In today's digital age, businesses are inundated with data, making it crucial to align document retention policies with litigation hold strategies to ensure defensible data deletion. This alignment not only reduces the risk of sanctions for spoliation but also mitigates costs associated with unnecessary data preservation. By coordinating legal and IT efforts, companies can establish reasonable and effective document management practices that cater to their unique needs and regulatory requirements.
The digital era has ushered in an unprecedented volume of electronic communication and documentation. In 2010, it was estimated that around 294 billion emails were sent daily, and by 2011, the average business email account was handling 105 emails per day, according to a report by Dynamic Business. The deluge of enterprise electronic documents, such as reports, spreadsheets, and other office files, varies by industry but is undeniably on the rise. This surge in data has significant implications for document retention and litigation hold strategies, particularly concerning a company's bottom line.
Data storage is not only expensive but also intricately linked to risk management costs, especially for companies susceptible to litigation or government regulation. The costs of processing, reviewing, and producing documents in litigation can range from $2.70 to $4.00 per document, as highlighted in the Minnesota Journal of Law, Science & Technology. Therefore, it is in a company's best interest to defensibly reduce the volume of documents that are often unnecessarily preserved, which in turn can lower litigation costs and mitigate risks associated with retaining potentially damaging data.
Creating a harmonious relationship between a company's document retention policy and its litigation hold strategy can be challenging due to differing departmental perspectives. Legal and IT departments must collaborate closely to balance cost and risk management effectively. Legal departments rely on IT for implementing retention policies, while IT needs legal guidance on the types of documents to preserve. This interdepartmental cooperation is essential for formulating an ideal document retention policy.
A document retention policy must withstand scrutiny in the event of litigation or government regulation. Organizations must consider business needs, obligations, industry standards, and exposure to litigation to determine the reasonableness of their policies. Legal and IT departments must work together to address these considerations and establish retention periods that comply with statutes of limitations and regulatory requirements. For example, contract disputes can arise within a range of three to twenty years from the date of breach, depending on the jurisdiction. A well-crafted document retention policy will also address the management of back-up tapes and other forms of deep archive storage due to the high costs associated with data retrieval.
The duty to preserve data arises when a party reasonably anticipates litigation. As established in Goodman v. Praxair Services, Inc., once litigation is anticipated, routine document destruction must cease, and a litigation hold must be implemented to preserve relevant documents. Trigger events for a litigation hold can be obvious, such as subpoenas or court orders, or more subtle, like employee threats of litigation. It is crucial for companies to recognize these triggers and safeguard relevant data to prevent spoliation.
The process of implementing a litigation hold can be daunting. However, the advent of Software as a Service (SaaS) solutions has provided tools to assist with this process. These technologies enable legal counsel to efficiently issue litigation hold notices and track compliance, thereby simplifying the preservation of relevant documents.
Through collaboration, reasonable practices, and tailored retention periods, companies can proactively reduce litigation costs. Not only does this approach decrease storage expenses, but it also leads to significant savings during document review and production. By integrating new technologies, businesses can manage the constant flow of data without being overwhelmed, ensuring that document retention and litigation hold strategies are both defensible and cost-effective.
For further reading on the importance of document retention policies, visit the American Bar Association or explore the Minnesota Journal of Law, Science & Technology for in-depth legal analysis on the costs of electronic discovery.
