Document retention in England and Wales: law, practice and cross-border issues – In recent times a number of high profile cases have demonstrated in stark terms that a failure to manage documents properly can have far reaching and serious consequences. Perhaps most famously, Arthur Andersen, then one of the world’s largest accountancy firms, collapsed in spectacular fashion in 2002 after being accused of destroying documents in response to an investigation by the US Securities and Exchange Commission into the affairs of its client, Enron.

More recently, in the case of Earles v Barclays Bank Plc [2009] EWHC 2500 the High Court of England and Wales stated that it would be prepared to draw adverse inferences against a party to litigation in the event of “deliberate spoliation” of evidence before proceedings have commenced. In that case, adverse cost orders were made against the bank, even though it was successful at trial, due to a failure to preserve electronic data before proceedings had commenced, and to conduct appropriate searches for electronic documents. The new Practice Direction on Electronic Documents, introduced in England and Wales on 1 October 2010, expressly highlights the need to put in place a litigation hold as soon as litigation is contemplated.

Of course, the need for proper document management policies is not confined to circumstances where actual or potential litigation is contemplated. As the Arthur Andersen affair showed, the increasing activism of the world’s regulatory authorities makes document management a key issue for businesses even when the chance of seeing the inside of a courtroom seems remote. Moreover, as this publication shows, there are a number of wider circumstances where businesses need to be aware of the importance of effective document management including for corporate, accountancy, tax, employment, health and safety, freedom of information and data protection purposes. From a pan-European perspective, the Data Retention Directive (implemented in the UK in April 2009) lays down further requirements in relation to the telecoms industry.

Document retention does not lend itself well to the concept of “one size fits all” and there is certainly no universal document retention policy which is right for every business. The number of documents generated by modern businesses is staggering, and in today’s world of electronic commerce, the idea of “documents” being confined to paper belongs firmly in the past. As well as emails and the more “traditional” word processed documents, the definition includes audio and visual media, computer disks, hard drives, back up tapes and mobile phone and Blackberry SIM cards. Indeed, it is currently estimated that around 90% of communications are in electronic form. As the volume of companies’ electronically stored material rises, so too do the risks associated with it – including, not being able to respond efficiently or properly to information and documentation requests by regulators or in the context of litigation. In addition, the ease with which documents are created and sent electronically poses risks too, since they leave a footprint which can rarely be fully destroyed.

Putting in place a document retention policy specific to the needs of your business will mean ensuring not only that the correct types of documents are preserved, but also that appropriate documents are destroyed, thereby saving storage space and costs (as well as complying with certain data protection legislation).

In the Herbert Smith (HS) publication they set out the key factors to be taken into account when developing and monitoring an effective document retention policy in England and Wales. We address the following questions:

1. What documents must be retained and for how long?
2. Which overarching rules influence how long documents should be retained?
3. In what circumstances must documents be destroyed?
4. Who may documents have to be handed over to?
5. How should I store my documents?
6. Where should I store my data?

In answering these questions, HS look at the principal areas and issues you should consider when reviewing your document retention policy, weighing legal requirements and sanctions for non-compliance against costs and proportionality concerns. We also highlight data protection laws requiring destruction, rather than preservation, of certain documents and highlight popular and new data storage options, such as outsourcing and cloud computing.

Whilst specific legal advice should always be sought, and exact policy requirements will vary depending on the type and location of the business and the relevant data, this guide contains a wealth of information for those wishing better to understand the relevant legal and regulatory requirements and key business considerations applicable to document retention in England and Wales.

http://www.herbertsmith.com/Publications/Document-retention-in-England-and-Wales-0111.htm

Document retention policies: an international review

Businesses are coming under increasing pressure, from a number of directions, to ensure that they properly manage their data. The proliferation of electronic documentation in the digital age has meant that there are ever increasing volumes of data being generated. The increase in regulation worldwide has led in general to more complex requirements for businesses to preserve data, for production on demand by regulators and others. Operating in parallel with these considerations is the development of data protection regimes requiring businesses to destroy certain (usually personal) data.

It is increasingly apparent, therefore, that businesses need to continue to give greater consideration to issues of document retention and disposal. The approach which businesses take will need to be tailored to their particular needs as well as those of the sector in which they operate. The nature of the documents in question, their commercial importance and, of course, volume, must all be considered, as well as the proposed mode of storage and any relevant legal or regulatory requirements requiring their retention or destruction (including the likelihood of formal dispute resolution proceedings). Each jurisdiction has developed different approaches in relation to each of these issues. For businesses operating in multiple jurisdictions the issue of data management is taking on an increasingly international complexity. In addition, electronic documents may now be stored remotely in cheaper or more lightly regulated jurisdictions and companies must often look beyond their registered offices or own shores when making decisions about document retention.

In this Herbert Smith (HS) publication we set out the principal legal and regulatory document retention requirements applicable across 22 worldwide jurisdictions. These include requirements as to company and trading records, employment, health and safety and anti-money laundering rules, and principal sanctions for non-compliance. For each jurisdiction we consider requirements of disclosure of documents in disputes (and applicable limitation periods), and obligations to produce documents in insolvency proceedings, regulatory investigations, or to third parties (including international requests). Data protection considerations are addressed as are modes of data storage, document retention policy guidance and the main advantages and disadvantages of storing data in each jurisdiction.

As well as providing key guidance in home jurisdictions, this guide will also prove useful to those involved in international commerce. Whilst specific local law advice should always be sought, and exact policy requirements will vary depending on the type and location of the business and the relevant data, this guide contains a wealth of information for those wishing better to understand the relevant legal and regulatory requirements, and key business considerations, in new and unfamiliar territories.
http://www.herbertsmith.com/Publications/Document-retention-policies-international-0111.htm