The article discussed "litigation holds" and the need to preserve information relevant to a lawsuit; as well as the potential penalties for failing to do so. Of particular note is the fact that without a proper litigation hold, businesses could be on the hook for destroying evidence, even if the destruction was unintentional. In addition to preventing the unintentional destruction of information relevant to a lawsuit, a robust and effective record retention policy is essential for businesses for a number of reasons.
First, an effective record retention policy will categorize information, indicate where that information is stored, and for how long it must be stored before it can be destroyed. This "retention schedule" allows businesses to quickly identify the information that may be relevant to a lawsuit, know where the information is stored and begin the process of retaining it. This is particularly relevant to electronic information that may be subject to regular purges. An effective record retention policy will hold only the information that may be relevant to the lawsuit, and allow regularly scheduled destructions of irrelevant information to continue.
Second, certain business information must be retained for specific periods of time, but after that time, the records can be destroyed. Many businesses keep records for much longer than they are required because they do not have a retention schedule, or they do not properly follow the one they have. This means that if a lawsuit comes down the pike and the business still has the information, the business must hold and disclose that information, even though technically the business was not required to keep that information. If the business had followed a retention policy, the information would have already been destroyed in accordance with the law and the policy.
Further, the more records a business continues to create and retain, the harder it will be to identify relevant information in the event of a lawsuit, or for any other business or legal reason. An effective record retention policy will make it easier to find information and will prevent a business from accumulating and paying for storage of massive amounts of records that are not required to be retained.
Determining the schedule of appropriate legal retention periods involves consideration of federal and state regulatory requirements, contractual obligations, statutes of limitations, and business needs. Each category of information a business creates could have a different retention requirement, making a retention schedule that clearly identifies those varying retention periods even more crucial. Implementation of a record policy involves training and educating staff, consistent monitoring, and regular updates to the policy and retention schedule to ensure the legal and business requirements are up to date.
If you do not have a record retention policy or have an outdated policy, you should consider putting one in place or updating the one you have. Putting in the time and effort in advance has many advantages, including avoiding feeling deflated after being hit with a lawsuit.