Know When to Hold Em: Understanding the Basics of ESI Preservation

In today’s digital world, nearly every organization’s communications, decisions, and operations are documented in some form of electronically stored information (ESI). From emails and spreadsheets to chat messages and collaborative documents in tools like Microsoft Teams or Slack, data lives everywhere. The ubiquitous nature of that data makes preservation of ESI perhaps the most critical stage of the discovery process.

When litigation is reasonably anticipated, organizations have a legal obligation to preserve potentially relevant data. Failing to do so can result in severe sanctions, reputational damage, and a loss of judicial credibility. Understanding the basics of preservation – what triggers the duty to preserve, the processes and procedures associated with preserving ESI, and what the Federal Rules require regarding that preservation – is essential to maintain defensibility in the modern data era. This post discusses the basics of preservation that serve as the foundation for best practices for modern ESI preservation.

What ESI Preservation Entails

ESI preservation is the process of identifying, protecting, and maintaining data that may be relevant to a pending or reasonably anticipated legal matter. The purpose is simple: to ensure that evidence remains intact and accessible for review, production, and potential use in court.

Unlike collection or production, preservation doesn’t necessarily require organizations to immediately copy or extract all potentially relevant data. Instead, it involves suspending the routine processes – manual and automatic – that might lead to that information being deleted, overwritten, or altered. This might mean disabling automatic deletion features, halting data retention policies, or instructing custodians to preserve specific materials related to a dispute.

Spoliation refers to the destruction, alteration, or failure to preserve evidence that is relevant to pending or reasonably anticipated litigation. Courts generally assess both the prejudice caused by the loss and the intent behind it, distinguishing between negligent and intentional conduct. Intentional spoliation can lead to severe remedies, including adverse inference instructions, dismissal of claims, or default judgment, while negligent spoliation may result in curative measures designed to mitigate the harm. Ultimately, spoliation of ESI undermines the integrity of the judicial process by depriving parties and the court of potentially critical evidence.

Preservation is the first step in demonstrating a defensible discovery process. Done properly, it establishes a foundation of good faith, transparency, and compliance: values that courts consistently emphasize when evaluating discovery conduct. Done poorly, it can essentially doom your case in the form of significant sanctions for spoliation of ESI that can even include dismissal or significant fines and cost shifting.

What Is a Legal Hold?

A legal hold (also known as a litigation hold) is the formal mechanism organizations use to communicate preservation obligations to custodians and stakeholders. It ensures that individuals who possess or control relevant ESI understand their duty to retain it and suspend normal data destruction procedures.

A legal hold notice typically includes:

• A description of the matter and the general issues involved.
• Instructions to preserve specific types of information or data sources (e.g., emails, text messages, Teams chats, shared drives, cloud storage, etc.).
• Steps for how to preserve that data (e.g., stop deleting messages, do not alter files, etc.).
• Information about where to direct questions or request clarification.
• Acknowledgment requirements confirming that recipients have read and understood the notice.

The legal hold process should also include tracking and management functions, such as recording who received, read, and confirmed compliance with the hold; periodic reminders or updates; and documentation of any changes to scope or custodians. Many organizations use specialized legal hold management software to automate these workflows and ensure accountability.

Why Legal Holds Exist

Legal holds exist because organizations have both a common-law duty and a procedural duty to preserve evidence once litigation becomes reasonably foreseeable. Without a clear and enforceable legal hold process, employees may continue to delete files, purge emails, or follow routine retention and destruction schedules, which could lead to the destruction of key evidence.

Legal holds also serve as a safeguard for the organization itself. Courts recognize that mistakes happen, but they expect organizations to act in good faith to prevent data loss – reasonableness is the standard, not perfection. A well-documented hold demonstrates that the organization took affirmative steps to identify relevant data and notify custodians promptly, helping to mitigate the risk of sanctions under Rule 37(e) of the Federal Rules of Civil Procedure (FRCP).

When Does the Duty to Preserve Begin?

The obligation to preserve ESI begins when litigation is reasonably anticipated, which can occur before a complaint is ever filed. Examples of when this may occur include:

• A demand letter is received.
• A regulatory inquiry or internal investigation begins.
• A dispute escalates beyond routine business discussions.
• An incident occurs that is likely to lead to a claim.
• A party retains the services of a lawyer for the purposes of filing a complaint or responding to an anticipated complaint.

Courts have consistently held that the trigger is reasonable anticipation, not certainty; however, what’s considered “reasonable” is very fact specific. As a result, organizations must develop mechanisms to identify potential litigation early, often through collaboration between legal, compliance, and IT teams. The notion of “better safe than sorry” is an appropriate approach to such an important phase in the discovery life cycle.

Conclusion

The actions your organization takes during the preservation phase of the case may not necessarily win you the case, but they could certainly lead to losing the case if a Court finds that there was intent to deprive your opposition of data that has been spoliated. Over the next several weeks, we will discuss topics related to best practices for modern legal holds and preservation of ESI, including:

• Duty to Preserve and the Federal Rules: Discussion of FRCP 26, 34, and 37(e), and how they emphasize preservation requirements and sanctions.
• The Evolution of Preservation: A historical perspective on how preservation practices have evolved with changing data sources over the years from paper to email to cloud-based sources and GenAI content.
• Communicating the Legal Hold: A more detailed discussion on how to issue notices, track compliance, and manage custodian engagement and leverage technology to streamline legal hold administration and help ensure defensibility.
• Preservation Pitfalls and How to Avoid Them: A discussion of preservation failures like delayed holds, incomplete scoping, failure to suspend auto-deletion programs and poor custodian communication.
• Case Law Trends Regarding Legal Holds and Preservation: Recent case law rulings that illustrate best practices for issuing legal holds and preservation of data, as well as where parties have succeeded or fallen short.
• Preservation Across Data Sources: Considerations for preservation across a variety of data sources, including enterprise solutions, mobile devices, structured data/databases and generative AI content.
• Defensible Deletion vs. Over-Preservation: A discussion of retention policies, defensible deletion, and the risks of a “save everything” approach to preservation.
• Legal Holds in Investigations: Differences in obligations between regulatory investigations and civil litigation.
• Building a Defensible Legal Hold Process: Steps needed to design and operationalize a legal hold workflow in today’s diverse data environment.
• The Future of Legal Holds: A look ahead at how technology and evolving data sources will shape preservation practices.

For more regarding Cimplifi eDiscovery, Litigation, and Investigations capabilities, click here.