The Four Challenges of Legal Hold Communications

1.

Determining whether to send notices in all matters that may result in litigation or only selected matters. A differential approach to sending hold notices is difficult to defend. If all potentially relevant information is already preserved through another means, then the obligation to preserve is already satisfied and hold notices have no function. If information is not already preserved through other means and the matter has the potential to result in litigation with costs significantly greater than the cost of hold notices, then formal hold communications would be prudent. A simple test is to ask how difficult it will be to justify why they weren’t sent after the fact.

Most often, the reasons cited for a differential approach are the inability to manage the task and to track it — the fear of not doing it right — and concerns for inundating people with legal obligations and emails. These arguments are unlikely to withstand challenge as more companies adopt a consistent approach, as “legal holds” makes its way into employee ethics training, and as processes and systems to automate and sustain the process are implemented.

2.

Issuing notices and frequent reminders and tracking them. Clearly, remembering to remind is difficult, particularly with any meaningful volume of litigation. Moreover, tracking the custodians to whom the notices and subsequent reminders were sent is tedious and error prone. Nonetheless, the process standard has become issuing first notices, sending quarterly reminders (or more frequent if warranted), and tracking the list of recipients of these notices and reminders by date and notice.

A good number of companies have begun using software to automate this process, which virtually eliminates the burden by automating all reminders and tracking all recipients automatically over the course of the matter.

3.

Requiring confirmations of compliance and tracking them. It’s instructive that a good number of companies and most of those with prior preservation challenges now use very explicit confirmations of hold notice receipt and compliance. These are not simply confirmations that the notice appeared in the recipient’s mail box window, but an affirmation of understanding and in many cases, specific affirmations for each type and kind of information that may be involved. Because they use software to automate the management, logging, non-responder exception alerting and escalations, these companies can employ a very low-cost, effective method of preserving information and demonstrating reasonable conduct.

Those companies who are electing not to use confirmations of compliance typically cite the difficulty in managing the process — it is hard to track responses and missing a non-response will expose the company to more risk. The argument is ultimately circular: “It’s too hard to track whether people understand their obligations so we don’t track it.” Yet, the obligation to ensure that people understand their obligations is clear, even if it’s tedious! Ironically, as more companies effectively use confirmations of compliance, those that don’t will be exposed to heightened levels of risk anyway.

4.

Centralizing the record of communications for persistence over long matters and a lot of correspondence. Given that legal and regulatory matters evolve over long periods of time and hold communications are increasingly a critical part of your offense and defense, the record keeping standard has evolved considerably. Now, there is an expectation that companies will capture and track all holds, all notices, and all custodians involved as a central element of process control.

For some companies, just centrally documenting all existing legal holds is a tremendous challenge. If the volume of litigation is greater than a hundred matters or so, then the number of spreadsheets needed to track all notices sent and re-logging custodians and reminders across matters quickly explodes. The back of napkin math shocks: 100 matters with 4 reminders a year to 50 custodians each is 20,000 rows in a spreadsheet or 100 spreadsheets with 200 rows each. It doesn’t make sense to do this manually any more than it makes sense to do payroll or invoicing manually. There are now systems that automate the process, automate the record of the process, and provide centralized access and visibility to stakeholders just as there are for core control functions in finance and human resources.