Answering Your Questions on the Ethics of Legal Holds
By Brian Schrader, Esq. and Barry Schwartz, Esq., CEDS
The attendees asked some great questions on a variety of topics, and we thought we would share our answers to the top questions and concerns they raised, as we know most of our readers are probably asking many of the same questions and facing many of the same issues themselves.One of our most popular annual presentations is Risks and Responsibilities: The Ethics of Legal Holds, and we just joined with ACEDS to present our 2018 update, which can be viewed here.
1. Can you explain what triggers a legal hold?
A legal hold should be triggered when something happens that could lead to litigation, which can range from the obvious, like being served with a complaint, to the less obvious like product complaints that rise to a level where a reasonable person would anticipate a potential legal action. While there are no Federal Rules specifically stating when a legal hold must be issued, the common law standard going back decades has been that a legal hold obligation is triggered when litigation (or a similar legal event) is “reasonably anticipated.” See, e.g., Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998).
In the end, it is a question of objective reasonableness: Given a particular set of circumstances, should a reasonable person have anticipated that those circumstances would lead to a litigation or other legal event? For example, a single complaint about a rather mundane alleged product defect would usually not rise to the level of a triggering event, while dozens of similar complaints might. On the other hand, a single sexual harassment claim made to an HR representative is likely sufficient to trigger a litigation hold.
- Common triggering events include:
- Product complaints
- Product malfunctions
- Harassment complaints
- Other HHR issues
- IP infringement
- Claim letters
- Regulatory investigations
- And more
Unfortunately, this is one of those legal gray areas without a neat, bright line, so we often counsel our clients that, when in doubt, issue a hold. Issuing a legal hold is one of the cheapest things you will ever do in discovery, but it’s the single act that can have the most disastrous consequences if not done correctly. The costs of issuing a hold will be miniscule compared with the consequences of having been found to have not met your legal hold obligations.