To survive in today’s fast-paced business climate it is necessary to have open communication and teamwork between departments. Everyone in a company must consistently work together to achieve the short — and long-term goals of the business. This is valid for anything from planning a budget to discussing strategy. But it is imperative when evaluating and implementing a document- retention policy.

For a company to deploy an effective document-retention policy members from the legal department information technology (“IT”) professionals and members from business operations must each come together. Without cooperative teamwork a corporate policy could be rendered inadequate. It could cause serious problems. It could cost millions of dollars.

Skeptical? Don’t be. Here’s an example of the possible negative implications if a team is not on the same page –– and the millions of dollars it can cost a company. In 2002 Fluor Daniel Inc. received a subpoena to turn over all the e-mails of 37 of its employees who were directly working with the company Murphy Oil Soap USA Inc.1 It was the soap company’s policy to retain backup files of its e-mail communications for a period of 45 days. That policy however had not been enforced.

The result? Fluor Daniel was required to turn over 93 back-up tapes holding an exorbitant amount of information — which was considerably more than the court required. In all it included 2325000 e-mails from 600 employees. Had it enforced and followed its own policy the situation could easily have been avoided. Fluor Daniel could have not only saved the money but could have saved time and embarrassment. Fluor Daniel is not the only company to be hit with sanctions and major litigation costs due to failure to follow a document-retention policy. It happens frequently. Cooperation and coordination between legal IT and business operations are essential to making these company policies work.

THE ROLE OF “IT”
With so much emphasis today on digital information IT departments are asked to play an increasingly important role every day. Gone are the days of housing boxes full of paper files in a warehouse. Those boxes have been replaced with terabytes2 of information stored on much more efficient compact file servers. Today e-mail communication is more efficient and timely than typewritten letters and photocopied memos.

But the transition from all-paper files to electronic storage of data has created a lag in effective retention policies. One e-mail can begin a chain of thousands of related communications –– mostly redundant and irrelevant. Without a well-trained IT department managing implementation the organization and maintenance of this data becomes a nightmare.

Electronic data extends beyond e-mails. A scanned copy of a paper loan application is considered legally binding. Any information saved on a hard drive may be considered relevant to a potential litigation case. Many employees also have laptops and PDAs that contain sensitive or important information. The ease of technology brings potential headaches when maintaining digital information. If your company’s data is managed poorly this may increase costs and risks and hinder operational performance. To bridge this gap business legal and IT departments must together address these challenges.

KNOWING THE LAW
How can an IT department employee know what is a relevant document how long it should be kept and know when it may be disposed? This is where the legal department enters the picture. The legal department’s advisory role with document retention is essential to achieve the correct company policy on this subject. It knows what the company would be required to turn over in the event of litigation and knows the proper policies on how long to keep employee and customer data. Knowing when documents can be deleted is critical as removing irrelevant data can save space and increase efficiency. If documents are not properly disposed a data breach could occur potentially crippling a company.

Large well-known companies and their attorneys have received sanctions and fines for mishandling their company’s electronic records. Even when documents have not been mishandled it can be costly to implement appropriate litigation holds. Because of this a company’s emphasis should be placed on preventive measures. A company’s best practices should be instituted before litigation or a data breach occurs. If the company’s policy is sound a secure company can avoid having these problems and thus minimize the potential damage.

COMPLIANCE ON THE FRONT LINES
The lack of compliance with existing records-retention policies and the failure to update these policies cause serious issues for companies and counsel. There is a large training gap in many companies. Because of this some employees keep records or e-mails indefinitely while other employees delete everything. A typical business is likely to be keeping thousands of boxes of old paper files in off-site storage hundreds of back-up tapes and terabytes of electronically-stored information (e-mails voice mails text messages and office productivity files) on their networks. The direct impact is:

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