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Top 10 Questions on the Ethics of Legal Holds – Part 2

Blog Posted in: Review | Legal Holds |
Nov 5, 2015

This week’s blog contributors are Barry Schwartz, Esq., CEDS and Brian Schrader, Esq.

As promised in our blog on Tuesday, here is part 2 of the top 10 questions on the ethics of legal holds. If you’d like to replay our webinar on the ethics of legal hold, you can view it here.

Is it a good strategy to collect data from all employees exiting the company even if they are not on a legal hold?

We also get this question frequently, and in fact, it has been the subject of a prior blog. What happens if Mary leaves a company and six months later we find out she was an integral part to a lawsuit, and we didn’t do anything to preserve her data? As is often the answer in the legal arena, this falls to a test of reasonableness. Was it a good or bad decision not to include her? Was your decision reasonably based on what you knew at the time? No one is perfect, and no one expects perfection. You must balance risk versus reward.

If I am in a company that has a lot litigation, and I’ve got certain people, managers, or executives who are regularly involved in litigation, I may want to preserve their data as they exit the company for a set period of time to make sure the information was not important or relevant to any ongoing or anticipated litigation. On the other hand, if you are in an organization with 100,000 employees and frequent turnover, that may not be realistic or economically feasible, so it comes down to what a reasonable person would do.  

It’s more important that you have a defined process, that you have taken time to look at what your obligations are and how you will handle exiting employees to be able to show that you are routinely making reasonable decisions. In most organizations this area is a black hole, and they are not looking at this issue at all and are caught off guard. If you put in a process where you evaluate employees, and look at key employees, especially under the fairness and general balancing approach reflected in the upcoming Federal Rules amendments, you will be able to show the court that you had a reasonable, defensible process. Again, courts do not expect perfection – they expect a reasonable, thoughtful approach.

How important are custodian questionnaires, and should they be used in every matter, or only larger matters?

Custodian questionnaires are one of the most useful, yet underutilized and often underappreciated tools in the discovery process. We cannot recommend enough that you should almost always issue custodian questionnaires, regardless of the size or type of litigation. Custodian questionnaires are often used to ask custodians where and how they create and store ESI, but they can be so much more useful than that.  

You can use them to ask custodians whether anyone else should be considered a custodian, and by doing so, help bolster the defensibility of your custodian identification process. You can ask custodians factual questions as well – it’s not just about finding data – it’s a questionnaire, so ask anything you’d like, and don’t worry, it’s all privileged.  

Some people look at the custodian questionnaire as a burden; we tell our clients to look at the custodian questionnaire as one of the best tools they have and, especially in cases with larger numbers of custodians, there is nothing more efficient and cost effective than a custodian questionnaire to aid in the fact-finding and custodian and ESI identification process.

May custodians be released after all data has been collected from them?

No, you shouldn’t release custodians in the middle of a case unless you have an agreement from opposing counsel or a court order. You never know when something in a lawsuit will take a left-hand turn or some entirely new (but related) aspect may arise, and if you’ve released your custodians because you thought you had everything collected, you’ll be caught in a pretty hard spoliation argument.  

Legal hold obligations don’t just happen at the start of a litigation; those obligations generally continue throughout pendency of the case. While releasing custodians won’t necessarily result in sanctions, as the party seeking sanctions (especially under the pending rule amendments) still would have to prove that relevant data was lost, releasing custodians early, without an agreement or court order, would be an incredibly risky move.  

If a company has third party vendors, is it the vendor’s responsibility to distribute and maintain the legal holds for its relevant employees or does the company need to track these as well?

While we haven’t seen a case on point, based on the reasoning in available case law, there is no delegation of the legal hold responsibility. Thus, it would come down to you working with the third party as to what they are going to do and how they are going to do it. There’s nothing that says you cannot issue individual notices to the individual employees (or contractors, etc.) of that third party, but we cannot image doing so in a vacuum. We wrote a blog post specifically talking about legal hold obligations when it comes to third parties, which you can read here.

Does each legal hold stand on its own, or are there overlapping concerns?

Generally speaking, Courts will look at each legal hold process on its own, but there can be exceptions, especially where cases are arguably related.  For example, the U.S. District Court for the Western District of Louisiana recently found in In re: Actos (Pioglitazone) Products Liability Litigation that a previous legal hold that arose nearly a decade before (and was still active) was related enough, and the legal hold broad enough, as to cover materials that should have been preserved for the new litigation, and thus, found spoliation of evidence.  In another case, In re: Ethicon, Inc. Pelvis Repair Systems Product Liability Litigation, the court found a similar prior legal hold had been put in place, but because that prior legal hold was much more narrowly scoped, the sanctions were not as severe.

When I release custodians from a legal hold in one case, what happens if they are on other legal holds?

While there’s no clear cut obligation to do so, we recommend to our clients that, in the release notice, they remind the custodian of any other legal holds they might be on that are still active.  Indeed, in our TotalDiscovery solution, you can do that automatically as part of that process.

One of the reasons we developed our educational series of programs, was to encourage stakeholders to stay continually educated and to ask questions. Those questions generally lead to better understandings and processes. If you have questions that you don’t see answered in our blogs, and you’d like our help, write us at edu@biaprotect.com. Speaking of education: check out our webinar on the eDiscovery Project Manager.