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Sources of Document Retention Requirements
In establishing and reviewing their document retention programs, corporations must determine their legal duty to retain documents. A review of sources of the duty to retain documents should be conducted periodically to ensure that the corporation’s document retention program is comprehensive while efficient.
- The Internal Revenue Code;
- The Sarbanes-Oxley Act of 2002 and related Securities and Exchange Commission regulations;
- Labor and employment laws, including regulations issued pursuant to those laws by agencies such as the Occupational Safety and Health Administration;
- State and federal environmental statutes and corresponding regulations;
- Criminal statutes that make obstruction of justice illegal;
- The U.S.A. Patriot Act and regulations issued pursuant to that Act that govern obligations of financial institutions to collect and maintain information on financial transactions;
- Statutes and corresponding regulations related to specific industries in which the corporation might be doing business;
- Statutes of limitations that set a time limit past which documents no longer will be useful in proving claims by or against the corporation; and
- Professional rules or standards for attorneys that establish requirements for protecting documents.
Corporations also should consider document retention requirements arising from the common law doctrine of spoliation. As part of its document retention program, a corporation should have a plan for halting normal document destruction schedules to implement in the event that the corporation anticipates or becomes involved in litigation or legal proceedings. If the corporation fails to put a litigation hold on its normal document destruction practices and relevant discoverable documents are lost, the corporation could face claims of spoliation and sanctions that could include adverse jury instructions, financial penalties, or default judgments.
In establishing its document retention program, a corporation should consider whether there are documents that receive special retention consideration due to the proof in the documents of contractual obligations. Contracts of the corporation may also contain explicit requirements for retention of documents.
An effective document retention program will cover all the potential obligations of the corporation to preserve documents and will provide for an efficient mechanism for disposing of documents that no longer are needed. Periodic updates of the program and adherence to its requirements by corporate employees will allow the corporation to maintain a good faith posture in any potential discovery disputes while information resources are used in the most efficient and effective manner available.
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