I am doing a panel session on Day 2 of the IQPC Information Retention and EDisclosure Managemement Summit with Ronke Ekwensi of Pfizer. Our subject is ESI preparation and preservation: Assessing – and addressing – your eDisclosure Liabilities. One of the aims is to cover the differences between the US and the UK approaches to preservation and to legal hold and I have been putting some slides together. It seems worth giving it a preliminary canter here.
Clearwell is the latest US ediscovery software company to produce a legal hold module, the logical extension to the existing components of its EDiscovery Platform. This is becoming a standard component of ediscovery applications – Guidance Software was, I think, the first to integrate such a module over two years ago.
A US lawyer needs no explanation of the importance of legal hold. It formalises the duty to preserve documents and records that an organisation “knows, or reasonably should know, will likely be requested in reasonably foreseeable litigation”. This quotation comes from Mosaid v Samsung of 2004 and remains a good base definition although a lot of water has flowed under the bridge since then. Critics complain of the use of the word “reasonably” in qualifying both the expected state of knowledge and the degree of foreseeability, but none has come up with an alternative way of defining the trigger for preservation (though serious attempts are being made to improve on this).
The formal trigger in England & Wales is the issue of proceedings. Destruction before issue brings penalties only in limited circumstances involving an objective to interfere with future litigation and a positive act as opposed to an omission; further, the documents must be relevant ones, that is, ones which might have made a difference. The key issue is whether a fair trial is possible despite the destruction of the documents. Taking all this together, it is quite hard to attack another party for alleged spoliation before the commencement of proceedings. That said, the parties and their lawyers may have to explain what became of “missing” documents and to justify their destruction.
There are differences between the scope of US discovery and UK disclosure. “Relevance” in the US includes information which is reasonably calculated to lead to the discovery of admissible evidence, where the post-1999 UK definition is the potentially much narrower test whether documents are supportive of or adverse to the case of the giver or of any other party.
Between these contrasting starting points and triggers lie two very different approaches to policing the mechanics of ensuring that an organisation preserves everything which it ought to preserve. I have no intention of giving a properly-sourced analysis of the present state of the US obligations, not least because there would be a new Opinion published on the subject before I have finished. It is enough for my present purposes to say that the words “sanctions” and “defensibility” which recur in any US materials on preservation are there for a reason. US case law has carried the duty of preservation to its logical conclusion and punished failures to observe strict procedures in the management of preservation.
We content ourselves in the UK with punishing deliberate destruction (see Rybak v Langbar and my article on it here), with providing for applications for specific disclosure, and with drawing adverse inferences at trial if documents are missing which ought to be present. The judgment of HHJ Simon Brown QC in Earles v Barclays Bank included this passage:
27. Despite this [promised response] none of the Bank, its legal department, the Claimant or his solicitors took the obvious steps of preserving the contemporaneous phone and e-mail records that would support or be adverse to their contentions and retaining them in anticipation of litigation between them – ‘litigation hold’ as it is termed in US under their Federal Rules of Civil Procedure.
28. However, in this jurisdiction as in Australia, there is no duty to preserve documents prior to the commencement of proceedings: British American Tobacco Australia Services Limited v. Cowell  V.S.C.A. 197, a decision approved in this country by Morritt V.C. in Douglas v. Hello  EWHC 55 at . However, the leading text book in this area – Documentary Evidence by Charles Hollander QC – suggests in paragraph 10-06 of the 10th edition that “there might be cases where it was appropriate to draw adverse inferences from a party’s conduct before the commencement of proceedings.” In my judgment there would have to be some clear evidence of deliberate spoliation in anticipation of litigation before one could legitimately draw evidential “adverse inferences” in those circumstances. There is no such evidential basis in this case.
29. After the commencement of proceedings the situation is radically different. In Woods v. Martins Bank Ltd  1 Q.B. 55 at 60, Salmon J. said “It cannot be too clearly understood that solicitors owe a duty to the court, as officers of the court to make sure, as far as possible, that no relevant documents have been omitted from their client’s list”.
30. In the case of documents not preserved after the commencement of proceedings then the defaulting party risk “adverse inferences” being drawn for such “spoliation”: Infabricks Ltd v. Jaytex Ltd  FSR 75.
Paragraph 7 of the new EDisclosure Practice Direction 31B says this:
As soon as litigation is contemplated, the parties’ legal representatives must notify their clients of the need to preserve disclosable documents. The documents to be preserved include Electronic Documents which would otherwise be deleted in accordance with a document retention policy or otherwise deleted in the ordinary course of business.
Attempts have been made to interpret the latter as inventing a new concept of legal hold or, at least, an extended duty of preservation. That was neither the intent nor the effect; Paragraph 7 is exactly what it appears to be and no more – a warning to solicitors to remind their clients to suspend the operation of a document retention policy which may have the effect of destroying disclosable information.
In the US, the management of preservation requires many more steps to be taken. Hold notices must be sent to any custodian likely to have relevant information, and those notices must be followed up with a reminder and escalated until the organisation is able to show that it has done everything possible to preserve the information. That inevitably requires a system capable of generating and tracking the requests and responses. In a large organisation with much litigation, this becomes a major exercise. The form of the notice may differ from case to case; custodians need to be able to check what holds they are subject to; in-house legal teams must be able to satisfy themselves and their external lawyers that everything is nailed down; on the other hand, no company wants to hold documents for longer than necessary, both because of the costs of managing it and because doing so conflicts with the reasons for having a document retention policy in the first place – not least because a document held over-long for one purpose may become discoverable in another context.
Put like this, there are obvious merits in having a legal hold system which integrates with the rest of your ediscovery / e-disclosure processes. Those merits appear the more obvious when you might be sanctioned for lack of them, but most of them have significant value even without the threat of sanctions.
Let us go back to Earles v Barclays Bank. The most significant paragraph in it, to my eye, is not the headline finding about costs but paragraph 27 which includes the following:
potential litigants, in particular organisations such as Banks at the current time, need to anticipate having to give disclosure of specifically relevant electronic documentation and [should have] the means of doing so efficiently and effectively.
The mechanisms in any legal hold application like those of Guidance Software and Clearwell have an administrative purpose which is as important in this context as the need to be defensible in your preservation processes. You do not need the fear of sanctions to want to manage preservation obligations efficiently. In this, as in so many other respects, software developed for the more rigourous environment of the Federal Rules of Civil Procedure has obvious benefits in our more relaxed environment.
I very much hope that we in the UK can resist going down the US route which, to my eye, has generated significant ancillary litigation and encouraged overbroad discovery – who can say that you are wrong to preserve on the maximum basis when the risk of sanctions seems so great? Much of the expense of UK litigation, however, follows from a failure to control and manage the preservation of potentially disclosable material. US-developed software designed to manage legal holds is equally designed merely to manage the process of being prepared in the way described in Earles. Regardless of the formal status of legal hold in English law, it makes administrative and commercial sense to be in control, and did so even before Judge Brown’s words in Earles about having the means of giving disclosure “efficiently and effectively”. You cannot do that if you have not got your arms round all the potentially disclosable documents; the US legal hold applications provide a mechanism for doing just that.
If you want to investigate this subject beyond the two providers mentioned here, try a Google search for “legal hold” + software. The quotation marks are important – without them I get over 92 million purported hits, with every variety of legal software included. Wrapping “legal hold” in quotation marks brings the hit-list down to a more manageable 312,000 hits – which give you some idea of the importance of this subject. Don’t read them all – but the first three pages (which includes both those mentioned here) gives you a good idea of the different functions and benefits from various suppliers.