Document Retention and Destruction Policies Ineffective in Non-Profits
IRS policies create systems that are unrealistic and unenforceable.
January 31, 2011 at 07:00 PM
7 minute read
I'll probably catch holy heck for this, but here goes …
The IRS attempt to get non-profits to adopt document retention and destruction policies is misguided in nearly every way imaginable. It does little more than create a business for lawyers and other consultants to create policies and systems that are unmanageable, unrealistic, unenforceable and therefore ineffective in almost every way (I agree that it will free up storage space), including legally. It has already cost thousands of charities many thousands of dollars to be able to check “yes” on the Form 990 question that asks, “Does the organization have a written document retention and destruction policy?” The IRS has already succeeded in getting the non-profit sector to adopt such policies, but the whole effort is, as Betty White said about Facebook, a big waste of time.
Like many of you, I have devoted many hours to learning about this issue. I've asked for, received and studied many sample policies. I've talked to in-house counsel of other non-profits. I've talked to outside counsel. I've listened to presentations by consultants. I've read articles and cases. I've quizzed the IT people. I've interviewed people who create, store and (usually don't) delete company documents. I have thought deeply about it. After (at least) two years of pondering the matter I've concluded that, notwithstanding everybody's good intentions, my time could be better spent, and the reason is e-mail.
Before the outrage sets in, let me say I fully understand how the timely and thoughtful destruction and/or retention of corporate documents might reduce legal risks. But I also understand that technology, combined with human nature, has outpaced the old paper-based document policy and rendered its adaptation to electronic documents ineffective.
Did I say the reason is e-mail? As a lawyer I understand how subpoenas work, and that, thanks to the best evidence rule, nearly everything is discoverable. I also know that easily 90 percent of the documents created by a company these days is electronic in form, either as e-mail or as attachments to e-mail. Those documents differ vastly in character from paper documents. They are easy to retain with little thought to the space they take up. They are easy to copy. It is as easy to send an e-mail to thousands of people as to one person. A document of thousands of pages can be attached to an e-mail as easily as a one-pager. An employee can walk out of the office with literally thousands of documents on a memory stick without anyone being the wiser.
These documents are also difficult to destroy with certainty. With paper you can be pretty sure you've got all the originals and copies, and when you put them in the shredder you know they're gone. Not so with e-mail and the attachments. We all know that “delete” doesn't really mean the file is gone. The IT guys can always get it back. Even if the IT department follows up, the ease with which copies can be sent outside your system means you're never really sure. But you can be sure the plaintiff's lawyer will draft the discovery order to capture them.
Employees at all levels of authority (including the bosses) have become very dependent on their electronic inboxes as extremely valuable aids to filing, project and contact management, and who knows what else? There is tremendous reluctance to delete those e-mails, and efforts to have it done automatically by the IT folks will mean either a riot in the cubicles or ingenious new ways to hide the stash. This will happen no matter how harshly the document policy is worded.
And, the courts have not been helpful in assuring companies that evidence destroyed pursuant to an established document destruction policy will not result in sanctions or a spoliation instruction to the jury. If that is true, and it is, then what is the point?
I'll probably catch holy heck for this, but here goes …
The IRS attempt to get non-profits to adopt document retention and destruction policies is misguided in nearly every way imaginable. It does little more than create a business for lawyers and other consultants to create policies and systems that are unmanageable, unrealistic, unenforceable and therefore ineffective in almost every way (I agree that it will free up storage space), including legally. It has already cost thousands of charities many thousands of dollars to be able to check “yes” on the Form 990 question that asks, “Does the organization have a written document retention and destruction policy?” The IRS has already succeeded in getting the non-profit sector to adopt such policies, but the whole effort is, as Betty White said about Facebook, a big waste of time.
Like many of you, I have devoted many hours to learning about this issue. I've asked for, received and studied many sample policies. I've talked to in-house counsel of other non-profits. I've talked to outside counsel. I've listened to presentations by consultants. I've read articles and cases. I've quizzed the IT people. I've interviewed people who create, store and (usually don't) delete company documents. I have thought deeply about it. After (at least) two years of pondering the matter I've concluded that, notwithstanding everybody's good intentions, my time could be better spent, and the reason is e-mail.
Before the outrage sets in, let me say I fully understand how the timely and thoughtful destruction and/or retention of corporate documents might reduce legal risks. But I also understand that technology, combined with human nature, has outpaced the old paper-based document policy and rendered its adaptation to electronic documents ineffective.
Did I say the reason is e-mail? As a lawyer I understand how subpoenas work, and that, thanks to the best evidence rule, nearly everything is discoverable. I also know that easily 90 percent of the documents created by a company these days is electronic in form, either as e-mail or as attachments to e-mail. Those documents differ vastly in character from paper documents. They are easy to retain with little thought to the space they take up. They are easy to copy. It is as easy to send an e-mail to thousands of people as to one person. A document of thousands of pages can be attached to an e-mail as easily as a one-pager. An employee can walk out of the office with literally thousands of documents on a memory stick without anyone being the wiser.
These documents are also difficult to destroy with certainty. With paper you can be pretty sure you've got all the originals and copies, and when you put them in the shredder you know they're gone. Not so with e-mail and the attachments. We all know that “delete” doesn't really mean the file is gone. The IT guys can always get it back. Even if the IT department follows up, the ease with which copies can be sent outside your system means you're never really sure. But you can be sure the plaintiff's lawyer will draft the discovery order to capture them.
Employees at all levels of authority (including the bosses) have become very dependent on their electronic inboxes as extremely valuable aids to filing, project and contact management, and who knows what else? There is tremendous reluctance to delete those e-mails, and efforts to have it done automatically by the IT folks will mean either a riot in the cubicles or ingenious new ways to hide the stash. This will happen no matter how harshly the document policy is worded.
And, the courts have not been helpful in assuring companies that evidence destroyed pursuant to an established document destruction policy will not result in sanctions or a spoliation instruction to the jury. If that is true, and it is, then what is the point?
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