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Tip of the Month, March 2012 - Automating the Legal Hold Process

March 2012
Mayer Brown Newsletter

For the past few years, a manufacturing company has seen its volume of litigation increase significantly. While the company’s legal department has a manual process in place for issuing and monitoring legal holds, the increase in litigation is making this manual process more difficult to manage. In particular, there have been issues with the Information Technology, Human Resources and Records Management departments regarding their routine practices and communications with the Legal Department about custodians on legal hold. The company is considering ways to improve the process through some type of automation.

Is Implementing New Technology the Right Answer?
The concept of an “easy button” for legal holds is very appealing, especially for overburdened in-house counsel and senior executives looking to simplify the process and manage costs. As with other too-good-to-be-true solutions, there is no such button. Technological solutions bring with them a new layer of complexity, in particular because such solutions may impact so many aspects of the organization’s business. That said, technology can help to automate, streamline and consolidate the legal hold process under the right circumstances. But before investing in any type of technology, it is important for the organization to develop a systematic approach to evaluating the pros and cons of the proposed solution.

Developing a Systematic Approach
The first step is identifying the right people to include in the conversation. At many organizations, those people include far more than the Legal Department. Other groups to consider include: Information Technology, Information Security, Human Resources, Procurement, and Records Management/Information Governance. The legal hold process and the implementation of an automated tool impacts each of these groups in different ways.

The next step is understanding the organization’s real needs when it comes to legal holds: exactly what problem is the organization trying to solve? The answer to that question may very well dictate the appropriate solution.

Finally, the organization needs to develop a clear plan for evaluating the available technology and whether it is truly suited to meet the organization’s needs. When it comes to developing that plan, there are a number of factors that are critical to consider in order to ensure success.

Factors to Consider

  • Litigation Risk Profile. The investment and the return on investment (ROI) of an automated legal hold tool is directly tied to the number of legal holds and the number of people on the typical legal hold. For highly regulated serial litigants, the ROI of implementing an enterprise solution behind the firewall may be quite high. For the organization facing run-of-the-mill employment and contract actions, with only the occasional more-complex litigation, a web-based, case-by-case legal hold tool may be entirely sufficient and certainly an upgrade from the “spreadsheet and email” approach to managing legal holds.
  • Budgeting and Procurement. When considering a significant investment in the more advanced technology solutions, budgeting is a major consideration. Legal can often obtain the necessary budget through Information Technology if Legal can convince the Information Technology leaders that the automated legal hold tool will improve the routine operations of the organization’s systems and save money. A similar approach may work with Information Governance if you know that there is an ongoing or upcoming information governance project. Keep in mind that if Information Technology or Information Governance are involved, the organization’s Procurement Group is likely to be involved as well.
  • Compatibility with Existing Systems. Possibly the most important factor to consider when selecting a legal hold technology is whether that technology will be compatible with the organization’s existing system. The systems to consider include:
    • Human Resources Databases
    • Document Management Systems (including archives)
    • Asset Management Systems
    • Research/Financial Databases
    • Email Systems
    • Compatibility/Interface with Outsourced IT Providers
  • Information Security. If an organization considers a web-based “software as a service” (SaaS) option, it is particularly important to take data security into consideration. An SaaS option opens a portal into the organization’s infrastructure, creating at least some risk of a data breach or a cyber attack. Evaluating the security and integrity of the provider’s networks, backup procedures and redundant layers of data protection, as well as the provider’s security protections and audit procedures, is critical to determining whether the service provider can offer the level of data protection the organization requires.
  • Integration. A major benefit of an automated tool is enhancing the integration of the legal hold process throughout the organization.
    • Business Personnel. An automated tool can streamline and simplify communications between Legal and the business personnel subject to the legal hold. Such tools can assist with distribution of legal hold memoranda and reminder memoranda, specific instructions for preservation and collection, questionnaires, and the tracking/auditing process.
    • Information Technology. When selecting an automated legal hold tool, it may be helpful to consider access to that system, including whether Information Technology can be provided with visibility into key information stored within that tool. The organization may also want to consider whether the tool can be configured to accommodate the unique identifiers used by Information Technology when referring to individual custodians. Having visibility into such information helps Information Technology to ensure that its routine business operations do not conflict with legal hold obligations, including with respect to departing employees, upgrades to software/technology, and break/fix.
    • Human Resources. With Human Resources, integration of the legal hold tool and the Human Resources database can significantly minimize the risk associated with departing or transferring employees on legal hold. Such tools can automate the notification process among Human Resources, Legal and Information Technology.
  • Information Governance. Information Governance is often responsible for enforcing an organization’s data retention policies, including purge or janitorial functions (especially in archives and document management systems). Automatic integration between the legal hold tool and those systems can protect against the inadvertent loss of data.
  • Functionality. Not every organization needs the Cadillac of legal hold tools. These tools range in functionality from simple notification and tracking to preserve-in-place to preserve-by-collection. An organization needs to determine how the tool fits into the existing legal hold process and whether the added costs often associated with the advanced functionality makes sense.
  • Unintended Consequences. Even the best tools may have unintended, or unexpected, consequences and considering those possibilities in advance can assist with long-term planning. For example, the more advanced the functionality of the tool, the more likely it is that significant internal resources may be needed to maintain and manage it. Similarly, an organization may want to consider the burden of integrating historical holds into the new legal hold tool and plan accordingly. In addition, while the ability to more easily identify and capture data for preservation may seem like a strong upside, it can also lead to the retention of greater volumes of duplicative data depending on how the tool implements preservation rules.

For inquiries related to this Tip of the Month, please contact Anthony J. Diana at , Therese Craparo at , or Patrick Garbe at .

Learn more about Mayer Brown’s Electronic Discovery & Records Management practice or contact Anthony J. Diana at , Michael E. Lackey at , or Ed Sautter at .

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