A legal hold is an instruction from a company's lawyers that tells particular employees to keep every document that may relate to a lawsuit, together with the system changes that stop those documents from being deleted. It is also called a litigation hold. It is usually run from enterprise legal management (ELM) software, and it is the first step of e-discovery.
Why is it needed? In a lawsuit in the United States, each side must hand over its relevant evidence to the other side. The duty to keep that evidence starts as soon as a company can reasonably expect a lawsuit, often before the case is filed. If relevant emails are deleted after that point, even by an automatic clean-up, the court can punish the company. It can fine the company, or tell the jury to assume that the missing emails would have hurt it.
Take, for example, an IT services company in Noida. A former client in the United States, a chain of furniture shops, writes to say that it will sue over a failed software project. The company's legal team opens a hold that same week. First, it lists the custodians, the people who hold relevant data. These are 38 people: the project managers, the developers who worked on the project, the sales lead and two finance staff. It also lists the systems where their data sits: email, the team chat app, the project tracker and the shared drive.
The hold software sends each custodian a notice. The notice explains, in plain words, what to keep and that nothing about the project may be deleted. Each custodian must click to confirm that they have read it. 36 confirm within two days. The software sends reminders to the other 2, and tells the legal team when they confirm.
A notice alone is not enough, because systems delete data on their own. Say the company's email system deletes messages after 24 months. The hold switches off that deletion for the 38 people. When one of them resigns, the IT team usually wipes the laptop for the next employee. Under the hold, the IT team must first copy the laptop, using endpoint backup. The chat messages are kept in communications archiving.
The hold stays in place until the case ends, which can take years. The software sends the custodians a reminder every three months, and it adds any new person who joins the project's support team. When the case ends, the legal team releases the hold. Normal deletion then starts again, because keeping data for no reason also has costs and risks under data protection law.
Indian courts do not run discovery on the American scale. But Indian companies with clients, offices or listed shares in the United States face American lawsuits, so they run legal holds too.