Corporate Records Management Q&A

July 31, 2015

file folder and mouseThe subject of corporate information, knowledge and records management covers a multitude of legal and practical issues that corporate lawyers need to address.  In addition to the basics of corporate records management detailed above, this broad subject covers (1) basics of corporate records management; (2) fundamentals of effective corporate records management; (3) establishing and maintaining a corporate records management program; (4) legal issues involved in a corporate records management program; (5) other issues involving corporate records; (6) considerations for computer files and electronic records; (7) auditing corporate records; (8) managing corporate information and knowledge; (9) developing and implementing a corporate records management practice; and (10) forms and exhibits relating to corporate records.  Posts subsequent to this one will provide more detail on each of these ten broad subjects in the form of conversations with lawyers who are or want to practice in these record management fields.

Basics of Corporate Records Management.

This is a conversation with a lawyer who is new to the field of counseling clients about the practice of managing corporate records.  This first conversation focuses on questions and answers about several of the basics of corporate records management.

New Corporate Record Management (CRM) Lawyer:  What are the first things a record management client should know about managing their corporate records?

Ed Dietel: One should distinguish between “what is a corporate record” and how long that corporate record needs to be retained and preserved in the corporate files.  A corporate record is basically anything that pertains to the corporate business, papers, photographs, electronic recordings, and any other physical objects that record and contain corporate data, information, and/or knowledge.  The key here is not what is a corporate record? – just about anything can qualify – but how long each of those various types of records need to be retained and preserved?  Those time periods are determined by the corporate Records Control Schedule (RCS) – a listing of various types of records – such as tax records – and how long they need to be retained.  The time periods specified in the corporate RCS are determined by various federal, state, and local laws, regulations, and guidelines and the needs of the business itself.  Destroying corporate records before the time specified in the RCS or in anticipation of litigation can create serious legal liabilities, such as was seem in the Enron/Arthur Anderson melt downs, bankruptcies, criminal prosecutions, and eventual business collapses.

New (CRM) Lawyer: Who within the corporation has responsibility for maintaining and preserving its records?

Ed Dietel:  Corporate policy should specify who within the organization has this responsibility.  Some organizations will want to have a central repository for its records, some will have those records more dispersed throughout its various units, and some may assign this responsibility to the individual who either receives the record from outside the company or the person who creates or originates the record.  A lawyer representing the company should be involved in determining this record keeping policy and/or overseeing its implementation.  The policy should address who within the organization is authorized to see and work with these records.

With the advent of many records being in some type of electronic form, these issues of who is responsible for the records takes on an even more important meaning.  Electronic records that are only in digital form are much more easily lost or impossible to locate, find, and use.  Furthermore, the method of controlling access is more critically important.  The case of Edward Snowden’s access to sensitive NSA records is a clear case on point.

New (CRM) Lawyer: Who within a company is responsible for corporate records?

Ed Dietel:  Part of the answer to this question is answered in the company policy as discussed in the previous answer.  However, another critically important part of the answer is that the top corporate officials of public companies are subject to the provisions of the Sarbanes-Oxley Act, which imposes accuracy and completeness requirements on certain corporate records, the details of which should be totally understood by lawyers advising those top officials and those responsible for maintaining and preserving their company’s records.

New (CRM) Lawyer: How does one judge the quality of the content – the data, information, and knowledge — of corporate records?

Ed Dietel:  The quality of the data, information, and knowledge can be judged on any number of criteria.  However, to evaluate the quality of corporate data, information, and knowledge is not at all a simple matter.  One needs to consider and evaluate corporate data, information, and knowledge on at least the following characteristics: (1) accuracy, (2) completeness, (3) preciseness, (4) timeliness, (5) appropriateness, (6) relevancy, (7) significance, (8) insightful, (9) understandable, (10) applicability, (11) adequacy, (12) credibility, (13) reliability, (14) ease of use, (15) shareability, (16) engagability, (17) accessible and retrievable, (18) objective, (19) consistent, (20) contributes value and fits, (21) reusable, (22) affordable, (23) communicates, (24) vital, (25) non-contradictory, (26) actionable, (27) farsighted, and (28) likely to be needed in the future.

This evaluation need not be done on a formal, systematic, structured basis, but the data, information, and knowledge in the records should be thought about and considered against each of these quality criteria from the standpoints of both the legal mandates and the needs of the business.  Ignoring these criteria may create considerable liability that could otherwise be avoided with some careful preventative evaluation.