What Is A Litigation Hold (Explained: All You Need To Know)

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What Is Litigation Hold

Litigation hold is a term used to refer to an internal process where a company will implement measures to preserve data that may be related to a potential or actual legal action.

In other words, when a company enforces a litigation hold, it will ensure that it preserves emails, files, data, and documents that may be potentially related to a dispute.

Typically, a company’s litigation hold will override its data retention policies where documents and data are destroyed after a certain period of time.

The objective is to keep documents, records, and data that may eventually help a court assess the facts in the context of legal action.

Since documents and records are kept, they are protected against spoliation, mutilation, alteration, or even destruction.

When a company has reasonable grounds to believe that legal action may be imminent or legal action can be reasonably anticipated, it must ensure it preserves all records related to the cause of action.

For example, Company A sends a demand letter against Company B for misappropriating its trade secrets.

Since Company B reasonably expects that legal action may be imminent, it must preserve all data and records relating to its dealings with Company A.

Keep reading as I will further break down the meaning of litigation hold and tell you how it works.

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Why Is Litigation Hold Important

Litigation hold is an important type of notification that has existed for a long time and is today standard practice in large organizations.

The objective of a litigation hold is to ensure that litigants or parties that may be involved in legal action suspend their document retention policies to ensure that no physical or electronic records relating to the legal action are altered or destroyed.

Litigants have preservation duties where they must take all reasonable steps to ensure that records pertaining to the legal action are not destroyed and remain available for discovery.

In the case Zubulake v. UBS Warburg in 2003, the notion of a litigation hold was addressed when the judge indicated that a party reasonably anticipating litigation must suspend its routine document retention or document destruction policies and place a litigation hold to ensure relevant documents are preserved.

In the United States, the law requires that companies and individuals engaged in litigation or expecting to engage in litigation must preserve evidence.

If a party fails in its preservation duties, it can face strict penalties and consequences.

Fundamentally, this obligation makes sense as it allows parties to collect the evidence they need to prove their legal positions and allow justice to be served.

On the other hand, to benefit from the right to get justice, parties must take measures to ensure that the records and evidence are preserved so justice can be served.

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How Does Litigation Hold Word

Litigation hold refers to the process of preserving data and records relating to an imminent legal action or when legal action is reasonably expected.

When a “triggering event” occurs, such as a demand letter is received, a lawsuit is served, or information is obtained where we can reasonably expect legal action to follow, a company will need to assess and identify all data it holds relating to the event.

Typically, the company’s IT team, along with its internal or external legal advisors, will review the nature of the data that must be preserved and determine who the key custodians of the data are.

Then, the lawyers will draft a litigation hold letter to be sent to the data custodians.

With the litigation hold letter, the data custodians are informed that there is a legal action or a reasonable expectation of one where a set of identified data must be preserved.

The data custodians will then acknowledge receipt of the litigation hold letter.

Since legal action may take several years before it is resolved, lawyers may send out reminder letters informing the data custodians that the litigation hold is still in effect.

Ultimately, when the legal action is resolved, the lawyers will send a letter to the data custodians informing them that the litigation hold obligation is lifted.

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What Does Litigation Hold Apply To

A litigation hold has a broad application and applies to all relevant data relating to a potential or actual legal action.

In general, a legal hold will apply to:

• Physical papers
• Logs
• Notes 
• Forms
• Bulletins
• Photographs
• Appointments
• Books
• Printed emails
• Electronic files
• Text messages
• Spreadsheets
• Presentations
• Social media posts
• Videos
• Audio records
• Databases 
• Application files
• Application logs
• Data stores 

This means that any “physical” and “electronic” records relating to litigation should be kept.

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Litigation Hold Challenges

Although the process of determining what are potentially relevant records for a legal dispute and notifying the data custodians may appear to be relatively simple, managing the litigation hold process can be challenging.

Larger organizations will potentially deal with hundreds, if not thousands, of disputes or events that can reasonably lead to the expectation of a legal dispute.

As a result, it can become challenging to handle all the different litigation hold letters for all the potential cases at the same time.

Also, another challenge is that data custodians may change over time.

As a result, the litigation hold letter may need to be sent to a new data custodian should there be a chance.

It may also be challenging to determine how to preserve records and suspend their destruction for companies dealing in different jurisdictions with conflicting legal requirements.

In the United States, when dealing with a litigated matter or expecting a legal dispute, you are required to preserve your data.

However, European countries have specific data protection and privacy laws imposing the obligation to destroy personal data.

Compliance with one legal regime may result in a violation of the requirements in another legal regime.

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Litigation Hold FAQ

When do you send a litigation hold letter?

The litigation hold letter should be sent when a party is sued or reasonably believes legal action is imminent.

Upon the occurrence of the triggering event, the litigants are required to preserve all records and data that may be responsive to the legal action.

Who sends the litigation hold letter?

In smaller organizations, their internal or external legal advisors can send the legal hold letter.

However, in larger organizations that are involved in hundreds, if not thousands, of potential disputes, a special team of paralegals or e-discovery managers will manage the litigation hold letters and process.

However, the sender of the letter will generally appear to be an attorney.

Who receives the litigation hold notification?

Anyone who may have potentially responsive information relating to a dispute or legal action should be notified with a litigation hold letter.

For example, if a company sends a demand letter to another for breach of contract, the defendant will need to send a litigation hold letter to all those employees who were involved in the contract negotiation, execution of the contract, and relations with the potential plaintiff.

Is a litigation hold letter enough to comply with preservation duties?

The answer is that it depends.

In most cases, when a data custodian receives a litigation hold letter, he or she will take the necessary measures to preserve the data.

However, if there is doubt that the data custodian may not retain the data, the decision may be made to collect the data in their possession immediately.

What are litigation hold best practices?

There are a number of things that you can do to ensure that you properly manage your litigation hold process:

• Make sure you send your litigation hold letter as early as you can when you reasonably anticipate litigation
• With the help of your internal teams, investigate and identify the data that needs to be protected
• Make sure that data custodians acknowledge receipt of the litigation hold letter
• Send reminders to the data custodians from time to time if the matter takes time
• Try to develop a standardized process to handle all your litigation hold letters
• Make sure that your litigation hold process is well documented in case the court requires evidence on the steps taken by a party to preserve evidence 

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Takeaways 

So there you have it folks!

What does litigation hold mean?

In a nutshell, litigation hold refers to a notification that is sent from an organization’s internal or external legal team to its employees instructing them not to delete digital files or discard physical documents relating to a legal case.

When a company has reasonable grounds to believe that legal action is imminent or has received a formal complaint, it must initiate its litigation hold process.

The objective of a litigation hold is to ensure that the parties involved in a legal action keep the relevant data and facts so the courts can render a fair judgment in light of facts.

If you have received a complaint and summons or you expect that someone may file a lawsuit against you, you must make sure you preserve the relevant records.

If you are looking to understand your rights and obligations relating to a litigation hold letter, be sure to consult with a qualified attorney.

Now that you know what a litigation hold letter is all about and how it works, good luck with your research!

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