keep in mind the possibility of ‘piggyback’ litigation.

Legal Holds & 3rd Parties

A non-party may be subpoenaed to produce information. The issue is being developed in the law, but in general the duty to preserve will apply. Major companies that receive subpoenas will follow a legal hold process. After a production is made, the requesting party may not provide a release. Related data will still have to be kept for a reasonable length of time.

Legal Holds & Technology

The legal hold process has been automated with the use of software available from several different vendors. A hold is not a static piece of information, but the first step in a series of interactions.

A centralizing tracking mechanism can be very helpful in determining who has received notices, and which notices have been released.

Conclusions

Wills has found that the legal hold process needs to work for individuals in a way that makes it easy for them to ask questions and see what they need to do next.

The system is ultimately about finding evidence that can be given to the trier of fact. Vast volumes of information are preserved that will never have an impact on the outcome of the case. The process should try to be just, speedy and efficient.