LITIGATION HOLDS: WHAT ARE THEY AND HOW DO THEY WORK?

INTRODUCTION

Following the September 2012 amendments to our Florida Rules of Civil Procedure that added a mechanism by which parties can obtain electronically stored information (ESI) in civil cases, there has been an explosion of CLEs, articles, and videos on how to prepare for and manage this new area of practice.  But, before a party can begin to amass, search, and produce relevant data in e-discovery, they must preserve that data.  This is called a “litigation hold”.

WHEN AND WHY TO HOLD

Because ESI is easy to accumulate, delete, or lose, a preservation component has developed in practice to secure and segregate certain potentially relevant data at the outset of a dispute or litigation.  Our Florida Rules place the burden on parties when a suit is filed whereas the Federal practice obligates preservation when a dispute reasonably arises.   While it may not be required in Florida State Court practice to hold certain data before a suit is served, it is prudent and appropriate to do so for several reasons.

First, sanctions can arise from the failure to preserve data so why expose your client to those by allowing data to be deleted when you know of the likelihood or potential of litigation.  Second, preserving data in anticipation of litigation will aid you in your early case assessment and assist you in compiling helpful and relevant ESI for your own case.  Third, it is very easy to implement a litigation hold and preserve data.

WHAT IS A LITIGATION HOLD

A litigation hold is nothing more than a directive to ESI custodians to maintain specific data.  This can be as simple as an e-mail telling specific individuals not to delete their e-mails sent or received about a certain transaction after a specific date.  In so doing, you are identifying custodians of data, narrowing the scope of potentially relevant ESI, and identifying possible key words or terms for your later e-discovery search.  Thus, you are protecting your client from possible sanctions and making your later work in e-discovery easier, which translates into a cost savings for your client and provides a better legal service.

In some instances, however, a simple e-mail to custodians may not suffice as there are either too many to manage or you need to manage and track the hold to defend it later.  Defensibility is and will remain a critical component in e-discovery.  This concept is not limited to defending a search of data, but extends to the initial preservation and accumulation of the data.  To accommodate these situations, many vendors have developed software to disseminate legal hold notices to custodians and track their actions in complying with those.  This software can be stand-alone or integrated into e-discovery software.  Either method works, it just depends on the situation, but as counsel, you need to know the options for your client.

WHEN DO YOU IMPLEMENT THE HOLD

This brings us to the situations in which you need to implement litigation holds.  When the hold is triggered is something of a judgment call, but you are not ill advised to adopt a proactive approach to protect your client.  I even include a section in my Retainer Agreements advising prospective clients of the new Rules, the obligation to preserve data, and a recommendation that they open a dialogue with me upon execution of the Agreement about this issue.  You really can’t go wrong advising and managing an early hold, even in response to a demand letter from an opposing party, but you can expose your client to sanctions if you allow deletion of data and may expose your practice to severe penalties if you ever counsel a client to do so.

In a now infamous Virginia State Court case, a paralegal advised the Firm’s client to remove and delete incriminating photos from the client’s Facebook page.  The Court later found that the attorney supervising the paralegal learned of the directive and approved it.  The Court fined the attorney $550,000 and he subsequently surrendered his law license.  The takeaway here is obvious; preserve, don’t delete.

Likewise, if you are transmitting a pre-suit demand to the opposite side, nothing prevents you from including a litigation hold statement in that demand.  In fact, it may now be prudent practice to do so as it brings the obligation forward in the process and can ensure preservation for your client’s benefit later.

HOW TO CRAFT A LITIGATION HOLD

So what do you put into a litigation hold to another party?  Do you just say hold your data or hold everything?  No.  That is not helpful to an opposing party and may even be unenforceable later because it is too ambiguous or burdensome.  Litigation holds are specific to each situation, thus the appropriate method is to be as specific as you can at that early stage.  It will be more beneficial to the process and more helpful to the opposing party if you can narrow a date range and include concepts or even keywords to help in the identification of relevant data.

The drafting committee of Florida’s new E-Discovery Rules toyed with the idea of creating a form litigation hold notice for inclusion in the Civil Procedure Rules Forms, but ultimately decided against it because they recognized that these notices were situationally dependent and fact specific.  Therefore, you can craft them in any form you wish, but they should convey information that is helpful to the party being asked to implement the hold.

CONCLUSION

In light of the fact that more businesses are utilizing and relying on electronic data, litigation holds will become an increasingly important part of pre-suit practice and early case assessment.  Crafting and transmitting holds to an opposing party and initiating and managing holds, whether a formal demand is made on your client or not, will save your client money and help focus your case and your e-discovery efforts.  You can do it yourself or you can use vendors and software to assist you as the situation requires, but you must get into the habit of incorporating these holds and educating your clients about them for their protection and benefit.  Free videos and articles on e-discovery, data preservation, and litigation holds are at www.davidsteinfeld.com

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