The Myths of Legal Hold Notification

Myth #1
LHN software is designed for large, serial litigant organizations.

In reviewing the evolution of LHN products, it is easy to understand how this myth came about. The early-to-market providers (2006-2007 era) are best suited for organizations with a steady stream of bet-the-company litigation and/or that operate in highly regulated industries. These products also offer functionality both beyond and connected to the LHN function. However, there are a number of point solution products on the market today that do not require heavy human or financial resources. Some of these can meet the demands of both large and small enterprises with both large and small litigation profiles. There are also broader information governance products, as well as products and services that address other parts of the e-discovery lifecycle that now include LHN modules and features.

Myth #2
LHN software is not affordable.

Whether an organization is an active, full-time litigant, a company with a low stakes litigation profile, or a law firm seeking to provide LHN management on behalf of clients, there are solutions available of the appropriate scale that will assist in creating defensible, repeatable processes and deliver a return on investment.

Myth #3
Managing LHN with spreadsheets and e-mail works great.

While it is true that LHN can be managed with spreadsheets, e-mail, and other manual solutions, in order to be successful, manually managed LHN programs must be highly structured and organized, and require a considerable commitment of human resources. Solutions designed for automated LHN workflow are superior to manual programs by reducing the risk of human error or human resource turnover, increasing efficiency, and improving automation, reporting and auditing capabilities. My experience in auditing manual LHN programs have consistently found human errors and discrepancies.

Myth #4
The mechanics of managing LHN are only owned by corporations, not law firms.

Many organizations actively involved in litigation on a day-to-day basis manage their own LHN processes. However, these organizations represent only a portion of litigants and often represent the serial-litigation population. Organizations with less litigation management maturity can benefit by a partnership with their law firms as legal hold managers. Law firms that manage LHN for clients that do not fit the 'manage in-house' model provide a significant value-add in legal services and are too often overlooked as customers for LHN solutions.

LHN Solutions

Once organizations get past the mythology of LHN, the challenge will be to identify the best solution from a crowded, confusing marketplace. eDJ Group has identified 17 LHN solutions on the market to date:

1. AccessData
2. BIA
3. Bridgeway
4. Cicayda
5. Exterro
6. Guidance Software
7. HP/Autonomy
8. IBM
9. kCura
10. Mitratech
11. Symantec
12. Thomson
13. X1
14. Xerox Litigation Services
15. Zapproved
16. ZL Technologies
17. ZyLAB

These solutions range from stand-alone point products to tools built into broader product portfolios (information governance, enterprise archive, matter management, ECA and review applications), and are sourced in a variety of ways (hosted, on-premise, cloud or hybrid).

Market Landscape

Corporations and law firms alike are consumers of LHN products. Corporations dominate the consumer market by far, though the number of law firms handling LHN management on behalf of clients is increasing ' albeit slowly. It should be noted that references to law firm consumers herein are related to law firms handling the LHN function on behalf of their clients rather than for their own organization's LHN processes.

According to the eDJ Legal Hold Notification Summer 2013 survey
(see, http://edjgroupinc.com/research), 37.2% of respondents use commercially available tools designed for legal hold notification, while 38.1% use commercially available tools not designed for legal hold notification (e.g., spreadsheets and e-mail). Of those not using LHN tools, 17.7% plan to purchase a tool within the next 12 months. Only 10.6% indicated they have little to no codified legal hold notification process.

Corporations

Corporate entities have a plethora of buying options for LHN solutions. There are hosted and on-premise solutions, as well as LHN tools embedded or added on to other products. In determining which is best, an organization must take into consideration its litigation profile, corporate culture and infrastructure, then align those with long-term business goals.

There is no one-size-fits-all (or even most) LHN model. 'Best practices,' when it comes to corporate legal hold and discovery response procedures, are unique to each organization and largely determined by cultural nuances.

Law Firms

Law firms have largely been lost in the LHN market. As previously mentioned, law firms are target customers for LHN solutions to address litigation aimed both directly at the firm and at firms' clients. However, more and more firms are coming to understand the value-add in assisting clients with the mechanics of managing LHN. They also recognize the risks posed by clients with immature or non-existent preservation processes. Additionally, a handful of service providers have recognized that the law firm consumer should not be forgotten. I believe that law firms are an emerging and important customer base for LHN solutions.

It is most appropriate for full time litigants to manage the LHN process internally. In-house legal departments are more familiar with their corporate environment and culture. In-house LHN systems can be more economical than having retained counsel manage the mechanics.

It is a different story for the rest of the litigants out there. Law firms are in a prime position to assist clients that have only a handful of cases in any given year or those opting for the outsourced general counsel model. Retained counsel understand the risks and requirements around legal hold and advise their clients accordingly. But law firms have traditionally relied on clients to administer the process around the advice given or are handling it the same way as corporations that don't have LHN software ' with spreadsheets and e-mail. Spreadsheets and e-mail have proven to be complex and clunky solutions for LHN, especially considering the availability of LHN tools available. Further, while law firms understand the risk and requirements, they often do not have a good grasp on client data and systems. Managing client LHN closes that gap.

Not all solutions are suited for the law firm environment (e.g., security not designed for use on a client-by-client basis; embedded in products intended for up-stream functions such as information governance). However, there are appropriate options for law firms, including both on-premise and hosted solutions.

What to Look for in LHN Tools

At a minimum, LHN tools should:

• Issue legal hold notice with customized language via e-mail;
• Provide a customizable questionnaire/virtual interview; and
• Track custodian acknowledgement and response activity.
• Additional functionalities that bring a higher value of return to'
• clients demonstrate product maturity include:
• Flexible reminder and escalation features, including aggregate reminders, controlled by legal hold administrators;
• Custodian dashboard/portal; and
• Integration with enterprise systems for custodian contact information.

Moving LHN Programs Forward

LHN tools mitigate risk and deliver significantly greater efficiency over managing LHN with spreadsheets and e-mail. Whether you are an organization or a law firm, large or small, there is a product on the market that will meet your needs.

• Recognize that LHN tools greatly increase efficiency and mitigate risk. Using tools designed to specifically manage LHN can protect against the risk of sanctions and make legal hold a more repeatable (and improvable) process.
• Develop business requirements and goals around the LHN function prior to tool selection. Because there are so many buying options and categories of LHN products, selection quickly becomes confusing. Knowing your business requirements and goals in advance allows you to narrow the toolsets that will be most appropriate for your organization.
• Know that LHN tools don't have to break the bank! There are several point solutions available that are very reasonably priced (e.g., one charges $5 per legal hold per month). Additionally, many service providers and enterprise applications that go beyond LHN functionality include LHN tools as part of the package and at no additional cost.
• Law firms need to recognize that managing LHN for clients is a value-add. Clients with out-sourced GC models, or that are low-volume or one-off litigants are prime candidates for the value-add service of efficiently and thoroughly managing the LHN process.

Sidebar: Cases with Sanctions for Failed Hold Procedure

Recent case law provides ample evidence of negative consequences for both Defendants and Plaintiffs, alike, because of immature or non-existent preservation methods.

• Branhaven LLC v. Beeftek, Inc., 2013 WL 388429 (D. Md. Jan. 4, 2013). Defendant sanctioned for inadequate legal hold and improper certification under FRCP Rule 26(g).
• Carrillo v. Schneider Logistics, Inc., 2012 WL 4791614 (C.D. Cal. Oct. 5, 2012). Defendant sanctioned for inadequate legal hold.
• Day v. LSI Corp., 2012 WL 6674434 (D. Ariz. Dec. 20, 2012). Defendant sanctioned for insufficient legal hold.
• EEOC v. JP Morgan Chase Bank N.A., 2013 WL 765593 (S.D. Ohio Feb. 28, 2013). Defendant sanctioned for failing to preserve database data subject to purge after expiration of retention period.
• EEOC v. New Breed Logistics, 2012 WL 4361449 (W.D. Tenn. Sep. 25, 2012). Defendant sanctioned for failure to issue timely legal hold resulting in destruction of data.
• E.E.O.C. v. Ventura Corp. Ltd., 2013 WL 550550 (D.P.R. Feb. 12, 2013). Defendant sanctioned for failure to preserve data lost as a result of system data migration and restructure.
• Peerless Industries, Inc. v. Crimson Av. LLC, 2013 WL 85378 (N.D. Ill. Jan. 8, 2013). Defendant sanctioned for failure to issue legal hold to third party that was under the control of Defendant.
• Scentsy Inc. v. B.R. Chase LLC, 2012 WL 4523112 (D. Idaho Oct. 2, 2012). Defendant sanctioned for failure to implement proper legal hold.

Mikki Tomlinson is the Managing Director at The eDJ Group (http://edjgroupinc.com). Her experience ranges from creating a successful legal consulting and training company to developing and managing the litigation support department of a Fortune 250 corporation. She can be reached at [email protected].

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