Should companies practice data retention or data destruction?

Many businesses focus on record retention, but here’s why one lawyer says “Destroy!”

Many businesses spend a lot of time thinking about how to retain and store data, but there’s another idea: Think about how to destroy your data.

Why? According to one attorney who advocates the practice of methodical and vigorous data destruction, it’s a way to avoid risk. That’s because when you no longer store the data you don’t really have to retain, complying with legal requests for e-mail or documents is not just easier, it means that whatever the topic of the legal inquiry of electronic discovery, the old documents are simply not there to produce, hence less legal exposure.

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“There’s too much data, and unnecessary data,” says Tony McFarland, attorney at law firm Bass, Berry & Sims PLC about the way most companies appear to be archiving many years of corporate data because storage seems cheap. But when lawsuits or other legal inquiries arrive demanding information, the expenditure and time associated with having legal experts troll through volumes of data is hugely expensive and fraught with increased legal risk. “It’s the reverse of what we should be doing,” he says. “Aggressive adversary lawyers push for every iota of information you keep.”

Tony McFarland, attorney at Bass, Berry & Sims PLC

Although it may be more the exception to the rule these days, the practice of having the IT department work with the legal department to create a “data destruction plan” for the company can be done. According to McFarland, here are a few tips, many of them relying on “self-executing mechanisms” that may be best accomplished through use of a centralized electronic-document management system.

  • When possible under law, consider e-mail transitory, perhaps saved to a personal folder but “all gone after a year.”
  • Eliminate shared folders.
  • Only retain personal information on employees required under labor laws.
  • Figure out what types of documents must be stored for specific timeframes in the given industry, and electronically destroy them (as well as the paper documents) based on specific timeframes for retention periods under law.

For instance, according to the law firm, certain documents required to be filed with the Securities and Exchange Commission have to be manually signed and retained for five years. In the healthcare world, the Health Insurance Portability and Accountability Act (HIPAA) has a six-year timeframe, with some variance. Employment eligibility verification forms must be retained for three years after hire date, or one year after termination, whichever is later. Certain employment records, like those required with respect to demotions, similarly must be retained for one year from the date of the personnel action.

Every industry does look different. Take hazardous waste generation: federal and state regulations for hazardous waste generators require retaining manifests and reports for three years. And for pollutant discharge elimination systems, sampling and monitoring records must be retained for three years.

The problem today, as McFarland sees it, is that businesses don’t cull out the data, instead storing it somewhere for endless periods, which also leads to issues related to technology obsolescence related to storage.

One of the best ways he’s seen for a business to set up its electronic data-destruction system is by using document management systems, including HP Autonomy, and Microsoft, and start learning to say goodbye to data. “You don’t really need to keep as much as you think you do,” McFarland concludes.

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