How Not To Mess Up A Litigation Hold
If there’s an E-Discovery 101 textbook out there somewhere, then one of the first lessons is probably legal holds.
If there’s an E-Discovery 101 textbook out there somewhere, then one of the first lessons is probably legal holds. Ever since U.S. District Judge Shira Scheindlin’s seminal 2003 rulings in Zubulake v. UBS Warburg, lawyers have been on notice that, once a party reasonably anticipates litigation, it must implement a litigation hold to ensure the preservation of relevant documents.
But implementing a legal hold is sometimes easier said than done. Just ask Volkswagen AG. Its mishandling of a legal hold resulted in the indictment of six current and former employees on charges of perjury and obstruction of justice and to the naming of an in-house lawyer as an unindicted co-conspirator. On Jan. 11, 2017, VW agreed to plead guilty to the charges and to pay a $2.8 billion penalty.
What did VW do wrong? As an investigation began into VW’s diesel emissions, an in-house attorney tipped off employees to an imminent litigation hold and indicated that they should “check” certain documents on their computers pertaining to the investigation. The employees took this as code to mean they should delete the documents, which they did.
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So how do you not mess up a legal hold? Well, there are some basic obligations to understand.
First off, understand that the legal hold duty is a duty to preserve. It requires a party to identify, locate, and maintain information and tangible evidence that is relevant to specific and identifiable litigation. As Judge Scheindlin explained in Zubulake, this means that, once a party reasonably anticipates litigation, it must suspend its routine document destruction policy and put in place a litigation hold.
That, of course, raises the question of what constitutes a “reasonable anticipation of litigation.” The answer to comes from The Sedona Conference Commentary on Legal Holds, which says that it arises when an organization is on notice of a credible probability that it will become involved in litigation, seriously contemplates initiating litigation, or when it takes specific actions to commence litigation.
Once the duty arises, compliance involves six steps: 1. identify relevant custodians, 2. inform the custodians of their duty to preserve relevant information, 3. provide instructions for doing so, 4. monitor compliance, 5. keep an audit trail, and 6. release the hold when appropriate. Courts have said that failure to put the hold in writing constitutes gross negligence.
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Those are some of the basics of litigation holds 101. Of course, there is much more to understand about the concepts involved and the steps to be taken. After all, even a sophisticated corporation such as Volkswagen was able to mess it up.
For a much-more detailed presentation on legal holds, view the free, on-demand webinar, How Not to Mess Up a Litigation Hold. Moderated by Mary Mack, executive director of ACEDS, it features Alon Israely, cofounder, Total Discovery/BIA; Rachelle L. Rennagel, e-discovery special counsel, Pillsbury Winthrop Shaw Pittman LLP; and John Tredennick, founder and CEO of Catalyst.
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