Records Management and
Document Retention
Stephanie L. Chandler, Esq.
Jackson Walker L.L.P.
North San Antonio
Chamber of Commerce
CFO Forum
Electronic and Paper Documents Are
Generated and Stored Impact All
Aspects of Your Business
• Litigation Avoidance/Litigation Expense -- data leaks, scope of
documents retained
• Employees -- monitoring employee activities; performance
enhancement
• Marketing -- pricing and strategy discussions
• IT Systems -- storage; systems design
Business Risk
Identify documents
that are important and
should be preserved
in order to
protect the business
in the event of litigation,
audit, employee disputes
Legal Compliance
Federal and state laws
contain recordkeeping
requirements
Document Retention Policies
• Why????
– Save valuable computer and physical storage space
– Reduces volume of stored documents and data
– Avoiding spoliation claims
• In re Prudential Ins. Co. of Am. Sales Practices Litigation: Prudential had “no
record of any written manual that would evidence that Prudential possesses
a clear and unequivocal document preservation policy capable of retention
by Prudential employees and available for easy reference.”
• Linnen v. A.H. Robins: The Defendant sent emails and voicemails to all of its
employees advising them to save all relevant documents. The Defendant,
however, failed to stop its back-up tapes from being recycled or taped-over.
Jury instructed to assume smoking gun.
• Default or dismissal possible.
– Lowering Litigation Costs – be sure your policies address
both Hard Copy and Electronic Files
Document Retention Policies
• Why????
– Removing “Smoking Guns”
• Prior to Litigation: Arthur Anderson LLP v. U.S., 544 U.S. 696
(2005): that “under ordinary circumstances, it is not wrongful
for a manager to instruct his employees to comply with a
valid document retention policy, even though the policy, in
part, is created to keep certain information from others,
including the govt.”
• After Litigation Filed: Zubulake v. UBS Warburg LLC:
Counsel failed to warn its client to not delete or recycle back-
up dates of technological data. The Court ordered the
Defendant to bear the substantial cost of restoring the back-
up tapes.
– Fines - $2.75M – Philip Morris USA
Document Retention Policies:
Protecting Trade Secrets
• Why????
– Bolstering trade secret protections
• How are electronic and hard copy documents
containing trade secrets retained?
• Who has access?
– Your trade secrets could lose legal
protection by failure to electronically
secure the information/manage the
distribution of documents
Document Retention Policies
• What Should be Included:
– Lewy v. Remington Arms Co.
• whether the policy is reasonable considering the facts and
circumstances surrounding the relevant documents
• whether the destroyed documents are relevant to pending
or probable lawsuits; and
• whether the policy was instituted in bad faith
• Consistency is the Key
• Company wide – this is not just an
accounting/finance or
legal department issue
Retention Policies
• Electronic documents
– Be aware of all locations where electronic
documents reside
• CEO’s hard drive?
• PDA’s
• Extranets?
• Telephone systems – especially VOIP
Retention Policies
• Weigh cost and logistics of saving
valuable electronic and hard copy data
– Designing the right policy from the
beginning is key
• Legal advice is highly recommended
– Incorporating the right technology from
the start to control costs
• Hiring the right IT employee/consultant
Document Retention Policies
• Review all applicable law [See Handout]
• Take into account statute of limitations
• Clearly describe the class of documents to which
the policy will apply (i.e. drafts, finals; backup
tapes)
• Specify the retention period for each class of
documents
• Create procedures detailing how the program
will be implemented and enforced
• Identify the staffer responsible for policing and
maintaining the program; Train them
Document Retention Policies:
When Litigation Arises
• Allow alternatives to, or even suspension of, document-
destruction procedures when a duty to preserve arises
• The “Litigation Hold”
– Prevent Your System from Automatically Deleting Data
– Stop the Automatic Recycling of Backup Tapes
– Stop the Automatic Recycling of Personal Computers
• Reissue the “Litigation Hold” – New Employees!
• Identify Key Players/Employees – Special Notice
• Consider Forensic Images of PC’s
• Designate one IT person who will be your Companies
Federal Rule of Civil Procedure 30(b)(6) deposition
witness (document preservation, chain of custody, etc.)
Handout on
Document Retention Policies
My example
ABA - form of Document Retention Policy
available at http://www.abanet.org/lpm/lpt/
articles/sampledocretentionpolicy.pdf
Arthur Andersen Document Retention Policy
Employees Use of Technology
and Employer’s Response
• 76% of Employers monitor web activity
(blogging, chat and message boards,
porn/gambling sites)
• 55% of Employers retain and review email
messages
• 36% of Employers track content/keystrokes/
time spent at keyboard
Source: 2005 Electronic Monitoring & Surveillance Survey by
American Management Association and The ePolicy institute
Software Usage Policies
• The BSA* and SIIA** are not your friends
– May 2006 – Losses from piracy - $34B
– 35% of all copies of PC software installed worldwide in 2005
pirated
– They want their money!!!
• Gartner:
– 40 percent of all medium-to-large U.S. businesses will face an
external software audit by the end of 2006
– less than 25 percent of public companies have mature software
asset management processes
• What to do: This is a Legal Matter, not an IT matter;
Educate your C-levels
* BSA: Business Software Alliance (Membership Examples: Microsoft, Cisco, Symantec)
**SIIA: Software and Information Industry Association
(Membership Examples: Adobe, Intuit, McAfee )
Stephanie L. Chandler, Esq.
Jackson Walker L.L.P.
210.978.7704
112 E. Pecan Street, Suite 2400
San Antonio, Texas 78205
Questions?
www.jw.com
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