Your company has just received a subpoena. It is the first sign that the company may be subject to an investigation or potential future litigation. Amid collecting documents, performing an internal investigation and considering strategic issues there’s another, admittedly unexciting, task at hand: Crafting and disseminating an appropriate litigation hold.
A litigation hold, sometimes referred to as a document hold, is just a communication within a company informing employees that they must preserve certain information for potential later use in litigation. The term took hold following the landmark e-discovery case Zubulake v. UBS Warburg, which explained, “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to safeguard all relevant data.” Since Zubulake, there has been a growing body of law and commentary on the myriad technical issues that can arise for companies with large amounts of e-data and how those issues can be handled. While that guidance is useful, it doesn’t always answer the more practical questions many companies have: What’s a litigation hold and how do I do it?
With that in mind, here are four basic steps toward an effective litigation hold. These do not (and could not) answer every complex e-discovery scenario, but they are the foundation on which every good litigation hold is built.
1. Know your company
Every litigation hold should be tailored to the specific company to which it is being issued. For example, counsel must assess the nature of the company’s business: How do employees communicate – email, paper, text, web, etc. – in the workplace? What is your IT infrastructure and archival policy? Are the employees with responsive information tech-savvy young executives or lower-level workers who don’t sit at a desk all day? How are paper files managed and stored? The answers to these and other questions will determine the manner a litigation hold is communicated and how it should be crafted, as well as likely pitfalls in your collection and compliance.
2. Define the scope
A litigation hold never requires that all documents and all data be retained. Rather, the scope must be defined, both as to the subject areas and the recipients. Subject area is going to be defined by the event that triggered the duty to preserve and what you can reasonably infer from it. For example, a subpoena may only seek a certain type of records, but if you are on notice of the larger investigation, the subject matter of that investigation should be reflected in the litigation hold. Who will receive the litigation hold is also dictated by the specific circumstances. The default position is often to send it to everyone, and that approach does avoid concerns over missing a key person. On the other hand, it can dilute the effect of the hold and can result in significant storage costs and the retention of (and need to review) many unneeded documents. Ultimately, counsel should prioritize key players who likely have information from employees who are nearly certain not to have information. With that priority list, counsel can then make an informed decision about the recipients of the hold based on litigation risk, costs and related concerns. In general though, it’s always safer to be over-inclusive.
3. Keep it short and simple
Perhaps the most overlooked aspect of a litigation hold is the manner in which it is drafted. If it is drafted so that it resembles the fine print on the back of a credit card agreement, it will be read and understood with similar frequency: never. Instead, a litigation hold should be drafted in simple, plain language. On only rare occasions should it exceed one page and never more than two. Generally, numbered or bulleted lists with short headings work best to catch the reader’s eye and allow a quick read. Most of the recipients will have never seen a litigation hold, so a short explanation of what it is, what it means, and what it relates to is key for context.
It also should explain the type of records, the applicable time period and the subject matter scope to which the hold applies. Because some types of records are not intuitive, the hold should give concrete examples: paper copies, emails, PowerPoints, electronically stored voice messages, electronic draft copies and the like. No matter how precise the hold is, however, there will always be gray areas. That’s why it’s particularly smart to have a safety net. The hold should inform a recipient that, if he is uncertain whether something is within the hold’s scope, he should preserve it and speak to a company contact or counsel before destroying it. Such a provision gives an added layer of protection.
4. Document and Follow up
Unfortunately, even with the best crafted litigation hold, just sending it out is insufficient. Counsel should document all those recipients who receive the litigation hold and have them acknowledge reading and understanding it. And then counsel should follow up periodically. If issues become known, a clarification can be disseminated broadly. Even if no issues arise, people tend to loosen their compliance as time passes. Given the length of many government investigations and civil litigation, a hold may be in place for more than a year. Periodic checks can ensure better compliance and, if there is a lapse, demonstrate the company’s good faith efforts to the opposing party or even the court.