What is a Litigation Hold (or Legal Hold)? Here Are the Basics
Getting sued (or suing someone) certainly isn’t a phrase most of us are pleased to hear. But let’s face it – life, and litigation, just happen sometimes.
And when it does, it’s good for laypeople to be familiar with the fundamental jargon, and even some legal staffers may need to refresh themselves. After all, if you’ve received notice, it’s not the best time to start Googling “what is a litigation hold notice?” So, without further ado, let’s just into it – just what is a litigation hold?
Firstly, a litigation hold goes by a few different names. It can be called a ‘legal hold,’ a ‘preservation order’, or a ‘hold order’. Issued by a company’s legal team, it is a temporary suspension of an organization’s electronic or paper document destruction policies pertaining to any documents that may be relevant to a new or impending legal case.
Quite a mouthful! Essentially, employees are instructed to refrain from deleting or discarding any documents that may be relevant to a lawsuit.
The entire process begins with issuing (or receiving) a litigation hold notice.
What is a Litigation Hold Notice?
A litigation hold notice, legal hold notice, or document preservation notice (yes, they really do have a lot of names) is the standard document that comes from in-house counsel of the organization facing litigation, a government investigation, or an audit.
It goes out to the employees of the company (or even government organization) in question, and outlines their obligation to preserve all relevant information, documents, data and records. The document contains important explanations, and its purpose is to keep all relevant evidence safe from destruction or alteration and ensure it is available for the discovery process before litigation.
If your organization reasonably anticipates litigation, it must implement a litigation hold. Employees should be alerted whenever there is information that is likely to be needed during the discovery process. Preservation requirements may be published by your company when you receive a complaint, a demand letter, or a preservation letter that expressly states or requests the preservation of certain documents or information.
An organization can issue a litigation hold internally, or your attorney may issue a litigation hold using a litigation hold letter. A company may face penalties if it does not comply with litigation hold orders. The penalties may include large monetary fines, reimbursement of the opponent’s litigation costs, or inferences against the party failing to meet discovery obligations.
What is a legal hold notice made up of?
As it’s an important legal document, there are a few points any written legal hold notice should include:
- A comprehensive description of the subject matter of the litigation or investigation – this helps the recipient determine if he or she possesses relevant information.
- Explicit instructions not to destroy, delete or alter records, along with examples of the records that should be preserved and their sources. Some examples of this include:
- Work and home computers
- Cell phones
- Voicemail systems – both office and personal – and their back-up tapes
- Warnings regarding the importance of preserving any possibly relevant information – and, more importantly, potential consequences of not complying with the litigation notice.
- Detailed guidelines for the types of documents and materials that need to be preserved, as well as relevant date ranges.
- An explanation to the recipient that this duty to preserve under the hold notice does not end until they are notified as such; it is continuous.
- Contact details for the corporate counsel responsible for issuing and enforcing the legal hold. An alternative is to provide the contact details of another internal point person in charge of answering questions about the litigation hold and receiving pertinent information collected by the company’s employees.
Consequences of not adhering to a legal hold notice?
Failing to implement and maintain a litigation hold in a timely manner can have serious legal consequences. U.S. courts sanction companies and other organizations with regularity for failing to properly institute litigation holds.
These sanctions can include monetary penalties, such as paying your adversary’s legal fees and costs; adverse inference instructions to the jury, in relation to any information that was lost or destroyed; and preclusion of evidence to support a claim or defense. In some serious cases, it may even extend to default judgment or dismissal of the litigation.
Best practices for litigation holds
Unless you want to face the penalties, it’s clear that every organization is obligated to preserve all relevant information once it learns of impending litigation or investigation.
However, traditional approaches to legal holds can be difficult, expensive, and error-prone, needlessly leaving a company open to risk. Your organization needs an end-to-end management solution of the legal hold process in a defensible, consistent, and reportable manner.
Relevant data and documents can be scattered among a number of people and systems, across multiple departments or various locations. That makes hands-on, manual compliance incredibly difficult and costly.
The right legal hold solution will allow you to centralize your documents and information, and integrate with internal systems to quickly let you identify potential custodians of relevant information, based on up-to-date employee data.
Automate processes & create templates
Without an automated solution, staffers struggle to identify custodians and obtain the attestations needed to ensure defensible compliance. Automating this process and using templates can save your legal staff time, cutting their time managing legal holds by 75% thanks to a consistent, reportable process that also mitigates litigation risk.
It will allow you to communicate instructions to the right custodians, then automate reminders and escalations to drive timely compliance.
A best-in-class litigation hold software solution (like, of course, our own LegalHold) will incorporate intuitive UX and UI design for simplifying the entire process, maximizing efficiency for both the legal department and custodians. In just four easy steps, a legal team can create and manage a hold – a standardized, repeatable process reducing the risk of potential evidence being deleted, and able to stand up to judicial scrutiny.