Significantly, one of the big developments over the past two years has been the willingness of various courts to assert that electronic records are 100% discoverable. Companies can no longer use the argument that they "cannot retrieve" existing electronic records on their systems because it is too difficult or costly. "A lot of this is out-of-sight, out-of-mind," says Lang. "Since most companies haven't yet been sued and haven't had to face discovery of their records, they don't think it's an issue they need to deal with right away. But the bottom line is that it's much better to discuss these issues at the top and develop a records retention policy before you're knee deep in it."

Howard Langer, a plaintiff's attorney in the current class action suit against Wachovia, thrives on such discovery and warns that developing such policies gets complicated. "The SEC requires companies to retain certain records," he notes. "They cannot just get rid of all emails, for instance. And if they get rid of only some records, assumptions will be made about why they did that." He adds, "If you do decide to destroy certain records, you may find it's hard to get every copy, and that can cause problems, too."

Plaintiff attorney McNicholas agrees. "Companies need to be very careful about destruction of records," he warns. "They need to be routine about it, and cannot get involved in trying to conceal things."
Kroll Ontrack's Lang gives one example of why even a records policy that regularly wipes employee emails from the company's server can't protect against later problems. "I save on my company laptop all my email communications going back years," she admits. "Especially ones that are about decisions that I made or that a group I was in made. I'd be a nightmare in a lawsuit! The thing is, you can clean your server of emails after 30 days, but you can't tell people to get rid of everything."

Adding to the complexity of the issue is the reality that the rules can change. For example, once an employee or executive knows that a lawsuit might be filed, at that point it becomes a crime to destroy records relating to that issue, even if no case has been filed yet.

Sam Kamran, senior director for financial advisory and litigation counseling at Chicago-based Aon Corp., points out that over the last year or so, the trend has been towards finding a technological solution to records retention and destruction, with companies like PSS Systems, (with its Atlas ERM and Hewlett-Packard (with its IA series) offering systems that tag documents, preserving those that need to be retained and eliminating those that aren't wanted or needed on some scheduled basis. "The problem," says Kamran, "is that the technology is not what it should be. Search and retrieval systems are not that adequate and because the platforms are proprietary, once you've adopted one, you're stuck."

But alleged problems with tech solutions often track back to an absence of policy and procedure, and Kamran admits that there is an over-dependence upon technology. "With a number of clients, we have seen an emphasis on the technology alone, and not on the procedures and decisions that are driving that technology," he reports.
More important than the technology, however, agrees Lang, is having a policy. "At Kroll, we advise our clients to have a litigation readiness and response plan in place. That means that IT, legal and top executives need to come together and develop a plan for how to respond to any discovery lawsuit. Companies that have handled lawsuits well have done tabletop drills: If this happens how will we respond? If that happens how will we respond?" She adds, "That's a lot cheaper than getting caught unprepared."