Legal holds and document preservation: How to get on the front foot

Identification and preservation of documentary evidence at the early stages of a dispute isn’t just best practice, it is a mandatory procedural requirement. Whilst English law does not formally define “legal hold”, there is a strict obligation on parties to take specific and timely steps to identify and preserve documents relating to a dispute which could result in or is already subject to litigation. This early obligation is set out as part of wider disclosure duties within the Civil Procedure Rules (“CPR”), Practice Direction 57AD (“PD57AD”).

The trigger for preservation is when a party “knows that it is or may become a party to proceedings that have been commenced or who knows that it may become a party to proceedings that may be commenced” paragraph 3.1, PD57AD. At that point, a party must do various things including:

1. take reasonable steps to preserve documents in its control that may be relevant to any issue in the proceedings (PD57AD, para 3.1(1)); and
2. undertake any search for documents in a responsible and conscientious manner to fulfil the stated purpose of the search (PD57AD para 3.1(4)).

PD57AD paragraph 4.2 expands on the above to confirm specific steps that are required to comply with the duty. These are that a party must: 

1. suspend relevant document deletion or destruction processes for the duration of the proceedings;
2. send a written notification in any form to relevant employees and former employees of the party where there are reasonable grounds for believing that the employee or former employee may be in possession of disclosable documents which are not also in the party’s possession; and
3. take reasonable steps so that agents or third parties who may hold documents on the party’s behalf do not delete or destroy documents that may be relevant to an issue in the proceedings.

These are immediate “stop the clock” requirements on data and some practical tips on the process for this are set out further below. 

Of course, further steps will need to be taken in due course to collect and review what has been preserved. However, a properly implemented and timely legal hold ensures that the first stage of document preservation is completed well ahead of this. This should help enormously when the collection and extraction processes begin. 

Scope and Nature of the duty

The definition of “document” for disclosure purposes in English litigation is “anything in which information of any description is recorded.” (CPR, rule 31.4).

This is understandably broad and includes all types and formats of data and storage (electronic and physical), including metadata. The enormous range and quantities of media and data, particularly the proliferation of electronic data and applications for communication, most notably platforms such as Slack and Microsoft Teams and messaging services such as WhatsApp can present preservation challenges. This is because such data tends to be spread far and wide. Also due to its often informal nature, it can be difficult to identify and lock down. 

 “Within a party’s control” also has a broad meaning. Under CPR PD57AD, Appendix 1 it includes documents:

1. which are or were in a party’s physical possession;
2. in respect of which a party has or has had a right to possession; or
3. in respect of which a party has or has had a right to inspect or take copies.

As stated above, this isn’t limited to documents that remain within the party’s own possession. In Various Airfinance Leasing Companies and others v Saudi Arabian Airlines Corporation [2021] EWHC 2904 it was confirmed that a party may be deemed to have control over documents that are physically with a third party where the party has a legally enforceable right to obtain access and also where there is a standing or continuing practical arrangement between the parties whereby the third party allows access. To establish this sort of practical arrangement, however, it is generally not enough just to demonstrate that there is a close relationship such as parent and subsidiary or employer and employee. The evidence must be “specific and compelling”.

All of this impacts the content and reach of the legal hold.

Practical steps required

For in-house Counsel the trigger for document preservation and implementing a legal hold may occur months before a Claim is actually served. Therefore, as soon as you become aware of a dispute that may result in litigation (if it hasn’t already been issued at Court), we suggest taking these immediate practical steps: 

1. Get clear on the scope of the data caught by the obligation:
2. Identify the key persons (“custodians”) involved in the dispute/matter. These may include current or former employees, partners, directors and/or third party contractors or agents.
3. Complete initial data-mapping to identify the relevant data sources. These will likely include email, messaging platforms such as Slack or Microsoft Teams and any shared drives or other cloud data. Physical devices (laptops, PCs, tablets and mobile phones, including BYOD) should also be noted.
4. Capture details of the above in written form and if necessary, engage further with any relevant team members or departments to identify any additions or deeper checks required.
5. Notify your IT Department to suspend immediately automatic or other document destruction policies and procedures for the categories and custodians identified in step 1. Request IT to locate and securely store any archived materials and mailboxes for later collection/extraction.
6. Issue a legal hold instruction to all custodians in writing (by email is acceptable) and keep a log of who received it and when they acknowledged it. The wording may differ slightly between current employees and external custodians. The instruction should contain the following elements:
7. Confirmation that urgent action is required.
8. A brief background to the dispute (for context).
9. Identification of the documents or classes of documents/data to be preserved.
10. Notification that the custodians must not delete, destroy or alter any documents (whether in paper or electronic form) that relate to the dispute.
11. Confirmation that the instruction is mandatory and not optional.
12. Confirmation that the hold remains in place until further written notice.
13. A requirement for a response (ideally within 24 hours) from each custodian to confirm that the instruction has been read and understood. Using voting buttons on an email could help with this.
14. Keep a note of the steps you took, as above, and when you took them. It is also useful to obtain details of your organisation’s routine document destruction policies and procedures. This information will be needed for the formal disclosure statement down the line.
15. Diarise a check-point to assess further if the scope of the legal hold instruction needs to be updated and if a further notice needs to be issued.
16. Liaise with your external legal advisors and/or e-disclosure providers about when to start the process of collection and forensic extraction (to preserve metadata), especially in respect of documents from external parties. It would be prudent to arrange this as early as possible if litigation is already underway or if it looks likely to begin.

Risks of getting it wrong

The most risky outcome in a dispute where evidence hasn’t been preserved or legal holds not properly put in place at the right time is that the Court may make adverse inferences if it considers there has been a failure to provide certain documents or evidence (i.e. it may conclude that the missing documents contained evidence that was damaging to that party’s case). 

An explanation as to why the evidence has been lost must be provided in the party’s disclosure forms. If there is no reasonable explanation for the destruction or failure to provide relevant disclosure, adverse costs orders could also be made, such as for indemnity costs. 

A recent example of the Court’s approach to preservation failures may be found in Vardy v Rooney [2022] EWHC 1076 (QB) (well known as the “Wagatha Christie” case). Here credibility was heavily damaged due to destruction of WhatsApp messages and device data by Ms Vardy and her agent, lost phones, lost and deleted WhatsApp chats, a laptop which was disposed of and a deleted Twitter account. The Court drew adverse inferences against Ms Vardy and also ordered costs on an indemnity basis meaning she had to pay 90% of Ms Rooney’s legal costs (a higher proportion than usual).

A punitive costs order was also ordered in Earles v Barclays Bank Plc [2009] EWHC 2500 (Mercantile), where Barclays failed to properly search electronic and email archives and gave disclosure that was incomplete. Such oversight would have started at the legal hold phase and the Court was not sympathetic about the failures. Over 15 years on from that case, the Court’s approach would surely be even stricter now given the pervasiveness of electronic systems and communications which for the most part make up the majority of data and documents for disclosure purposes.

Key takeaways

1. Proactivity when implementing and managing a legal hold is essential. It would be helpful to have a suite of templates to use for the steps above to save time and give you a clear path to follow particularly at a time which will likely be busy and stressful as a dispute crystalises and escalates.
2. Having a defined process in place with effective and timely communication with custodians and your IT Department and good records will make the process easier and will also be protective later on if and when the disclosure stage of the litigation takes place.
3. Although a thorough approach is needed at the preservation stage, this does not mean that all data that has been identified and preserved will actually be disclosed in the dispute. The huge quantities in most cases means that would likely not be proportionate. Thankfully disclosure regimes under the CPR have evolved to take account of this. But it is important to be aware that a well-executed legal hold is foundational and will set the tone for the wider disclosure phase. Getting ahead as early as possible is advisable.