Companies that have existed for any period of time can be overwhelmed by the volume of documents they create. The amount of material and data have grown exponentially in the last few decades with the expansion of electronically stored information (e.g., emails, word documents, Excel spreadsheets, and PowerPoint presentations) that may never be printed but nonetheless are documents the company retains. For that reason, it's important to establish and implement a solid document-retention policy.
A document-retention policy outlines how long documents are kept and when they can be deleted or destroyed. Generally, there is no statutory or common law that establishes a uniform period as to how long documents must be kept. However, there are exceptions for certain regulated industries. For example, SEC-regulated companies must retain emails for three years. In addition, federal employment statutes require that employment records be retained for a certain period of time, the length of which depends on the specific statute.
First, you must examine how long documents and emails will be retained as a general matter – whether it be two, three, or seven years or some other figure – and then recognize exceptions for certain types of records and custodians depending on the industry. While you should retain some documents (e.g., board minutes) forever, most others should have a retention date, after which they can be deleted or shredded. While uniformity and consistency are important considerations, some flexibility may be incorporated into the policy as well.
If your company is ever involved in litigation, you'll be thankful you established and followed a good document-retention policy. As an initial matter, if your organization is sued or reasonably anticipates litigation, it will be required from the moment it receives notice to put a litigation hold on all documents and electronic data, preventing them from being deleted under your document-retention policy. For a thorough discussion on discovery of electronic data and potential sanctions for deleting data after a litigation hold is in place, see John B. v. Goetz, 879 F.Supp.2d 787 (M.D. Tenn. 2010).
Aside from the litigation-hold context, a uniform policy may help in discovery controversies. For example, if you receive a document request, your previously implemented document-retention policy will limit the amount of data that can be searched, saving both time and money. Often, lengthy document retrievals and reviews in the discovery phase are the most expensive portions of litigation. And having a solid document-retention policy can potentially close the door on a discovery dispute if documents were deleted pursuant to policy. (See Campos v. MTD Products, Inc., 2009 WL 2252257, at *12 (M.D. Tenn. July 24, 2009) in which the company didn't retain records of prior lawsuits, so an additional discovery request for such data was denied.)
Conversely, if documents are retained on a haphazard basis – e.g., with some documents in some departments being deleted every three months and other departments retaining every piece of paper or kilobyte of information without limitation – it won't help your cause before an attorney or a judge. In a worst-case scenario, you may get a spoliation or sanction order or an adverse inference instruction to a jury. An email that was kept too long and taken out of context can severely damage a case. However, having a consistent, well-thought-out retention policy allows you to efficiently draw upon documents used for your defense.
On a practical level, space is limited and storage of data is expensive, whether your constraints are boxes and shelves of hard-copy documents or computer-based storage limitations. It is not unusual to read about cases in which the cost of document searches and electronic information retrieval reaches hundreds of thousands of dollars during the discovery process. You simply cannot keep everything that was created by your organization from its origin into perpetuity, nor are you required to do so under the law. As the federal rule puts it, "A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost."
Finally, implementing a thorough document-retention policy is just good business practice for any company to stay organized. Rather than the "I wonder if we still have that?" inquiry that creates blank stares at a meeting, there will be a consistent, reasoned approach to how long items are retained. Once you developed your policy, it needs to be communicated to all employees and implemented uniformly. If your organization needs to develop a document-retention policy or have its current policy reviewed, please feel free to contact our firm for assistance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
