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December Edition
View previous articlesDeveloping Retention Policies
With the implementation of the updated Federal Rules of Civil Procedure on December 1, 2006, the importance of having properly defined and enforced retention policies has reached a new level. Companies now face the critical task of identifying and managing all media archives within a properly defined period in order to avoid liability. Failure to do this can open the company up to unnecessary litigation simply for holding data that falls outside of its retention policy. Despite the importance of this fact, it would not be an exaggeration to state that as many as 55% of companies in this country do not have a defined and cohesive retention policy for documents and email. (TMC Net 2004 Survey on Workplace E-Mail) During litigation, this can cause huge additional costs and expose a company to additional liability, all because documents were kept too long or deleted improperly. With this in mind, what do you need to know, and what steps should your company take to define and institute a proper retention policy?
A document retention policy provides for the systematic review, retention and destruction of documents received or created in the course of business. Document retention policies will identify documents that need to be maintained and contain guidelines for how long certain documents should be kept and how they should be destroyed. Retention policies include many different types of data, not the least of which are emails and other types of electronically stored information (ESI). ESI is not just found on laptops and desktop computers; ESI includes instant messaging programs, websites, voicemail, cell phones, data recorders, PDA's & Blackberry devices, flash drives, and the list continues to grow.
EVERY company should have a formal document retention policy, and this policy must be actively enforced. When a company or business is on notice of pending litigation, it is required to implement a "Litigation Hold" to retain any information or documents that the organization reasonably believes are discoverable in the anticipated litigation. Failure to properly implement such a hold can result in large damage claims for the opposing part, as evidenced by the landmark spoliation ruling in Zubulake (Zubulake v. UBS Warburg ("Zubulake V"), 2004 U.S. Dist. LEXIS 13574 (July 20, 2004). Morgan Stanley faced a $1.4 billion award in compensatory and punitive damages stemming from its lack of knowledge about the location of its discoverable information ( Coleman (Parent) Holdings v. Morgan Stanley, 2005 Extra LEXIS 94 (Fla Cir. Ct. Mar. 23, 2005) . Likewise, a company may have email or other electronic records that were excluded by an under-inclusive preservation order, thus opening up the entire catalog of archived electronic records to scrutiny by the courts. Sanctions may be imposed where a party has not only acted in bad faith or gross negligence, but also through ordinary negligence (Residential Funding Corp. v. DeGeorge Fin. Corp. 306 F.3d 99).
Outside of industry regulations and litigation hold requirements, a company only needs to keep electronic information for as long as is necessary for business purposes, but no longer than that. A well-developed retention policy can also serve as a tool to prepare for litigation, providing both in-house and outside counsel with a roadmap for finding information or documents in case of document requests.
A company's retention policy is only as effective as its implementation
Retention policy must receive buy-in at the top management level and be enforced down through the organization.
- Retention policies should be easy to follow & should include periodic audits.
- Retention policies must also be renewed every few years, to allow for adjustments in company operations and changes in technology.
- Policies must recognize and address that different people store information in different
ways.
- Hard drive
- Network drive
- Blackberry/PDA
- Archived email folders
- Retention policies should explicitly spell out how backup tapes are handled and which ones are necessary for continuing archival.
- In some cases you may have to adjust retention polices to avoid archiving tapes that are not needed and serve no useful purpose.
If a company is to develop a functional retention policy, then it must know where all of its information and documents are kept and how that information is stored, including: names of custodians and types of servers and backup tapes used. And in the case of backup tapes, it's important to catalog and manage your existing tape backup systems and to know the data that exists on each tape and when it was created, and eMag's proprietary MM/TMS software is an effective tool in helping companies to organize and catalog their backup tapes, as well as defining media policies and implementing litigation holds.
The updated Rules of Civil Procedure have shifted the playing field, creating new issues for companies to consider, making it more important than ever to create and enforce existing retention policies to avoid incurring undue burdens. Contact us today if you'd like for eMag to consult with you on a new or existing retention policy.
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