I Think My Client Is About To Be Sued: How to Execute A Proper Litigation Hold

The duty to preserve potentially relevant evidence is an affirmative obligation.  Yes! Attorneys and their clients must take action to ensure preservation of discoverable documents.  The duty to preserve evidence arises when a party knows, or reasonably should know, that the evidence is relevant to pending or future litigation. (Zubulake v. UBS Warburg, 220 F.R.D. 212, 217.)  Simply, a party should preserve evidence when the party is on notice of potential litigation or investigation.

How do you identify when the duty to preserve has been triggered?  While the answer to this question is inherently fact-specific, the determination of whether a party reasonably anticipates litigation should be based on a good faith and reasonable evaluation of the facts and circumstances as they are known at the time. (The Sedona Conference, Commentary on Legal Holds: The Trigger & The Process, 11 Sedona Conf.J. 265, 269 (2010).)  In some cases, the “trigger date” is quite clear.  For example, in employment cases, notice that an employee has filed an administrative complaint with the Equal Employment Opportunity Commission (or the state equivalent), would trigger the duty to preserve.  More subtle examples include pre-litigation communications from counsel that may or may not “threaten” litigation, an employer’s receipt of a personnel file request and/or preservation letter, and the existence of closely related investigations or proceedings.  When in doubt, initiating a litigation hold should be the default response.  It is better to have it and not need it, than to need it and not have it—“it” being the documents.

Judge Scheindlin’s opinion in Zubulake v. UBS Warburg, 229 F.R.D. 422, 431-434, is instructive on implementing a proper litigation hold.  Once the duty to preserve documents is triggered, the attorney must develop an action plan and oversee the preservation of its client’s documents.  Counsel must issue a directive to the client to preserve and, specifically, not to destroy documents which may be relevant to the case (i.e., issue a “litigation hold”), including a suspension of the client’s routine document retention or destruction policy.  But an attorney’s obligations do not end with the issuance of the litigation hold.  Attorney oversight is essential to ensure compliance with the litigation hold.

Once a litigation hold is in place, a party and the party’s counsel must make certain that all sources of potentially relevant information are identified and placed “on hold.”  In the context of electronic discovery, to ensure that the client identifies and holds the potentially relevant information, counsel must familiarize himself or herself with the client’s document retention policies, as well as the client’s data retention architecture.  To achieve this level of understanding, counsel should communicate with the client to identify the persons having responsibility for the matters which are the subject of the potential lawsuit and all employees likely to have been the authors, recipients, or custodians of documents falling within the realm of potentially relevant information.  Counsel should ensure that all such individuals are interviewed to obtain an understanding of their knowledge of the existence of any documents that are potentially relevant to the impending lawsuit and how they stored information.  Invariably, counsel will have to speak with information technology personnel, who can explain system-wide backup procedures and the actual (not theoretical) implementation of the business’s retention policy.  Counsel should also communicate directly with the “key players” in the litigation, who are the employees most likely to have discoverable information, in order to understand how they stored information and to periodically remind them of their preservation duty.  Counsel should take steps to ensure that all documents within the identified record owners’ knowledge are retrieved, including instructing all identified record owners to review their active files and produce electronic copies of their relevant active files.  Counsel should then review all documents received from the client to determine whether other documents not retrieved exist, or if there are other individuals who might possess potentially relevant documents.  Lastly, the attorney should periodically follow up with the client and individuals to remind them of their continuing preservation duty.

The search parameters will vary from case to case, but courts generally believe these basic procedures should be employed by careful and conscientious lawyers in every case.

TAKEAWAY: (1) watch for triggers; (2) take immediate action to implement the litigation hold; (3) communicate directly with the client (and the client’s employees) regarding litigation hold expectations and compliance; (4) get familiarized with the client’s data structure; (5) identify potentially relevant information; and (6) follow up with the client regarding continued compliance.