At its core, a records retention policy is exactly what it sounds like: a written policy that outlines what types of business records and other legal documents should be preserved, and for how long. But even going beyond that, it’s a clearly defined and enforced policy that helps create a standardized way to review, retain and even destroy those documents that are created by or in the possession of a business over the course of its lifetime.
Making an effort to follow document retention best practices can be invaluable in a number of situations, from compliance with local and federal rules and regulations (like U.S. Federal Rules of Civil Procedure rule 37) to instances of pending litigation or government investigation. All told, there are a wide range of different benefits that you’ll only get through having a solid records retention policy that are certainly worth exploring for any type of organization.
Benefit #1: Your Company Is Protected from Litigation
One of the most important things to understand about running a business is that if your organization becomes the subject of litigation, your records suddenly become a major focal point of the process, too. Experts agree that records which are A) properly retained, and B) disposed of by following previously-published internal guidelines would “rarely, if ever” fall under increased scrutiny during legal proceedings or some other type of impartial third-party review.
If you’re asked to produce records that you no longer have because they were disposed of as per company policy, there really isn’t much to be done – or much that you can get into trouble for. Without such a policy, however, you could be accused of destroying evidence – or worse – which is a situation you absolutely do not want to find yourself in. You’ll be able to honestly and plainly state to a court of law that you’ve produced everything you can, which itself can often be a significant advantage during litigation.
Benefit #2: They’re Essential in the Context of High-Risk Agreements
Creating and maintaining a records retention policy will also come in handy during any situation where your organization enters into a “high-risk agreement” with another party, usually a third-party vendor. If any questions should arise over the course of said relationship, you will be able to easily perform functions like:
- Have a single repository of essential documents and contracts to draw from, even for general business purposes.
- You’ll always be able to demonstrate the “good faith” efforts you’ve taken to avoid situations like improper document destruction.
- You’ll be able to provide any and all information requested in the most timely and efficient manner possible, regardless of how urgent that request happens to be.
Benefit #3: The Importance of Compliance and Legal Requirements
Establishing this type of records retention policy also yields benefits in two particular areas: namely, your compliance with all local, state and federal rules and regulations, as well as any compliance factors that need to be considered.
When creating your records retention policy, it will always be designed with the specific industry that you’re operating within in mind. This makes it not only easier to meet those legal requirements over the long-term, but it can also significantly reduce time and expense requirements later on – particularly in the case of discovery.
Essentially, if your policy is built to adhere to all relevant state and federal laws, by design you’ll have an easier time accomplishing that goal than if there were no policy in place at all. It’s also important to note that some elements of your records retention policy will be determined by outside parties, like guidelines issued by the Internal Revenue Service. Without a thoughtfully designed and carefully constructed policy in place, you can never really be sure that you’re not in violation of these or other conditions.
The same concept holds true of other regulatory standards that you’re expected to meet within your industry, with HIPAA being perhaps the most obvious example of that.
In the end, one of the major benefits of having a records retention policy has nothing to do with compliance, legal requirements or pending litigation. These are the types of problems that – hopefully – you’ll never have to deal with in the first place. Really, this type of policy makes your own internal records management far more efficient and less expensive on a daily basis – thus giving your employees another opportunity to work smarter, not harder, in their positions. Your policy will make it easier than ever to eliminate duplicated documentation, remove redundant records and more – all of which will bring with them huge efficiency gains across the board.
