We were drafting a legal hold policy for a client’s law department when the client asked when it was necessary to issue a legal hold notice to preserve information. My answer usually involves an application of the nose test—which is “the first smell of trouble”. But what is trouble? Great question. Let me consult my nose. My nose says, “it might involve getting into trouble with a regulator or court.” OK, got it. But that is really way too simple. No doubt failure to provide employees with timely notice of the need to preserve information for a pending, threatened or imminent lawsuit is essential. In a recent court case a judge made the following statement “…plaintiffs failed to timely institute written litigation holds and engaged in careless and indifferent collection efforts after the duty to preserve arose. As a result, there can be little doubt that some documents were lost or destroyed.” But, making a determination of when to do it is not simple and has serious implications.
Say I’m an insurance company, do I need to issue a legal hold notice every time I get a letter from an annoyed insurance policy owner. Oh. If I issue early—at the FIRST smell of trouble, I might over-preserve. How about preserving after we get served with a lawsuit? Well, that may be too late especially if a lot happens before the lawsuit. What if we get a nasty gram from a lawyer demanding the matter be addressed? How about a letter to mediate? How about a written complaint filed with the state department of insurance? How about a notice by the state that it intends to commence an investigation? You get the idea, before a lawsuit is filed, much can happen that should commence the legal hold notice process. So what to do. We deal with it all the time and if you want our help, please call early and often. Clearly earlier in time is safer. So a threatened lawsuit is earlier in time than a filed one but it has implications. Bottom line it’s a lawyers question and don’t let them delegate to you IT or RIM.