The Importance of Having Effective Retention Policies

It has always been a burden to the IT company, the amount of tedious work managing loads of electronically stored information (ESI). It has caused businesses especially industry giants to shell out resources to invest in document management systems, e discovery softwares, and services of IT and legal experts. With all these to take into consideration, why do companies still need to have a record retention policy running? It is for the simple reason that having no record retention policies, or one that works, means bigger trouble for any business.


For companies earning millions of dollars in revenues each year, facing multiple litigations at a given time is almost a normal part of day to day business. This unfriendly legal environment and the tightening regulations brings into existence the necessity of for companies to be litigation ready at all times. Having a sound record retention policy gives companies an opportunity to react intelligently to ediscovery requests and in reality decreases company expenditures through minimizing ediscovery and litigation costs. Cases wherein litigation readiness from having a sound record retention policy would have played a vital role in the outcome of the case include the famous Zubulake v. UBS Warburg case - $29m in fees shouldered by UBS Warburg as a result of the guilty verdict on accusations of gender discrimination and illegal retaliation by former employee Laura Zubulake, The Ernst v. Merck Vioxx Trial - a lawsuit filed by the family of the late marathon runner Robert Ernst which late cost Merck $253M after Ernst's cause of death have been attributed to the side effects of using Vioxx, and the Perelman v. Morgan Stanley - $1.45B in fines to be paid to Ron Perelman after losing to a case related to Perelman's 1998 sale of his Coleman camping gear company to Sunbeam.



Knowing what to store and when to dispose out of date information that are no longer needed will not be a problem if companies have stable record retention policies. This is crucial because having to store every electronic data that passes through the company becomes costly and impractical as the amount of data over time will grow into significant size. On the other hand, deleting data that has not undergone careful record retention practices may become a liability for companies.

Though companies have acknowledged the need for a record retention policy, because of the complexity involved in the management of electronic data, there have been much debate on the best way to establish a reliable record retention policy. But for a good start, companies should take into consideration electronic discovery software and services to enhance the features provided by traditional management systems alone.