It’s generally taken for granted that, when your client is involved in a litigation or regulatory matter, all relevant records need to be preserved. This is commonly termed a legal hold. Unfortunately, the way this obligation is managed varies greatly. A poor legal hold process can even lead to spoliation allegations and adverse inferences. One recent example is the DuPont v. Kolon trade secrets dispute.
The matter resulted in a $920 million judgement for DuPont. However, the court recently awarded an additional $4.5 million in costs because of the extra amount of work DuPont’s lawyers and vendors were forced to do as a result of what the court defined as the defendant’s “overall obfuscatory conduct” which resulted in “a long, and oftentimes tortuous, journey on the part of DuPont to get to the bottom of the alleged deletion of files and email items by key Kolon employees”. Clearly, Kolon’s legal hold process was not all it should have been.
Apart from ensuring that the people with the relevant records (including IT, who do things with data that end users are only vaguely aware of) are notified that they need to preserve, a properly managed legal hold process includes:
1. Confirmation that custodians actually received the notification and understand their obligations
2. Periodic reminder notices so that the custodians don’t forget
3. Interviewing the custodians to make sure they understand what they need to do and what is relevant.
4. Notifying the custodians when the legal hold is no longer required.
While small legal holds can be managed using a spreadsheet, holds involving more than a handful of custodians should take advantage of one of the new breed of dedicated legal hold software applications. These programs help to implement a standard process and take care of the bookkeeping aspects of the hold, allowing the legal team concentrate on the substance of the case.