Saving paper records may be more expensive than you think

It can take $143.49 to destroy a box of records.

A paper record storage vendor argued that for the average cost of imaging a carton of inactive documents, you could store that same carton with a records management company for roughly 40 years.

I think this is misleading. Although actual storage fees are often low, they may comprise a very small portion of the total costs. Storing paper records with offsite records management storage vendors looks inexpensive, but companies are increasingly finding otherwise.

Let’s look at an example taken from a quotation one of our clients asked us to review from a storage vendor. Most paper record storage is charged per cubic foot. A standard legal or letter carton is 1.2 cubic feet, and at a monthly storage cost of 19 cents per cubic foot  each month, storing 1,000 cartons for three years would cost $8,208.

We are not done. We also need to include fees for:

  • The initial move ($3,564)
  • Initial move labor ($411)
  • Fuel surcharges (about $200)
  • Receiving and entering ($2,052)
  • Monthly administrative fees ($2,260)

When it is time to get rid of the boxes, there are additional charges for destruction ($2,484) or permanent withdrawal ($3,099).

In this example, storing 1,000 boxes for three years and then disposing them would cost $8,208 for the actual storage, but a whopping $10,971 in additional fees. These prices include box level tracking and management only, and do not include any file level tracking or typical charges related to accessing these records, such as retrieval, refile, pickup, delivery and handling fees, which can add up quickly.

Probably most onerous are the withdrawal and destruction fees, sometimes referred to as “hostage fees.” We know of one case where a company had 126 boxes at an offsite storage vendor and were quoted $14,300 to have their boxes destroyed, which works out to $143.49 per 1.2 cubic foot box. Often companies give up and simply keep paying the lesser monthly storage fees.

So what is a company to do?

First, avoid storing paper in the first place. More than 70 percent of paper records are copies of documents initially created or received electronically. Paper records cost between 20 to 100 times more to store and manage than their electronic counterparts. The default storage should be electronic, with paper storage reserved for records that are created and exist exclusively on paper.

Next, evaluate imaging for those paper documents you would otherwise send to storage. Imaging does not make sense in all cases, but often it has a lower, long-term total cost, especially when the rate of retrieval is high or if there is any likelihood that some of the documents may be accessed for a discovery action.

Prices do vary considerably among vendors and these can be negotiated. When you do work with an offsite storage vendor, carefully review the contract and terms. Get competitive bids. Don’t sign the first agreement your vendor sends you. Perform periodic reviews to ferret out hidden cost increases and to ensure that your monthly bill matches your agreement.

Track what you put in boxes, where these boxes are and when the records can be compliantly deleted. One company had thousands of boxes in storage, with no real idea what they contained, and was therefore afraid to get rid of any of them. Don’t get caught in this trap.

Finally, consider a paper remediation project. In our analyses of organizations’ offsite paper stores, we often find companies are saving and paying for  many more boxes of paper than required. Put a project together to retrieve and defensibly delete older paper. Don’t get buried under a mountain of paper.

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Mark Diamond

Mark Diamond, Founder & CEO of Contoural, Inc., is a regular contributor to Inside Counsel on Litigation Readiness and Records Information Management. You can e-mail...

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