During the course of my commercial litigation practice, some of the most expensive mistakes I have seen companies make had to do with either the retention or destruction of documents. Modern businesses can generate a huge amount of documents and data, both in paper and electronic form. During litigation, if a company does not have a proper policy for purging old documents and data, the time and expense of the litigation can be significantly higher. Worse, improper destruction of documents during litigation can result in a negative inference against the company that can result in its losing the case. This can happen even if the documents that were destroyed would not have been negative for the company.
With all the potential issues involving documents, you are probably asking what your company should be doing. The answer is that your company needs an strong written document retention policy.
What is a Document?
A long time ago, understanding documents was easy; documents were literally pieces of paper. However, modern businesses need to worry about much more than paper. The Federal Rules of Civil Procedure provide some guidance as to what is considered a document. Rule 34 states, in part, that document production should include: “any designated documents or electronically stored information – including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations – stored in any medium from which information can be obtained either directly or, if necessary, after translation but the responding party into a reasonably usable form.” From a legal perspective, a “document” can include the following:
- Information on physical pieces of paper
- Electronic documents, including Word files, PDF files, Excel files, etc.
- Text messages
- Anything stored on hard drives, backup drives, and in the cloud.
- Anything stored on your employees’ devices (possibly including their personal devices)
This is not intended to be an exhaustive list of documents or sources of documents, but is only meant to illustrate the scope of the document issue. In order to have a comprehensive document retention policy, you need to address all types of documents and all sources of documents.
Elements Of The Document Retention Policy
The following elements are essential to a document retention policy:
- The policy must be written. Due to the amount of information generated, even by small businesses, the policy must be in writing to be effective.
- The policy must be content neutral. You document retention/destruction policy should not depend on the specific content of any particular document.
- The policy must have controls. You need to make sure someone at your company is responsible for implementing and maintaining the policy. If it is not specifically assigned to an individual, it will not be implemented.
- The policy must follow applicable laws. Depending on your business, you may have specific law/regulations that apply to your documents. You need to make sure your policy follows these laws.
- You need to train your employees. When developing your policy, you should also provide training to your employees about how to implement the policy and what you expect from them.
- Controls for litigation. Your policy must have procedures for special circumstances such as litigation.
Depending upon your specific business, there may be additional considerations, and you need to talk with an experienced professional to design an appropriate document retention policy for your business.
Risks without a Document Retention Policy
Without an appropriate document retention policy, you are putting your company at substantial risk. The following are just a few risks that can be mitigated with an appropriate policy:
- Data Security – A document retention policy can not only help you maintain security of your data, it can also help you decide when you can purge old information, thereby reducing the total amount of data you need to secure.
- Litigation – A document retention policy can be critical during litigation. Without a strong policy, data may be lost or erased, with devestating consequences for your business.
- Access To Information – With a strong document retention policy, your business will have easier access to its information. This can save your company a significant amount of money over the long term.
If you do not currently have a document retention policy, you should talk to your attorney about putting one into place.