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A Guide to IT Contracting by Michael R. Overly, Matthew A. Karlyn

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Critical Considerations for Records
Management and Retention
CHECKLIST
Scope
Applicability to all types and formats of records
Applicability to all aliates, divisions, and business units
Risk assessment
ird-party contractors and outsourcers
Active vs. inactive records
Retention Schedule
Detailed list of records categories
Employee surveys and interviews
Organized by department/business unit
Retention periods based on applicable law
Retention periods based on operational needs
Retention periods based on statutes of limitation
Citations to applicable laws
Periodic (e.g., annual) review and update
Litigation Holds
Responsibility for issuing litigation holds
Litigation hold notice
IT department involvement in litigation hold process
Notication of outside vendors and outside counsel
Employees obligated to notify management of pending or fore-
seeable claims
Termination of litigation hold
330  •  A Guide to IT Contracting: Checklists, Tools, and Techniques
E-discovery procedures
Data map
Electronic Records
Authorized storage locations
Retention, archiving, and destruction of e-mails
Retention, archiving, and destruction of voicemail
Security and encryption where required (e.g., protected health
information, sensitive nancial information, laptops and remov-
able media, etc.)
Administration
Designated records manager
Input and approval by board and senior management
Condentiality of employee personnel and medical records
Approved methods for destroying paper and electronic records
Procedures for distribution to and training of employees
Auditing compliance with the policy
O-site storage of inactive paper records
OVERVIEW
In light of the vast volume of computer and other electronic les and com-
munications, and litigation obligations with respect to e-discovery, com-
panies now realize the need for a comprehensive records retention policy.
Failure to retain records in compliance with applicable law and in connec-
tion with pending or threatened claims can result in regulatory and court
sanctions, nes, unnecessary expense, and other adverse consequences.
Inadequate and ineective records storage and retention practices can
result in (i) the loss of valuable trade secrets, condential information, and
other important business and proprietary information, and (ii) the breach
of privacy laws and regulations. e cost (time, money, and resources) of
complying with litigation discovery requests can be signicantly reduced
through implementation of cost-eective records retention and e-discov-
ery policies and practices.
Keeping everything is not the answer. Companies that say they keep
everything typically do not. Employees will always discard paper records,
electronic les, and e-mails. Destroying records without a policy can
Critical Considerations for Records Management and Retention • 331
result in inconsistent and haphazard retention and destruction prac-
tices frowned upon by courts. In light of this inevitable destruction of
records, it is imperative for the company to adopt a policy governing
destruction in order to avoid liability for selective destruction of records
or spoliation.
e benets of an eective records management program include
easier and timely access to necessary records; complying with statutory
and regulatory retention obligations; reducing storage costs; protection
of condential and proprietary information; and meeting e-discovery
obligations. An eective records retention policy can mitigate the risks
of not actively managing electronically stored information (ESI), such
as the inability to eciently locate and use important business informa-
tion, sanctions due to the failure to comply with statutory and regulatory
retention and destruction laws, increased costs due to ineciencies from
inaccessible information, and the inability to comply with e-discovery
requirements, court orders, and other litigation-related requirements.
AVOIDING SPOLIATION CLAIMS
“Spoliation” is the term commonly used by courts to describe the improper
destruction of evidence, most typically documents and records. Although
the precise rule varies slightly in dierent jurisdictions, generally a party is
guilty of spoliation if it destroys evidence (e.g., company records) relevant
to litigation with the purpose or intent of preventing the other party from
using the evidence against the party. Liability can arise from destruction
prior to litigation being instituted, and sometimes even in the absence of
an actual threat of litigation.
e consequences to the “spoliator” can be dramatic. Remedies for
improper destruction of records can include (i) monetary sanctions or
penalties, (ii) an inference in the litigation permitting the jury to presume
that the documents contained damaging information (i.e., information
supporting the other partys position), (iii) sanctions ordering that certain
facts be deemed established or preventing the spoliator from opposing a
certain factual assertion, (iv) dismissal of claims or entry of default judg-
ments, and (v) criminal liability. In light of the severe consequences of

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