E-discovery: How a records management policy can save you time and money

A centralized information management strategy promotes accountability and compliance

Electronic information is being generated at an astounding pace. Faced with a new landscape that boasts mountains of digital data, some companies, perhaps daunted by the prospect of conquering this Everest, have been slow to implement records management policies. These policies are not one-size-fits-all. However, all well-designed records management policies offer at least three benefits for any company:

  1. They centralize and organize enterprise information
  2. They provide accountability
  3. They promote compliance with the law

The benefits are realized immediately and will save a business substantial amounts of time and money.

Of course, the decision to implement or improve a records management policy is not always an easy one. Designing a records management policy from scratch requires an up-front investment, often in the six-figure range, in the proper technological infrastructure and, at minimum, one full-time staff member qualified to serve as the company’s records manager. This outlay, though significant, should not serve as a deterrent because in the long run, the savings and efficiency resulting from the program will make the upfront cost appear nominal.

Centralization and organization of enterprise information

A records management policy that facilitates the administration and consolidation of information will benefit more than e-discovery and litigation. Knowing in advance where things are and whom to contact saves time and helps a company’s bottom line. Also, a records management policy helps reduce data storage costs by creating an economy of storage that ensures that only appropriate documents are retained. Therefore, even for purely internal matters, having a records management policy in place is a sound business decision.

The advantages of a records management system grow if a company becomes involved in a lawsuit or is the subject of an investigation. Being able to locate relevant information quickly reduces discovery costs in two ways.

  1. It allows for effective collaboration between in-house and outside counsel when fashioning discovery plans
  2. It decreases the amount of time it takes to produce documents, which will shield the company from rising e-discovery costs 

If you’ve ever been involved in litigation at a company that did not have a records policy, you know the benefits of having one. Allowing employees to store data and information just about anywhere—on their PC, laptop, iPad, in their office, down the hall, in a storage room—can make for a chaotic and costly document collection. There is great risk that something relevant may be overlooked. And in a legal world that increasingly sees litigation about litigation, (i.e., extensive motion practice on e-discovery issues that are not central to the merits of the case), it is prudent to be able to quickly and cost effectively locate records relevant to a litigation.

Accountability

Records management policies should designate custodians to serve as gatekeepers of information. Custodians should make sure that only authorized personnel have access to documents. Although this buffer is not a time-saving mechanism, it fosters a culture of accountability and aids in the proper management of information. In particular, it adds a layer of security, assigns responsibility for certain information and prevents custodians from corrupting electronic data, either willfully or inadvertently. Some may find this short-term inefficiency hard to swallow, but by reducing the probability of costly mistakes, this element will generate long-term savings.

Compliance with the law

Perhaps most importantly, a records management policy promotes compliance with burgeoning statutory and regulatory retention requirements. Increasingly, companies have a legal obligation to preserve records for extended periods of time. For instance, the Occupational Safety and Health Act requires certain employers to retain medical records and environmental monitoring records for periods of 30 and 40 years, respectively. A reasonable records management policy helps ensure compliance with these kinds of legal obligations.

Disorganization, by contrast, hinders the ability to find documents, which in turn can lead to severe penalties, including adverse inferences, monetary sanctions and even criminal liability. However, a party can avoid these penalties if it disposed of documents in accordance with a reasonable document destruction policy. Rule 37(e) of the Federal Rules of Civil Procedure indicates that absent exceptional circumstances, a court cannot impose sanctions where a party’s failure to provide electronic information was the result “of the routine, good-faith operation of an electronic information system.” In addition, disposing of documents in accordance with a record management policy reduces the possibility that a company will retain records that it has no obligation to keep, creating the possibility that such records would need to be produced for a litigation or investigation. 

Conclusion

Overlooking the importance of having a record management policy places an organization at risk, increases its record storage costs and limits its ability to be litigation-ready. Knowing what documents you have, where they are stored and how to retrieve them efficiently is a necessity for any in-house lawyer.

Contributing Author

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James Bernard

James L. Bernard is a Partner in the Litigation Practice Group at Stroock & Stroock & Lavan LLP. His practice covers a range of complex...

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Michael Quartararo

Michael Quartararo is the Director of Litigation Support Services at Stroock & Stroock & Lavan LLP, an adjunct instructor at Bryan University's E-Discovery Program, and...

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Jason Vinokur

Jason S. Vinokur is an associate in Stroock's Litigation Practice Group.

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