Litigation holds

Executive summary

In any litigation context, it’s crucial to start and maintain a suitable “litigation hold” to prevent destruction of potentially-relevant evidence. This includes stopping the following, at a minimum:

• the destruction of potentially relevant hard-copy documents and physical evidence;
• the deletion of potentially-relevant emails;
• the overwriting of backup tapes containing potentially-relevant information (although at this writing the law has been evolving on the question whether this means all backup tapes, or whether instead it excludes tapes and other media that are not normally accessible to users and are used exclusively for emergency data recovery).

Failure to do a proper litigation hold can result in severe penalties; see the stories below.

When to put a litigation hold in place

A litigation hold should be put into place:

• whenever you’ve been sued;
• any time there’s a reasonable likelihood that you are going to be sued — for example, if you’ve received a demand letter;
• especially if you’re contemplating suing someone else.

Stories

Zubulake

The canonical horror story of litigation holds gone awry was the gender-discrimination case of equities trader Laura Zubulake ((Laura Zubulake Web site)) against her former employer, UBS Warburg LLC.

During the pre-trial discovery phase, according to the judge, certain UBS personnel destroyed emails relevant to the case, even though they had been instructed not to do so. Moreover, said the judge, UBS’s lawyers didn’t do a reasonable job of proactively managing the litigation hold. As a result, the judge said, Zubulake was prejudiced in her ability to make her case to the jury. The judge allowed Zubulake’s lawyers to tell the jury about the destruction of emails. The judge also instructed the jurors that they were permitted to infer that the missing emails would have been damaging to UBS if they did not feel UBS had a plausible excuse for the email destruction. (Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) (Zubulake V).)

The jury awarded Zubulake USD $29.3 million, including $20.2 million in punitive damages. (UBS Must Pay Ex-Saleswoman $29.1 Mln in Sex Bias Case, Bloomberg, Apr. 6, 2005.)

Further reading

What is a “litigation hold” and what does it mean for your business, by Jeff Neuberger (of Thelen Reid), Jun. 1, 2007 (accessed Jul. 22, 2008).

Electronic Discovery: An Overview and Practical Pointers (accessed Jul. 23, 2008)

Footnotes