Data Security: Record Retention Rules
An important service that in-house counsel and outside advisors must render to the corporation relates to the maintenance and control of a company's documents and record-keeping system. Aside from the obvious need for counsel to ensure the preservation and retention of company documents and other records which are the subject of or relevant to (i) litigation or other controversies involving the company, or (ii) governmental or other subpoenas or other legal requirements, and avoid improper destruction of such records, there is the basic consideration of protecting company records from unauthorized disclosure or misuse, and managing effective and legitimate means for retaining and disposing of material in the ordinary course of business.
Like other compliance programs initiated and implemented by companies, record retention/disposition programs are vitally important to management's observing its legal obligations in the conduct of its business. And, as is the case with such other programs, document retention programs must be consistently enforced. In short, it makes good business sense to have these clearly defined policies in effect and to follow their guidelines.
There is no doubt that most firms and businesses respect the rules against obstructing justice, and, in civil matters, abide by the requirements of pre-trial discovery; and are truly responsive to subpoenas and requests for document production. Generally, companies will diligently search their files and furnish copies of requested and required material. Accordingly, there should be policies and programs in place which not only protect against careless or willful destruction of "subject" material, but also provide for the orderly and legitimate disposition of documents; and, at the same time, reasonably and readily enable the company to identify and locate material required to be produced. It falls to the in-house attorney to institute such policies and procedures and monitor their implementation.  The American Corporate Counsel Association has developed a Model Records Retention Guideline and Model Corporate Records Retention Plan to assist counsel in establishing effective plans in this area.
3. See In re Prudential Ins. Co. Sales Practices Litig., No. 95-4704, MDL No. 1061 (D.N.J. Jan. 6, 1997), where the court imposed a $1 million fine for a company's failure to take adequate steps to halt routine document destruction once litigation had been filed, even though the company had made some effort to comply with its disclosure obligations and had not intentionally sought to hide evidence.