Hmm. First, verify the definition of "ALL data" with your lawyers, as normally they would want to keep only the most recent backup for when legal hold was issued - which technically contains "ALL data" - for example, this backup will allow them to search all mailboxes in the backup of Exchange for example, if that's what they are after.
If they confirm "ALL data" is really is *all existing backups*, then to be on a safe side I recommend you make a copy of ALL backup files you have in the repository, so that they are not impacted by retention. This way you will do exactly what you've been told to do - and your only personal goal here is to not get yourself in trouble. Making a copy of all backups is best and safest, because depending on how long the hold will be, just bumping those retention values to the maximum (I believe it is 99 in 9.0) will not cut it.
Now, any backups that are made AFTER legal hold was declared are normally not a subject to hold for obvious reasons - as everyone who might have been engaged in wrongdoing is aware of the case at this point. If for whatever reason this is different in your case, then I guess your and opposing lawyers will need to agree on frequency of backups that are to be retained (for example, weekly) - because you don't have unlimited storage space, nor our software allows keeping more than 99 daily backup. Until they agree, just bump daily counter to 99, and this will give you almost 3 months of time.
As a rule of thumb, talk to lawyers more and confirm everything you are about to do in written to safeguard yourself. Also, in my experience, both lawyer teams are actually quite ready to work together closely - it's they job anyway to move the case forward. So, don't be afraid of "technical issues" with complying - just explain them to your lawyers, and they will resolve those with the opposing counsel quickly.