With greater quantities of documents being electronically produced and stored by companies, the time and cost involved in searching for those documents is greater than ever before, according to a commercial litigation expert with national law firm Hunt & Hunt.
James Orr, a senior associate at Hunt & Hunt, says runaway electronic document storage is leaving businesses at risk of time consuming and costly repercussions should documentation be required in legal proceedings, and advises businesses to have effective document management and destruction policies in place.
Mr Orr says advances in technology, and the ease with which documentation can be backed up and stored, means that increasingly large amounts of electronic data can be stored and forgotten, only to potentially cause problems for businesses down the line.
“Documents these days can be stored in any number of ways electronically; the hard drive of an employee’s computer, the company’s central file server, back-up discs, PDAs, USBs and home computers.
“Given the volume and complexity of electronic and online documentation, and with so many storage facilities now available, the process of searching for records for legal proceedings can be expensive and time consuming,” he said.
According to Mr Orr, an organisation may be compelled to produce electronic records even if the company is not a party to court proceedings.
“The real problem arises when a court order may not necessarily identify the specific documents required and the business may be left to search painfully through their files in order to distinguish which documents are in fact relevant,” he said.
Although in some instances the costs involved in searching for and producing documents can be recovered by the party seeking the documents, this is not always the case.
Mr Orr cited a recent case from America, where a court ordered a company to produce email records in spite of evidence that it would take more than six months and cost more than US$6 million to do so.
He said the prospect of having to incur such costs in litigation could strongly influence a business’s attitude to defend a claim.
Given the potential financial and time loss to companies, Mr Orr said that it is vital that all businesses have their own document management and destruction policies in place. He said it is equally important that this policy be understood and executed by all members of the organisation.
“If a company has a proper document management and destruction policy, and effectively implements that policy across the company, the costs of becoming involved in litigation can be significantly reduced,” Mr Orr said.
Mr Orr recommends that businesses undertake a number of steps in order to implement an effective document management and destruction policy.
Appoint a person to be responsible for the policy and to assist other employees with implementing the policy.
- Educate all employees in relation to proper implementation of the policy.
- Keep relevant documents. The length of time will depend on the type of document, although some documents are required to be kept indefinitely. For example, it is an offence punishable by imprisonment to knowingly destroy a document which is reasonably likely to be required in evidence in legal proceedings.
- Store documents in such a way that they can be quickly and easily located.
- Destroy irrelevant documents and other unimportant documents such as duplicates.