By Julie Pittman
A company’s success often depends not only on the actions it takes, but the actions it can prove without “oversharing.” A well-crafted, fully-implemented document retention policy strikes that balance, keeping your company compliant with governmental/regulatory recordkeeping requirements and prepared for potential litigation.
Too often, however, companies may ignore the need for a document retention policy, or maintain a policy that is outdated, poorly drafted, or improperly enforced. Keeping too much or too little documentation can lead your company directly to risky audits, costly fines, or disastrous litigation that could have been averted by simply producing the right document at the right time.
If your company is currently operating without a specific, up-to-date records retention and management policy, it is important to stop and assess whether this risk is acceptable. Consider these questions:
- Has your company ever been sued by an employee, a former executive, a competing company, a vendor or supplier, a governmental agency, or other party?
- If your company was served with a lawsuit tomorrow, would you have important records and documentation of policies and decisions that could support your defenses against the kind of claims you might reasonably expect?
- If a governmental agency, such as the IRS or a regulatory body specific to your industry, notified your company of an impending audit, inquiry, or other investigative action against your company, would you have the documentation necessary to prove your compliance with applicable laws?
- If important documents and records cannot be accounted for, would your company have a way to account for its failure to retain this necessary documentation?
- Do you have the resources of staff, time, and money necessary to “recreate” lost documents or piece together the information that retained documents would easily have provided?
- On the other hand, if your company tends to hold onto all documents of all types “just in case,” do you have the resources to search for exactly what you need? Or worse, will you have to provide investigators or opposing attorneys with more documentation than is strictly necessary, simply because that data was retained and “all” documents have been requested?
Your answers should help you decide whether operating without a strong, defensible document retention policy is a liability that your company can afford. In our next installment in this series, we will cover the basics of a good document retention policy: what to keep, where to keep it, the right form to keep it in, and for how long. In the meantime, if you have questions about creating or updating your document retention policy, please contact us at (256) 534-3288 or firstname.lastname@example.org.
This information is not intended to provide legal advice, and no legal or business decision should be based on its content. No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers. Read full disclaimer.