Member Article

Document Storage Policies ? Better to be Safe than Sorry!

With Watson Burton LLP Law Firm

It is very important for businesses to maintain a strict, logical policy when it comes to the retention of business documentation. It is not difficult to achieve the implementation of a firm-wide standard retention framework. Effective archiving requires consideration of two key factors:

• What should be retained?
• How long should documents be retained for and why?

Documents should be retained that evidence:

• what obligations and duties were assumed (i.e. contractual documentation or details of oral transactions that may have formed part of the contract);
• documents evidencing whether those duties and obligations were discharged effectively, or to show that the job was completed to a good standard or if incomplete/inadequate what the circumstances are;
• who performed the work, or had an involvement in the negotiations;
• job correspondence including e-mails, reports, documentation and correspondence; and sufficient personnel information to show who worked on the job and when

How long should documents be retained? – Legal Considerations

• A potential claimant will have 6 years from the date of breach to commence Court proceedings in relation to a written contract, and 12 years when by deed. Time runs in the law of tort for 6 years from damage occurring (which can happen many years after the relevant breach). The Latent Damage Act 1996 provides a long stop upon tort liability, running from breach to the end of the 15th year.
• This 15 year period, however, may be extended by the Civil Liability Contribution Act allowing a further 2 years in which to bring contribution proceedings. This suggests that the retention period should be 17 years.

19 years might be a prudent minimum in which to keep documentation, however, because it is possible that proceedings could be issued last minute. It may take some time to locate documents. It would be unfortunate if a filing clerk had efficiently destroyed the documents at the end of year 17. Some extra time above the 17 years might be sensible. Additional considerations, however, include:

• Some of the contracts entered into may have terms of up 25 years (particularly for management contracts) so that the 19 years would, in theory, run from the end of year 25.
• If your firm has provided an indemnity, then time runs for 6 years. However this period of time does not begin to run until there has been an indemnifiable breach, which could happen in 10 or 20 years time.

In Conclusion

In an ideal world, as lawyers, we would ask clients to retain documents indefinitely, but this is expensive and inherently hazardous. Each business will have its own procedure. Long periods of retention, however, provide the greatest protection in the event of a dispute.

If you require any further advice on document retention then please do not hesitate to contact Tom Wills or Richard Palmer at Watson Burton LLP on 0191 244 4444.

This was posted in Bdaily's Members' News section by Ruth Mitchell .