Litigation Hold in Microsoft 365: Protecting Your Data Effectively

Litigation Hold in Microsoft 365 is an essential feature for organizations that need to preserve critical data for legal, compliance, or regulatory purposes. Whether your organization faces internal investigations, external audits, or potential legal proceedings, understanding how to configure and manage litigation hold ensures that electronically stored information (ESI) remains intact, accessible, and secure.

In this article, we’ll explore the functionality of litigation hold in Microsoft 365, discuss use cases, provide configuration steps, highlight best practices, and explain how IT and legal teams can leverage the platform to maintain data integrity while reducing risks of data loss or non-compliance.

What is Litigation Hold in Microsoft 365?

A litigation hold, also known as a legal hold, is a mechanism designed to preserve all mailbox content, SharePoint Online files, OneDrive for Business documents, and Teams conversations for a specific user or group of users. Unlike standard retention policies, which may delete content after a defined period, litigation hold ensures that all mailbox items, including deleted content, remain recoverable during legal proceedings or ediscovery activities.

In Microsoft 365, litigation hold applies to user mailboxes, shared mailboxes, and can also encompass archive mailboxes, providing comprehensive protection for critical organizational data. This feature is particularly valuable for organizations subject to regulatory frameworks such as GDPR, HIPAA, or SOX, where preserving electronically stored information is mandatory.

Why Organizations Need Litigation Hold

Organizations often face situations where critical data must be preserved to avoid legal repercussions or regulatory penalties. Common scenarios include:

• Pending legal actions: A court may request access to specific mailbox content or SharePoint Online documents.
• Internal investigations: HR or compliance teams need to review Teams conversations or OneDrive for Business files.
• Regulatory audits: Government or industry-specific regulators may require evidence of data retention and compliance.
• Preventing accidental deletion: Active users may inadvertently delete critical emails or documents; litigation hold ensures recoverability.

By leveraging Office 365 litigation hold, organizations reduce the risk of non-compliance and protect sensitive information while maintaining operational efficiency.

Key Components of Litigation Hold in Microsoft 365

1. Mailbox Preservation: Litigation hold in Microsoft 365 preserves all mailbox items, including messages in the deleted items and recoverable items folder.
2. Retention Period Control: Admins can specify a retention period for preserved content, ensuring data is retained for the duration required by legal or regulatory obligations.
3. In-Place Holds: In-place holds allow granular control, targeting specific users, mailboxes, or data types.
4. Audit Trails: Maintain notification logs, dashboards, and compliance center reports to track preserved content.
5. eDiscovery Integration: Litigation hold works seamlessly with core ediscovery and advanced ediscovery tools for streamlined legal requests.
6. Data Scope Coverage: Extend protection to Teams conversations, SharePoint Online, OneDrive for Business, and associated attachments.

Configuring Litigation Hold in Microsoft 365

Configuring litigation hold is a straightforward process in Microsoft 365, though proper planning and documentation are essential.

Step 1: Access Microsoft 365 Admin Center

Navigate to the Microsoft 365 admin center or Exchange admin center (EAC). Here, IT admins can view all user mailboxes, shared mailboxes, and configure hold settings.

Step 2: Identify Custodians

Determine which user accounts or mailbox users require litigation hold based on legal guidance. These custodians are typically individuals involved in legal matters or under investigation.

Step 3: Apply Litigation Hold

Using the admin center, select the mailbox and enable litigation hold. Admins can:

• Set a retention period (or indefinite hold).
• Add optional notes for compliance records.
• Decide whether to notify the user of the hold.

Admins can also use Exchange Online PowerShell to script litigation hold for multiple users, which is particularly useful in large organizations or SaaS environments.

Step 4: Confirm Hold Status

After enabling litigation hold, confirm that the mailbox is active in the compliance center. Verify that mailbox content, archived items, and deleted items are preserved.

Step 5: Monitor and Manage

Regularly review litigation hold configurations, audit logs, and ediscovery dashboards. Adjust retention policies as required and ensure the hold remains in effect throughout legal proceedings.

Best Practices for Litigation Hold in Microsoft 365

Implementing litigation hold correctly ensures compliance, minimizes data loss, and simplifies ediscovery. Key best practices include:

1. Integrate with Core eDiscovery: Link litigation hold with core ediscovery workflows to streamline search and retrieval of electronically stored information.
2. Document Custodian Information: Maintain a record of all custodians under litigation hold, including user mailbox details and mailbox content.
3. Set Appropriate Retention Periods: Define retention periods based on legal requirements and data protection policies.
4. Leverage Automation: Use PowerShell scripts to automate litigation hold for multiple active users, ensuring consistency and efficiency.
5. Include All Relevant Data Sources: Extend holds to Teams conversations, SharePoint Online, OneDrive for Business, and any email account related to the case.
6. Minimize User Impact: Configure litigation hold to avoid disrupting user mailbox access or email communication.
7. Monitor Compliance via Dashboards: Track notifications, recoverable items folders, and audit logs in the compliance center.
8. Combine with Retention Policies: Use retention and in-place holds together to meet corporate and regulatory requirements.
9. Coordinate with Legal Teams: Keep your legal team informed of litigation hold implementation, updates, and termination.

Use Cases for Litigation Hold

Understanding the practical applications of litigation hold in Microsoft 365 helps organizations implement it effectively:

1. Regulatory Compliance

Organizations in finance, healthcare, or government sectors must comply with strict data retention rules. Litigation hold ensures that emails, SharePoint documents, and OneDrive for Business files are preserved for audit purposes.

2. Internal Investigations

HR or compliance teams can review email messages, Teams chats, and document libraries without fear of accidental deletion.

3. Legal Proceedings

When facing litigation, companies can secure ESI and mailbox items for legal review, reducing risk and expediting discovery processes.

4. Data Loss Prevention

Litigation hold acts as a safety net to prevent data loss, even if end-users delete messages or documents. Combined with archiving, it ensures full data protection.

Integrating Litigation Hold with eDiscovery Tools

Microsoft 365 provides robust ediscovery features for managing preserved data. Features include:

• Core eDiscovery: For basic search and export of mailbox items, SharePoint documents, and Teams content.
• Advanced eDiscovery: Offers analytics, ESI management, and case management for complex legal scenarios.
• Compliance Center Dashboards: Monitor litigation hold status, notifications, and recoverable items in real-time.

Integration between litigation hold and ediscovery tools allows legal and IT teams to respond promptly to requests while maintaining secure, auditable records.

Common Considerations and Limitations

While litigation hold in Microsoft 365 is powerful, organizations must be aware of potential limitations:

1. Storage Implications: Mailboxes under litigation hold may grow significantly in size. Plan for archive mailbox usage and storage management.
2. Performance Impact: Large mailbox items may impact Outlook or Exchange Online performance.
3. Compliance Complexity: Ensure alignment with internal policies and external regulations.
4. End-User Awareness: Decide whether to notify users of litigation hold, balancing transparency with legal requirements.
5. Automation Planning: Scripted or automated litigation hold should be carefully monitored to avoid errors in large SaaS environments.

Tips for Efficient Management of Litigation Hold

• Use the Microsoft 365 admin center to view and configure litigation hold.
• Maintain clear documentation for each custodian under hold.
• Use PowerShell for bulk operations and automation.
• Combine retention policies with in-place holds to reduce administrative complexity.
• Regularly audit mailbox content and archiving settings to ensure ongoing compliance.

By following these tips, organizations can manage Office 365 litigation hold efficiently while reducing risks for data protection and compliance breaches.

Licensing Requirements for Litigation Hold in Microsoft 365

Not all Microsoft 365 plans provide access to litigation hold, and understanding licensing requirements is essential to ensure compliance without unexpected costs. Litigation hold is considered an advanced compliance feature, typically included in higher-tier plans.

Plans that include Litigation Hold

• Microsoft 365 and Office 365 Enterprise E3/E5: Litigation hold is fully available in these enterprise-level subscriptions, covering user mailboxes, archive mailboxes, and integration with eDiscovery.
  
  
• Microsoft 365 Business Premium: This plan does not natively include litigation hold. Organizations requiring legal hold should upgrade to Enterprise E3 or add specific compliance licensing.
  
  
• Exchange Online Plan 2: Litigation hold is available, making it a cost-effective option for organizations that need mailbox-level holds but not the full Microsoft 365 suite.
  
  

Plans without Litigation Hold

• Microsoft 365 Business Basic and Standard: These licenses support retention policies but do not offer litigation hold capabilities.
  
  
• Exchange Online Plan 1: Also lacks litigation hold functionality.
  
  

Add-on Licensing Options
Organizations that don’t want to upgrade to E3/E5 can purchase compliance add-ons such as the Microsoft 365 Compliance add-on or Exchange Online Archiving (for certain plans), which may provide litigation hold functionality depending on the licensing bundle.

Key Takeaways for Licensing

• Litigation hold requires at least Exchange Online Plan 2 or an Enterprise-level Microsoft 365 subscription.
  
  
• Business-focused plans (Basic, Standard, Premium) require an upgrade or add-on for litigation hold.
  
  
• Always align licensing decisions with your compliance, legal, and regulatory needs, since failing to provision the correct license can result in gaps in data preservation during audits or legal actions.

Conclusion

Litigation Hold in Microsoft 365 is a critical tool for preserving electronically stored information during legal proceedings, audits, or compliance reviews. It ensures that mailbox content, SharePoint Online documents, Teams conversations, and OneDrive for Business files remain accessible, secure, and compliant with regulatory requirements.

By integrating litigation hold with ediscovery features, automating processes through PowerShell, and maintaining proper retention policies, organizations can reduce data loss, simplify legal hold management, and provide reliable evidence during legal proceedings.

Organizations should coordinate closely with legal teams and compliance officers to implement litigation hold, track notifications, and maintain audit dashboards. With proper planning, automation, and best practices, litigation hold in Microsoft 365 becomes a powerful tool for securing critical corporate data and mitigating risks.

Discover how ne Digital can help your organization implement and manage Litigation Hold in Microsoft 365 effectively, ensuring compliance and data protection: Explore our Microsoft 365 Managed Services.