Software companies
Records under legal hold: can they be licensed?
By SourceX Editorial · Reviewed by Noah Loul ·
Short answer
Records under legal hold must be preserved exactly as they are, so the originals cannot be altered, moved or deleted for a licensing project. Whether copies of held records can be licensed is a decision for litigation counsel, and the usual first answer is to exclude held records from the package or defer them until the hold is released.
Key takeaways
- A legal hold governs preservation: originals and their metadata stay untouched while the hold is in place.
- Preparation steps such as redaction and de-identification change records, so they may only ever run on copies.
- Counsel decides whether copies of held records can be licensed; excluding or deferring them is the common default.
- Map each hold's custodians, systems and dates against the proposed package before scoping anything.
Can records under legal hold be licensed?#
Records under legal hold can be licensed only if litigation counsel approves using copies, and only while the originals stay preserved exactly as they are. A hold exists to protect potential evidence, so nothing done for a licensing project may change, delete, move or degrade the held records or their metadata.
In practice, most companies exclude held records from a first licensing package or defer them until the hold is released. A typical hold is narrower than the whole company, covering certain people, systems and periods, so a package can often proceed around it.
The question usually arises in one of two ways: a hold already exists when licensing is first discussed, or a dispute starts after scoping has begun. Both are handled the same way, by mapping the hold before deciding anything about the package.
What a legal hold requires of the company#
A legal hold requires the company to preserve records that may be relevant to litigation or an investigation once that matter is reasonably anticipated. The hold notice usually names custodians, systems, date ranges and subject matter, and it suspends routine deletion for anything in scope.
Check how each system enforces the hold, because tools behave differently. Slack's Enterprise legal hold feature saves messages and files in a held conversation regardless of retention settings, even if members edit or delete them. Zendesk ticket deletion schedules, by contrast, keep deleting every matching archived ticket and deleted tickets cannot be restored, so a schedule that touches held tickets must be paused manually. Zoom's setting to delete cloud recordings after a set number of days works the same way and needs the same check.
Failing to preserve can lead to court sanctions for spoliation, which is the destruction or alteration of relevant evidence. That risk is why every step of a licensing project, from export to preparation, has to be checked against the hold's scope rather than assumed harmless.
- Custodians: the people whose email, chat and files are in scope.
- Systems: mailboxes, Slack workspaces, helpdesks, Jira projects, repositories and shared drives.
- Date ranges and subject matter that define what is relevant.
- Suspended deletion: retention rules and auto-delete settings turned off for in-scope data.
- Instructions to custodians not to delete, edit or move covered records.
Legal hold, retention policy and licensing compared#
A legal hold, a retention policy and a data license each answer a different question, and the hold overrides the other two for anything inside its scope. Keeping the three separate in your own documents avoids the most common confusion, which is treating a hold as a longer retention period.
| Concept | Question it answers | Who decides | Effect on licensing |
|---|---|---|---|
| Retention policy | How long do we keep this kind of record? | Legal, records management and IT | Sets what history still exists to license |
| Legal hold | What must we preserve unchanged for this matter? | Litigation counsel | Originals are untouchable; copies need counsel approval |
| Protective order | How may documents exchanged in this case be used? | The court and the parties | Documents received in discovery are usually excluded |
| Data license | What may a licensee do with a prepared copy? | The company's authorized signer | Covers only records cleared by the rights review |
Why preparation work collides with a hold#
Preparation work collides with a hold because licensing usually means changing records. De-identification removes names, redaction removes confidential details, deduplication drops repeats and format conversion rewrites files, and each of those would be alteration if it touched an original.
Even a careful export can cause problems. Moving mailboxes to new storage, re-saving attachments or exporting chat with a tool that drops edit history can change metadata. Litigation counsel and IT should agree on export methods, keep a log of what was copied and when, and leave source systems untouched.
There is also a confidentiality question. Held records often include privileged communications with counsel and documents about the dispute itself, and those should not leave the company in any form, whatever happens to the rest of the package.
Decision steps for counsel#
Decision steps for counsel start with mapping each active hold against the proposed licensing package and end with a written decision for every overlap. The goal is a scope nobody has to revisit if the matter escalates.
Revisit the map before delivery. New holds can arrive after scoping, and a package approved earlier may need to be narrowed before anything leaves the company.
- List active holds, open investigations and reasonably anticipated disputes.
- For each, record custodians, systems, date ranges and subject matter.
- Map the overlap with the proposed package by system and by period.
- Choose a treatment for each overlap: exclude, defer until release, or approve copies.
- If copies are approved, confirm the export method and keep originals untouched.
- Record the decision and its basis in the package's release documentation.
Common overlaps and how they are usually treated#
Common overlaps between holds and licensing packages fall into a few patterns. The treatments below are typical starting points for discussion with counsel, not rules, and the facts of each matter decide.
| Overlap | Typical starting point |
|---|---|
| Hold covers one customer dispute | Exclude that customer's tickets, emails and related Jira issues |
| Hold covers certain custodians | Exclude their mailboxes and direct messages; review shared channels they used |
| Hold covers an employment matter | Exclude HR systems, HR channels and the employee's records |
| Documents received from another party in discovery | Exclude entirely; protective orders usually limit their use |
| Hold has been released by counsel | Records return to normal retention and the standard rights review |
Illustrative: a hold arrives during a licensing review#
Illustrative: a fictional field inspection software company is scoping a license of its Jira and GitHub history when a former reseller sends a demand letter. Counsel issues a hold covering reseller-related email, two Slack channels, the reseller's helpdesk tickets and one Jira project used for the reseller integration.
The general counsel maps the hold against the package. The reseller Jira project and its linked repository are excluded, and the Slack channels were never in scope. The rest of the engineering history is exported as copies with an export log, and the originals stay in place under the hold.
When the dispute later settles and counsel releases the hold, the excluded project returns to normal retention. Whether it joins a future package is a separate rights decision.
How SourceX handles legal holds in a transaction#
SourceX deals with legal holds during Rights, the second stage of the SourceX five-step transaction: Supply, Rights, Preparation, Approval, Delivery. Suppliers are asked about holds, investigations and disputes, and held records stay out unless the supplier's counsel approves otherwise in writing.
Preparation runs only on exported copies, and SourceX does not alter a supplier's original systems. The release authorization in the SourceX Evidence Packet notes any exclusion made because of a hold, so the supplier can show later exactly what was left out and why.
Frequently asked questions
Does a legal hold stop routine deletion?
Yes, for records in its scope. Retention rules and auto-delete settings that would remove covered records are usually suspended until counsel releases the hold. Records outside the scope continue under the normal retention policy, which is why a precise scope matters for both preservation and licensing.
Can held records be licensed after the hold is released?
Possibly. Once counsel releases the hold, the records return to normal retention and can go through the same rights review as anything else. The underlying dispute may still affect the decision, for example if the records include settlement terms or confidential information about the other party.
What if a hold starts after records were delivered?
Delivered copies are already with the licensee, but the hold protects the originals, so preserve them as usual. Tell counsel what was delivered and when, keep the export log and delivery records, and check whether the license lets you pause further deliveries that fall in scope.
Could a licensed copy become evidence?
It could be relevant in some matters, which is one reason counsel should approve any use of held records. Keep complete records of what was delivered, the preparation applied and the license terms, so the company can explain exactly what left and in what form.
Who should sign off on scoping around a hold?
Litigation counsel, in-house or outside, should approve any treatment of held records. The general counsel then confirms the final package scope, and the company's authorized signer approves the license. IT should confirm that export methods do not change source metadata.
Should we tell the licensee about a hold?
Usually only as far as needed. A licensee needs to know which records are excluded and that scope may narrow, not the details of the dispute. Confidentiality around the matter itself is a question for litigation counsel, who should approve any wording used in the license or delivery notes.
Sources
- When a Slack legal hold is in place, messages and files in the conversation are saved regardless of retention settings, even if members edit or delete content. Source
- Zendesk ticket deletion schedules keep deleting matching archived tickets, and deleted tickets cannot be restored. Source
- Zoom lets admins and users enable deletion of cloud recordings after a specified number of days. Source
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