Litigation Hold Policy and Procedures
When a litigation hold is received management – A litigation hold policy is a set of procedures that an organization implements to preserve relevant evidence in anticipation of litigation. The purpose of a litigation hold policy is to ensure that evidence is not destroyed or altered, and that it is available for review by the parties involved in the litigation.
A litigation hold policy should be tailored to the specific needs of the organization, but it should generally include the following elements:
Triggers, When a litigation hold is received management
Triggers are events or circumstances that may indicate that litigation is likely. Common triggers include:
- Receipt of a demand letter or other communication from an opposing party
- Filing of a lawsuit
- Internal investigation of a potential legal violation
Preservation Requirements
Preservation requirements specify the types of evidence that must be preserved, and the methods by which it must be preserved. Common preservation requirements include:
- Preservation of all electronic and paper documents
- Preservation of metadata associated with electronic documents
- Preservation of physical evidence, such as equipment or products
Communication Protocols
Communication protocols specify the procedures for communicating the litigation hold to employees and other relevant parties. Common communication protocols include:
- Issuance of a written litigation hold notice to all employees
- Training of employees on the litigation hold policy
- Regular reminders to employees about the litigation hold
Legal and Ethical Obligations: When A Litigation Hold Is Received Management
When a litigation hold is received, management has both legal and ethical obligations to comply. Failure to do so can result in severe consequences, including sanctions from the court, financial penalties, and damage to the company’s reputation.
When a litigation hold is received management should take immediate steps to preserve all relevant documents and information. It is important to consult with an experienced attorney to ensure that all necessary steps are taken to comply with the litigation hold.
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Legal Obligations
- Federal Rules of Civil Procedure (FRCP): Rule 26(a)(1)(A) requires parties to preserve relevant evidence once litigation is reasonably anticipated.
- State Laws: Many states have enacted statutes or rules governing litigation holds, such as the California Code of Civil Procedure Section 2031.060.
- Case Law: Courts have consistently held that parties have a duty to preserve evidence, and failure to do so can result in sanctions.
Ethical Obligations
- Professional Responsibility: Lawyers have an ethical obligation to advise their clients of their duty to preserve evidence.
- Duty to Shareholders: Management has a fiduciary duty to protect the interests of the company’s shareholders, which includes preserving evidence that may be relevant to potential litigation.
Consequences of Non-Compliance
- Court Sanctions: Courts can impose sanctions for failure to comply with a litigation hold, including adverse inferences, exclusion of evidence, and default judgments.
- Financial Penalties: Companies may be liable for financial penalties for spoliation of evidence, which is the destruction or loss of relevant evidence.
- Damage to Reputation: Failure to comply with a litigation hold can damage the company’s reputation and make it more difficult to attract investors and customers.
Communication and Coordination
Effective communication and coordination are paramount in managing litigation holds to ensure timely and accurate preservation of relevant data. Various stakeholders play crucial roles in this process, including legal counsel, IT professionals, and business units.
Legal counsel provides guidance on the scope and duration of the litigation hold, ensuring compliance with legal obligations. IT professionals are responsible for implementing and maintaining the technical measures necessary for data preservation, such as suspending automatic deletion processes and restricting data modifications.
Communicating Litigation Hold Requirements
Clear and concise communication of litigation hold requirements to employees and third parties is essential. Legal counsel should provide written instructions outlining the scope of the hold, the types of data to be preserved, and the duration of the hold.
Employees should be informed of their obligation to preserve relevant data and the potential consequences of failing to comply. They should also be instructed to contact legal counsel or IT if they have any questions or concerns.
Third parties, such as vendors or contractors, should be notified of the litigation hold and provided with clear instructions on how to preserve relevant data in their possession or control.
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Data Preservation and Collection
Data preservation and collection are crucial steps in litigation hold. This involves identifying, preserving, and collecting relevant data from various sources, including electronic and physical formats.
Preserving data ensures its integrity and prevents alteration or destruction. Collection involves gathering relevant data from various locations, such as computers, servers, mobile devices, and physical documents.
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Methods and Technologies
- Electronic Data Preservation: Using software or hardware to create a mirror image or backup of electronic devices, preserving the original data.
- Physical Data Preservation: Securing physical documents and objects in a secure location to prevent tampering or loss.
Challenges
Preserving and collecting data can be challenging due to various factors, including:
- Data Volume: The sheer volume of electronic data can make preservation and collection time-consuming and resource-intensive.
- Data Diversity: Data can be stored in various formats and locations, requiring different preservation and collection techniques.
- Data Volatility: Electronic data can be easily modified or deleted, making it essential to preserve it promptly.
Identification and Collection
To identify and collect relevant data, consider the following steps:
- Identify Relevant Data: Determine the scope of the litigation hold and identify the types of data that may be relevant to the case.
- Suspend Automatic Deletion: Disable any automated deletion processes that may purge relevant data.
- Collect Data from Multiple Sources: Gather data from all potential sources, including computers, servers, mobile devices, and physical documents.
- Minimize Business Disruption: Implement data collection methods that minimize disruption to ongoing business operations.
Data Review and Analysis
The review and analysis of collected data is a crucial step in identifying potentially responsive documents. This process involves examining the data to determine its relevance to the legal matter at hand. Technology-assisted review (TAR) and other tools can be used to streamline the review process, making it more efficient and cost-effective.
Criteria for Determining Responsiveness and Privilege
When reviewing and analyzing data, it is important to consider the criteria for determining which documents are responsive and potentially privileged. Responsive documents are those that contain information that is relevant to the legal matter. Privileged documents are those that are protected from disclosure due to attorney-client privilege or other legal protections.
The criteria for determining responsiveness and privilege can vary depending on the specific legal matter and the jurisdiction in which the case is being litigated. However, some general criteria that are often considered include:
- The subject matter of the document
- The author and recipient of the document
- The date of the document
- The context in which the document was created
- Any markings or annotations on the document
By considering these criteria, it is possible to identify potentially responsive and privileged documents and ensure that they are handled appropriately.
Document Production and Privilege Review
Document production and privilege review are critical steps in the litigation process. Producing responsive documents to the requesting party involves gathering and organizing all relevant documents, while privilege review ensures that privileged documents are protected from disclosure.
The attorney-client privilege is a fundamental legal principle that protects communications between attorneys and their clients. Privileged documents include communications that are made in confidence and relate to legal advice or services. It is crucial to identify and protect privileged documents to prevent the disclosure of confidential information.
Identifying Privileged Documents
To identify privileged documents, consider the following criteria:
- Was the communication made in confidence?
- Was the communication made between an attorney and their client?
- Does the communication relate to legal advice or services?
If all three criteria are met, the document is likely privileged.
Protecting Privileged Documents
Once privileged documents are identified, they must be protected from disclosure. This can be done by:
- Storing privileged documents securely
- Limiting access to privileged documents to authorized personnel
- Marking privileged documents clearly
- Asserting the attorney-client privilege when necessary
Retention and Destruction of Data
The retention and destruction of data subject to a litigation hold is a critical aspect of litigation management. It involves legal and practical considerations that must be carefully balanced to ensure compliance with legal obligations and the preservation of relevant evidence while also protecting the organization from unnecessary liability and costs.
The concept of “reasonable destruction” is key in this context. It refers to the destruction of data that is no longer relevant to the litigation or that is not reasonably likely to be discoverable. Factors to consider when determining whether data can be reasonably destroyed include the age of the data, the nature of the litigation, the likelihood that the data will be requested in discovery, and the cost and burden of preserving the data.
Developing a Defensible Data Retention and Destruction Policy
To ensure compliance with legal obligations and protect the organization from unnecessary liability, it is essential to develop a defensible data retention and destruction policy. This policy should be tailored to the specific needs of the organization and should address the following key elements:
- Identification of data subject to retention
- Establishment of retention periods
- Procedures for destroying data
- Documentation of data destruction