Can records under a litigation hold be licensed or shared?

Can records under a litigation hold be licensed?

Not without written sign-off from the company's own counsel, and often not at all while the hold is active. A litigation hold (also called a legal hold) is an instruction to preserve records that may matter to a dispute, investigation or audit. Licensing is a different act from preserving: it copies and transfers material to a third party, and counsel must decide whether that is compatible with the hold, the dispute and any confidentiality duties. This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

In practice the safe default for a referral partner is simple. If a hold exists, the held records are out of scope until counsel says otherwise in writing, and the rest of the company's records can still be assessed.

What a litigation hold is, and what it is not

A hold is issued by counsel, usually through a written notice to custodians and IT, once litigation or an investigation is reasonably anticipated. It suspends normal deletion for the named categories, people and date ranges.

Separately, a company's own promises to customers about how their data is used can limit licensing; the FTC staff post on confidentiality commitments explains why quietly using customer data for undisclosed purposes such as model training can be a problem. A hold does not by itself forbid every use of the records. It also does not make them licensable. The hold, the retention schedule and the contract terms are three separate gates, and all three have to be clear.

Situations a CFO or partner will actually meet

The hold check: three questions before an introduction

1. Is any hold, preservation notice or investigation open today, and who in the company can confirm that?
2. Which systems, people and years does it cover, and can those be excluded cleanly from the inventory?
3. Has counsel agreed in writing that the remaining scope can be licensed?

If question 1 is unanswered, pause. Do not guess. A fractional CFO is often the person who knows whether outside counsel is currently engaged on a matter, which makes the question natural to ask during a board prep or close call.

How exclusions work in a licensing scope

Scope is agreed between the company and SourceX before anything goes to buyers. The company's data inventory lists each system, its years of history and what can be exported, and categories under a hold are marked out of scope at that stage. Redaction and de-identification requirements are also agreed before any work begins, and data is delivered only after an executed agreement and the company's authorization.

For a partner this means you never decide scope. You flag that a hold may exist; the company and its counsel decide what the inventory contains. The finance workflow assessment guide shows how to talk about records without describing them.

Holds and ordinary deletion

Many cleanups collide with holds. Auto-delete rules in email or chat, ticket archiving and system decommissioning can destroy held material if nobody checks. Before any disposal, run the records disposal checklist. Deleting records that are under a hold can create serious legal problems for the company, which is a counsel question, not a licensing one.

The reverse also holds. Licensing is not a reason to keep records the retention schedule says should be disposed of, and a retention schedule is not a reason to destroy records that have licensing value without a review.

Questions to ask counsel

• Is any hold currently active, and for which matters, custodians and date range?
• Does the hold restrict copying, exporting or transferring held records, or only deletion?
• Do any protective orders, settlement terms or regulator instructions limit disclosure?
• Can the remaining records be licensed once held categories are excluded?
• Who confirms in writing when a hold is released?
• Does the insurance policy require notice to the carrier before a license? The insurance question covers that angle.

How partner rewards work

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. The reward is paid only after the buyer pays and SourceX receives its fee; an introduction, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed.

When to stop

A hold is a pause signal, not a disqualifier. Walk away from the introduction if the sponsor refuses to involve counsel, if the held records are most of the company's history, or if a court, trustee or assignee controls the assets and has not been involved. A company that fails today can qualify later.

Next step

Add the three hold questions to your intake notes, check the fractional CFO referral page and use the company fit checker for a first screen against who qualifies. When a company clears, register as a partner and introduce it.