Recent federal court cases have reinforced that legal holds are an indispensable element of electronic discovery. A legal hold is a corporation’s legal duty to preserve electronically stored information (“ESI”). A hold issued internally within a corporation places potentially key custodians on notice to retain materials that may be relevant to legal claims of a pending or anticipated matter. Although these cases are highly fact-specific, federal courts have noted that the duty to preserve is invoked “when the party has notice that the evidence is relevant to the litigation or when a party should have known that the evidence may be relevant to future litigation.” Instituting and managing a legal hold must thus take place from inception through release.
The recent trend toward harsh discovery sanctions, including contempt of court, for violations of legal holds, include Judge Paul Grimm’s famous holding in Victor Stanley, Inc. v. Creative Pipe, Inc. (D. Md. 2008), and the recent decision in Green v. Blitz (E.D. Tex. Mar. 1, 2011). These decisions may well be a natural reaction to corporate legal executives’ attempts to avoid liability in this regard. According to Joshua Rosenberg, the Senior Director of Strategy and Operations at LexisNexis:
Many corporate legal executives [had] their law firms take on the role of managing legal holds for their organization because they saw it as a risk management technique. In other words, if anything goes wrong, the responsibility falls on the law firm, which should then shield the corporate executives from sanctions. However, a discernible pattern of corporate decisions over the past five years has revealed there is no available safety net to corporate counsel. If essence, the courts have said that corporate executives cannot hide from the responsibility of legal holds. If something goes wrong, the blame will fall squarely on their shoulders.
via Automated Management of Legal Holds – Ben Kerschberg – Law & Technology – Forbes.
