Document Retention and Scanning

There are many federal and state agencies that have adapted their own rules and regulatory requirements in regards to document and record retention based upon the laws created by the US government in regards to retaining their own records (Federal Records Act 44 US Code 3301). The IRS has regulations for accounting firms, the SEC and FINRA have rules for brokerage firms, the Food and Drug Administration have guidelines for pharmaceutical testing as does the Department of Health and Human Services for insurance and medical records.

IRS Regulation 26 CFR 1.6001-1, The Guide of Record Retention Requirements in the Code of Federal Regulations defines records and states how long each kind of record should be retained. SEC Rule 2-06 of Regulation S-X specifies retention requirements for work papers, memos correspondence and other documents including voicemails and emails.

These governing agencies require having specific compliance departments to establish guidelines and strictly enforce these rules and regulations with proper employee training. The detailed particulars in these policies by lawmakers and the disciplined implementation by business owners and employees are essential to the safety and protection and preservation of personal information of the client and customers, but protection of the business owners as well. Not only is record retention a vital risk management tool, taking strict measurements to follow these rules can save companies, time, money and legal hassles that can develop into costly and timely lawsuits.

If you don’t think record retention is important, be it physical or digital, the following will make you a believer:

Zubulake v UBS Warburg – UBS is ordered to pay $29.3 million as a result of an employment discrimination suit and not producing documents and emails that were presented by the plaintiff. The courts found UBS had failed to take all necessary steps to guarantee that relevant data was both preserved and produced, and granted the plaintiff’s motion for sanctions.

Coleman v. Morgan Stanley – Coleman’s document productions request specified emails from a certain date range, which according to Morgan Stanley resided on a complex backup system that required significant resources to recover. Morgan Stanley had not produced them in response to the Court’s order. This ultimately resulted in an award of $1.5 billion in damages. Although this decision has since been reversed, the sanctions relating to the failure to disclose were not removed.

scanner topEnter document scanning. Besides the legal implications of (see above examples) here are some other reasons why document scanning has turned the subject of record retention from a negative to a positive.

  • Instant access to important documents without ever having to leave your desk.
  • Documents are now digital which offers disaster protection in the event of a flood or fire.
  • In situations dealing with clients, you can respond quickly to questions or concerns by having immediate access to your documents.
  • Get peace of mind that confidential documents are safe from falling into the wrong hands.
  • Free up physical space -no need for filing cabinets or mountains of white file boxes.
  • Cut costs – no need to pay an offsite storage company; it eliminates supplies that are associated with all physical documents, such as file folders, clear covers, storage boxes and again – those heavy, bulky filing cabinets.

Imaging documents has become a critical part of the ability to comply with the strict rules and regulations that have been established in regards to record retention. It has become a saving grace for many large companies, small business owners and their employees giving them the capacity to save time, money and carry on long-standing and strong, client relationships for years to come.