More than 90 percent of all documents are now created electronically through various word processing and e-mail programs. The vast majority of these documents remain in their electronic state and are never printed. Those documents, stored on computer hard drives and on backup tapes or diskettes, are primary sources of evidence in legal disputes.

	Ted Crow, Post-Gazette Click illustration for larger version.

If your business is ever involved in litigation -- and most businesses will be sooner or later -- you might be required to produce large numbers of documents as part of discovery, the evidence-gathering phase of a legal dispute.

Attorneys are no longer satisfied with reviewing printed documents supplied in response to discovery requests. They are looking to a document's metadata as a rich source of potentially damaging information. Metadata is hidden data that is part of all electronically created documents and is accessible in only the electronic form of the document. It contains information such as the identity of the author, all recipients, creation and modification dates, when the document was read or accessed by recipients, when it was printed and any revisions made with the software's tracking function. It can provide abundant evidence about who knew what and when they knew it.

The cost of producing documents for discovery can be staggering -- in the millions of dollars in a complex dispute. If any documents were created with software that the company no longer uses, it may be required to restore them to usable form. Whether the documents actually contain admissible evidence is unimportant. If the opposing party requests documents that are even remotely relevant to a claim or defense asserted in the litigation, the business will have to produce them unless it can prove to the court that doing so would be an extraordinary hardship.

		Write us To submit a letter or an essay for consideration for The Private Sector, please send it via e-mail to Business@Post-gazette.com or via regular mail to Post-Gazette Business Section, Private Sector, 34 Blvd. of the Allies, Pittsburgh, Pa. 15222. Please include your telephone number, municipality and return address for verification.

The financial cost of retaining information is high, but the failure to keep key business documents could be even more expensive. If a company that has even an inkling that it may be a defendant in litigation negligently or intentionally destroys relevant documents, the judge hearing the case may assume, or instruct the jury that it may assume, the worst about what those documents contained. A plaintiff who is found to have intentionally destroyed relevant documents may have its case dismissed outright. Either side may be subject to a hefty fine for document destruction. "Destruction" in this case includes standard business practices such as recycling backup tapes and throwing out old computers.

The Sarbanes-Oxley Act further mandates fines and imprisonment for up to 20 years for anyone who knowingly destroys or alters documents with the intent to impede federal investigations, bankruptcy proceedings or any official proceeding.

Companies can reduce the cost of litigation and the risk of liability for destruction of evidence by developing, documenting and consistently enforcing a document retention policy. Merely having a document retention policy is not enough: Failure to follow that policy may deprive a company of the right to claim its existence as an excuse for destroying documents.

A document retention policy, which should cover both electronic and hard copy documents, should:

Specify what kinds of documents should be kept, in what form and for how long. E-mail, for example, should be deleted, in most cases, after 60 days.

Name the person responsible and the procedures for implementing and enforcing the policy.

Provide for training and regular refresher courses on document retention.

In carrying out its document retention policy, a business should routinely:

Identify and mark key electronic business records for retention;

Adopt and enforce a policy to print copies of important e-mails. This may seem redundant, but computers can fail, destroying all the data stored on them;

Segregate and label confidential documents and data;

Discard or delete all other electronic documents; if there is no business reason or legal obligation to keep a document, destroy it;

Discard old backup tapes;

Purge unnecessary data from obsolete computer systems.

Make certain that policy covers all media used by employees, including network servers, desktop, laptops and hand-held computers and other wireless devices with text messaging capabilities.

A business must change this routine if it has a duty to preserve a document. This duty can arise from a contractual obligation or a regulatory requirement, such as a requirement to retain employment or tax records. The Uniform Preservation of Business Records Act requires that certain types of business records be retained for three years from the date of their creation unless the law specifies a different retention period. The IRS, SEC and OSHA stipulate how long a business must retain certain records.

A duty to preserve also arises when documents are or could be evidence in a current, pending or reasonably foreseeable lawsuit. In this case, the business will have to immediately alter its document retention policy as it applies to these documents. It should identify all documents that may become relevant and instruct employees not to delete them or dispose of the hardware where they are stored. Information technology personnel should establish secure, separate files for electronic documents and data that have to be retained. They should disable automatic deletion programs to prevent destruction of potentially relevant information and disable automatic backup to avoid the expense of producing masses of irrelevant documents for the opposing party's review.

If management knows that a lawsuit is imminent or has already received notice of an impending lawsuit, it makes sense for the company's attorney to try to negotiate with the opposing party up front over the scope of discovery.

This approach can save money for both sides: Some courts have ruled that, under certain circumstances, the parties in a dispute must share the costs of document recovery.