The greatest of commercial court battles can be won and lost on bits of paper, email, voice messages and even SMS. Winning depends not on who hires the most expensive legal team but on who can produce documents that best support the case. Smart, cost-effective document retention strategies have become big business. But knowledge among business people of what documents to retain remains vague in spite of recent legislative changes in Victoria, Australia.
A company's documents are its own property and it can deal with them in any way it sees fit. But regulators and courts are clear that both hard and soft copy "documents" can have a broad interpretation and include anything on which information is stored.
Freehills litigation partner Malcolm Cooke says some companies focus too much on litigation risk. "Those who have turned their attention to document management have perhaps been a bit spooked by developments in Victoria - the McCabe case and the recent legislation," he says.
Cancer sufferer Rolah McCabe become the first Australian cancer victim to successfully sue a tobacco company for damages (see story, right). McCabe was awarded $700,000 six months before she died. The decision was overturned on appeal, but the case shone a light on corporate document retention. Since then, the courts have not shown much sympathy for companies that seek to narrow their discovery obligations by complaining about the cost and expense of document recovery.
"There are two reasons why you might like to keep documents," Cooke says. "Once knowledge is developed in your business you might believe it makes sense to store it and make use of it in the future, particularly when people leave the business. Second, it is because you need to keep them, or you are required to.
"The first category is more a knowledge-management business system, and we're a bit more enthusiastic about those systems - people feel it adds value to the business. The second category is about compliance - and systems that fall under that nasty heading are often seen as a cost to the business and people don't get too enthusiastic about it."
The product marketing director at information storage company EMC, Clive Gold, stresses that it is not so much about what you keep but rather what you can find.
"Increasingly, the cost of keeping information is irrelevant when you look at the cost of finding that information," he says. "You keep what you need to keep. If anything, people should err on the conservative side, that is, keep more than required. The problem everybody has is finding it."
Keyword searches are not enough, especially when huge volumes of information are involved. Gold recommends adding information on the metadata (similar to the properties section on a document).
"You need to put some context around the keyword," he says. "Being able to tie the document to things like a specific customer, a job undertaken or the person who did the job makes searching a lot easier. From there you can say, 'We're doing the same sort of thing for a bunch of different customers - perhaps we can create a new service and offer it to the rest of our customers'.
"Not only does it help to keep you out of trouble but once you have put that structure around it, it can start to drive your revenue and your services."
Most companies are comfortable with the detailed, well-established rules relating to the retention of transaction records, Cooke says. Compliance can be met readily when the legislation is understood. For example, the Income Tax Assessment Act 1997 requires the retention of tax records for five years, with provision for electronic storage.
"Where it gets a bit harder is where judgement calls need to be made, and that's the difficult area of keeping documents that you may need in litigation for whatever reason.
"That's the issue that was clearly brought to the fore in the McCabe decision and then the Victorian legislative response."
Policies built around documents that are needed for compliance or risk reduction tend to be driven by lawyers and are not applied consistently on the ground, Cooke says.
"Where a system is built upon documents that you want to keep, it's actually much easier to get buy-in across the business."
PricewaterhouseCoopers partner in forensic services Steve Ingram notes that starting from scratch can be daunting. He recommends taking a look around the organisation to see if anyone already has a document-retention policy in place. If so, build on that.
"A lot of organisations have different practices in different areas," he says. "Some will be great at document retention, others won't. The key theme is to integrate and streamline.
"It's a matter of taking the breadth of what you produce, then stepping back and mapping what documentation you generate against your legal and other requirements, and looking for a pillar that's already successful in your organisation."
Documents should be stored in a central location. Many staff store their most valuable documents either in hard copy at their personal work station or on a hard drive.
"If you need to go and find out every person who might have touched a particular issue that is the subject of a regulatory investigation or a dispute and search their individual offices or hard drives, it's a vastly more expensive and time-consuming process," Cooke says.
Ingram adds that it is helpful if companies pre-empt their record-keeping needs. "Take a break sometime this year, map what data you produce, map your requirements, and put a system in place - because if a regulator comes in they want your data quickly.
"You want to keep some sense of control over your agenda - and to do that you need to know what you've got."
Document destruction leads to new legislation
Documents and records have become the basis on which court cases are fought. The litigant best able to recreate it at the lowest cost carries a valuable advantage into any dispute.
In McCabe v British American Tobacco (2002), the issue was the impact of the destruction by BAT of documents relating to a proceeding involving a cancer sufferer, Rolah McCabe.
The plaintiff contended these documents, which were destroyed before the proceeding started, were necessary for her to prove her case.
Justice Geoffrey Eames ruled in the Supreme Court of Victoria that there had been a deliberate intention by BAT to put its documents beyond the reach of the discovery process, and that this had denied McCabe a fair trial. BAT appealed successfully against the ruling before she died a few weeks later.
Two pieces of Victorian state legislation were introduced following the case. The first, the Crimes (Document Destruction) Act 2006 (Vic), established a crime for destroying documents with the intention that they be unavailable for legal proceedings.
The second, Evidence (Document Unavailability) Act 2006 (Vic), for use in civil proceedings, gives judges broad discretion as to what orders they make where documents are unavailable and which may affect the fairness of the proceeding.
No other states have yet followed suit, but all judges across the country have discretion as to what they do in regard to the evidence.
A systematic approach
EMC product marketing director Clive Gold offers six suggestions:
* Consistency across the business is the key.
* Take advantage of technology and store information electronically - do not simply duplicate paper processes.
* Involve different disciplines across the business. Pull together a project team or taskforce to identify the issues and ensure the strategy is applied consistently.
* Make it practical. Everyone needs to understand how the plan works and carry it out simply as part of their daily work. If it adds time, it will not happen.
* The strategy should be intuitive for all employees across the business. It must reflect the type of documents that are expected to be kept and how these will be retrieved at the end of the process.
* Bear in mind the result. Whatever the strategy, it will have to cope with ever-increasing data and changing technology. Consider the flexibility of storage systems and how they will cope with growth.
Fairfax Business Media
Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.