Electronic Document Retention: Can Your Business Avoid a Legal Disaster?

By Camille A. Miller

In today's computer-savvy workplace, an increasing number of documents are exchanged electronically. Every email, hard drive, and network server leaves a paper-trail that could be disastrous in the event of litigation. The burden of storing every paper and electronic document ever created or received can be enormous. At the same time, the destruction of some documents could put your business at risk for hefty monetary sanctions and irreparably harm your business's reputation.

Knowing Your Legal Duty

In the event that your business is threatened with a lawsuit, the law requires you to preserve all documents which contain information relevant to the suit, as well as all documents which are likely to lead to relevant information. (footnote 1) This preservation of relevant documents can be achieved by placing the documents in a "litigation hold." In a "litigation hold" employees must suspend routine document destruction. This duty includes ensuring that relevant emails are not deleted, backup tapes are not recycled, and hard drives are not reformatted. In addition, it requires employers to implement and/or maintain an organized filing system so that opposing counsel can locate the relevant documents in a reasonable amount of time.

Guidelines for Creating a Litigation Response Plan

To best avoid legal disaster, arm yourself with a strategy, or litigation response plan. A litigation response plan should incorporate the following practices: (footnote 2)

• Assess your current document retention policy's ability to meet your business's needs and comply with the law.

• Collaborate with all departments to assess best practices (Human Resources, IT department, records management personnel, attorneys, senior management).

• Educate key employees about document preservation duties under the law.

• Create electronic copies of active files and ensure all backup tapes are identified and safely maintained.

• Establish a contact person to handle all questions regarding the document retention policy.

• Notify employees quickly when a "litigation hold" is in place and document destruction must be suspended.

• Document all steps taken once you have placed a "litigation hold," including the legal notice given to employees, the distribution list, and any other actions taken with regard to the "litigation hold."

• Monitor compliance.

Your business is much more likely to avoid legal disaster if you formulate a litigation response plan well in advance of litigation. Not only will these steps save you the time and expense of storing unnecessary documents, but they will also go a long way in reducing your potential liability.

Footnote 1: Fed. R. Civ. P. 26

Footnote 2: Whitney Adams & Jeffrey Jacobs, Ghost in the Machine: Legal Developments and Practical Advice in an Age of Electronic Discovery, Association of Corporate Counsel, 2004.