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Records Retention - Do You Have a Plan?

For many small businesses, deciding what documents to keep and for how long is a function of storage capacity. As servers and filing rooms reach capacity, businesses look for documents to discard.

This is not the way to manage your documents.

Develop a plan for document retention and stick with it. Too often, small businesses that are stretched because of a lack of resources have difficulty honoring a well-intentioned document retention policy in actual practice. Details of a policy are often less important than sticking with it.

Lawyers view a document retention policy in terms of its effect on potential litigation as well as various government requirements to hold on to certain documents for tax or compliance purposes with agencies, such as OSHA and the EPA. But perhaps the most important reason to have a policy is because a business runs more efficiently when it saves the right documents and can access them quickly.

And if a business does find itself in litigation, it may be important to have a document retention policy. Your decision to destroy a document usually can be defended as long as you did so as part of a policy you followed consistently. In most cases, courts will look at the reasonableness of a plan rather than black letter requirements.

If you don’t have a document retention policy, or have one and haven’t reviewed it recently, ask these questions:

  • Who is in charge? Start by designating one person in your organization to spearhead the development and implementation of a plan. This should be a senior manager who has a big-picture understanding of the business and the authority to push employees to follow the plan. This is not a one-time responsibility. This person must monitor the plan to ensure daily compliance and periodically review it to adjust for changes to the business.
  • Who are the stakeholders? Assemble a committee of key managers to make recommendations and assess records in their areas of the business, such as HR, sales, financial and IT. Obviously, the IT manager will be a key member of this group, but don’t let IT drive the decision-making based on storage capacity or other technical factors. Record retention should be a business policy that is enabled by technology.
  • Do you have a process? Develop filing protocols. Especially with electronic records, it’s important to develop a filing process that is followed consistently. Are letters filed under “ltr” or “letter?” When you have tens of thousands of documents stashed in thousands of folders on a hard drive, finding the one document you need from five years ago can make retrieval a frustrating task if everyone doesn’t follow the same procedures. Businesses can fall into chaos because a clerk who left is the only one who understood how records were filed. Don’t let this happen to your business. Remember, your primary reason for holding on to documents is that they are useful.
  • What records do you have? What types of records does your business create or possess? Customer data, sales records, financial information, government inspections and contracts with vendors are just a few of the possible categories. Determine what you have, whether there are statutory requirements for retention, how they currently are filed and whether there is a retention policy for them, either formal or ad hoc. 
  • Are you holding on to paper? Don’t hesitate to convert physical copies of records to a digital format. Electronic storage is cheaper and safer, and it’s rare for a court or regulatory agency these days to require the original hard copy of a document. 

  • Are you drowning in email? The most problematic area of record retention is email. A typical desk-bound employee may generate a hundred or so emails a day and mailboxes are a major cause of hard drive overload. Some organizations impose the discipline of mailbox size limits, but that’s a blunt instrument that only takes into account the age of messages. Encourage employees to purge nonessential messages on a regular basis and perhaps you have to concede that investing in archival storage is a cost of doing business in today’s digital-centric world.

Finally, avoid off-the-shelf record retention plans that don’t consider all the needs of your business. Take the time to study your business and compose a plan that addresses your needs and works within your resources. 

C. Pierce Campbell is a shareholder at Turner Padget in Florence, S.C., where he serves as chair of the firm's Business Litigation Practice Group. His practice focuses on business and commercial litigation, as well as probate litigation, and his clients range from small partnerships to large corporations. He may be reached at (843) 656-4429 or by email at pcampbell@turnerpadget.com

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