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Just over three years have passed since the December 2015 amendments to the Federal Rules of Civil Procedure. In that time, courts have grown increasingly comfortable with the amended Rules’ emphasis on proportionality and overhauled spoliation regime. What has not changed, however, is the pivotal role of good-faith, reasonable document preservation efforts in avoiding downstream discovery disputes. In recognition of the continued importance of sound legal hold procedures, the Sedona Conference—an influential e-discovery think tank composed of jurists, lawyers (from both sides of the aisle), academics and other experts in the field—recently published for public comment its Commentary on Legal Holds, Second Edition: The Trigger & The Process. The Commentary sets forth 12 guidelines, each supported by case law and accompanied by illustrations, to help parties meet their duty to preserve “discoverable information,” which is defined as “information that is relevant to the parties’ claims and defenses and proportional to the needs of the case.” The Commentary also provides pragmatic suggestions for establishing preservation procedures, addresses the tension between preservation obligations and data protection laws (most notably the EU’s General Data Protection Regulation), and offers best practices for the eventual release of legal holds. Below we highlight the key provisions of the guidelines, emphasizing how parties can put each to practical use to create an effective and defensible preservation program.

The Preservation Trigger

The touchstones of the duty to preserve are “reasonable anticipation” or, stated another way, “reasonable foreseeability.” In Guideline 1, Sedona defines these concepts as “notice of a credible probability that [an organization] will become involved in litigation, seriously contemplates initiating litigation, or when it takes specific actions to commence litigation.” Emphasis should be placed on the phrase credible probability—the mere possibility of litigation, without more, is typically not enough to trigger the duty to preserve. But those contemplating filing suit should be mindful that seeking the advice of counsel or sending a cease-and-desist letter may very well be sufficient to mandate an accompanying legal hold.

Guideline 2 instructs that, should a party’s preservation decisions later be subject to challenge, it may be easier to demonstrate reasonableness and good faith if that party adhered to “explicit and consistent policies and procedures to guide compliance with its preservation obligations.” Having a procedure for determining whether a duty to preserve has attached can help ensure that the decision is made in a defensible manner. While the process will vary based on the size and nature of each entity, the key is to follow your process and memorialize your adherence to it (but be mindful that your documentation may eventually have to be disclosed, if not to your adversary, then for in camera review).

To help promote the reporting of facts that could bear upon the duty to preserve trigger, Guideline 3 suggests that organizations adopt procedures “for reporting information relating to possible litigation to a responsible decision maker.” The threshold for reporting should be calibrated to “discourage spurious or trivial reports, while still encouraging the candid flow of information.” Individuals within an organization should be trained on how to follow the procedure, and its effectiveness should be evaluated periodically. After receiving a report, organizations’ designated decision makers must then embark on a multifactor analysis to decide whether the duty to preserve has in fact been triggered. Among the many factors that could inform this inquiry are the nature of the threat, the entity making it, press or industry coverage, knowledge of similar claims, retention of counsel, and even the prior marking of documents as “attorney work product.”

While hindsight may be 20-20, Guideline 5 counsels against judging preservation decisions in that manner. Instead, they should be evaluated “based on the good faith and reasonableness of the decisions (including whether a legal hold is necessary and how it should be implemented) at the time they were made.” While an adversary may seek to challenge a decision using later-acquired information, the Commentary should serve as a reminder to judges that parties are not capable of preservation clairvoyance.

Appropriate Scope of the Legal Hold

Once an organization determines that it has a duty to preserve, Guideline 6 explains that it should identify and, in most circumstances, notify custodians likely to have relevant information, and it should do so proportionately and “as soon as is practicable.” Although perfection is not required, an organization should “consider the sources of information within its ‘possession, custody, or control’ that would likely include discoverable information.” As part of this exercise, organizations should consider providing notice to third parties in possession of information that remains under the organization’s control.

Per Guideline 7, “[f]actors that may be considered in determining the scope of information that should be preserved include the nature of the issues raised in the matter, the accessibility of the information, the probative value of the information, and the relative burdens and costs of the preservation effort.” If, as is often the case, prior agreement with an adversary is not feasible, organizations should apply their best judgment considering all of the circumstances, including the cost to preserve, the number of custodians, the type of information at issue, and the temporal scope of the dispute. For instance, a party may reasonably decline to preserve inaccessible sources if it concludes—as is often true with disaster-recovery backup tapes—that the burdens and costs of preservation are disproportionate to those sources’ potential value. Likewise, absent compelling circumstances, Sedona counsels against an expectation of preservation when organizations have made good-faith decisions not to retain instant messages, voicemails or other transient/ephemeral data in the ordinary course.

The Legal Hold Notice

While verbal notice might theoretically be sufficient in limited contexts, a formal, written legal hold notice is almost always best. In that regard, Guideline 8 provides that “such a notice is most effective when the organization identifies the custodians and data stewards most likely to have discoverable information” and when the notice:

• uses language understandable to all types of recipients

• instructs recipients on how to comply and who can help

• requires recipients to confirm receipt and compliance

• addresses technological nuances that could impede preservation (e.g., auto-delete functionality)

• is periodically reviewed and amended

• is followed up with periodic reminders.

Conceivably, if the information encompassed by the duty to preserve is already maintained under an organization’s information governance or record retention policy, a written legal hold notice may be redundant, but issuing one might nonetheless be considered the most prudent course of action.

Organizations may also choose, consistent with Guideline 9, to document the procedures and reasoning behind a particular legal hold. The thinking here is that a party can best defend the contours of a legal hold by citing contemporaneous documentation showing when, why and how it was put into place. A party should not prepare memoranda, however, that it is unwilling to disclose in court should the need arise.

While Guideline 9 is optional, Guideline 10, which advocates for regular monitoring and oversight of legal holds, is important on most matters. This monitoring can take several forms, from issuing reminder notices, to conducting compliance training, to revisiting the scope of the hold as the matter shifts over time.

With so much attention paid to getting legal holds right, too little time is spent making sure they are lifted, or released, when the duty to preserve has lapsed. Guideline 11 reminds litigants that any legal hold process should “include provisions for releasing the hold upon termination of the duty to preserve,” thus permitting the organization to resume its standard document retention policies. As part of their information governance efforts, organizations should consider conducting periodic audits to identify information no longer subject to hold, being careful to cross-check custodians and data sources against other ongoing legal holds to avoid the inadvertent loss of discoverable information in those matters.

Data Protection Laws

The implementation of the EU’s GDPR in May 2018, with its harsh penalty structure, has served as a stark reminder to U.S. litigants that they do not operate in a vacuum. Guideline 12 rightfully warns organization to “be mindful of local data protection laws and regulations when implementing a legal hold and planning a legal hold policy outside of the United States.” Under the GDPR, preserving EU data subjects’ personal data longer than would otherwise be required likely constitutes data processing, which is only permissible pursuant to narrowly drawn exclusions. To minimize conflicts, the Commentary suggests a tiered approach to preservation in the United States and elsewhere, limiting the extraterritorial scope of preservation to data that is unique and necessary for the specific purpose of the litigation, and only for the period necessary.

An organization can best satisfy its preservation obligations by conducting the thoughtful analysis described in the Sedona Commentary. While not every case will require the full spectrum of best practices contemplated therein, organizations should take the opportunity to vet their existing procedures against these 12 guidelines, refining their policies where appropriate.

Jason Lichter is director of discovery services and litigation support at Pepper Hamilton in New York. Matt Hamilton is a partner in the health sciences department in the firm’s Philadelphia office.