Defensible Disposition: Let’s Get Down to Basics

In the modern era of work, documenting and tracking actions has always been possible: sales receipts, pay stubs, tax documents, letters, memoranda, etc., all have value some point. At times, these types of documents need to be referenced later on down the road in connection with tax preparation, audits, compliance, or other reviews. Not knowing whether something is going to be needed in the future has led to a cultural mantra of “better to save something you don’t need rather than destroy something you do.”

Businesses, including law firms, are collectively guilty of over-retention, as evidenced by mountains of boxes in offsite storage facilities that are rarely, if ever, retrieved or dispositioned.  This “keep everything forever” mentality has led to an informational environment that has severe financial and risk-related implications and wading through volumes of often unclassified data can be a real hindrance to efficiency.

The cost of storage has exponentially increased and it is becoming more and more difficult to properly index the massive amounts of information, which could potentially lead to the over-retention of personal information or other sensitive materials that could cause serious financial or reputational damage in the event of a breach. Further, there’s the implicit cost of finding a particular piece of information and how that cost increases when the information you are looking for is held amongst a mountain of information (think: trying to find a needle in a haystack. Now imagine the person searching for the needle could otherwise be billing at $995 an hour!).

The McKinsey Global Institute reports that the average employee spends nearly 20 percent of their work week looking for internal information. Using these estimates, we can infer that a law firm could experience almost $8,000 a week in lost time for someone billing at $995 per hour. An effective Information Governance (IG) program will leverage disposition initiatives aimed at the reduction of redundant, outdated, or trivial (ROT) information and result in improved operational efficiency and greater profitability.

So, what does ‘legally defensible disposition’ actually mean? Disposition can include several actions, including destroying documents with no legal hold requirements or business value, moving data to less expensive storage (also known as archiving), or transferring custody of the information to another party (such as returning the data to the clients to whom it belongs or transferring it to a third party such as another firm). Performing these actions in a defensible manner means attempting to comply with regulatory requirements and internal policies, or, at the very least, considering client’s best interests throughout the disposition process and perhaps most importantly, performing disposition activities in a consistent and reasonable way.

You should be able to demonstrate to the client, (or to a judge, if it came to that), that you took all reasonable efforts to get required input regarding the disposition of a client’s legacy data.  Depending upon your program, any agreed upon terms in outside counsel guidelines, or other documented agreements with the client about file disposition, is helpful. You may also need to get input from business partners, a broader base of clients, General Counsel or other internal contacts as well.

It is easy to get stuck in “analysis paralysis” when attempting to start and maintain a disposition program.  To avoid this, it helps to approach your efforts with a two-pronged approach.  These two prongs are: 1) Legacy; and, 2) “Go forward” retention and disposition.

Legacy disposition refers to the actions taken on client data that precede any formal retention policy implemented by the firm. All organizations have pockets of data that may not have been well organized or governed.  Typically, legacy information has little to no business value because of its age.  However, because there isn’t a distinct policy covering it (and, more importantly, telling you what to do with it), destroying legacy information isn’t as simple as just throwing it away. In order to mitigate the risk of the data being related to an existing legal hold or being needed down the line, the information needs to be analyzed and owners and other involved parties (e.g. attorneys, outside counsel, etc.) need to be consulted.  This can be challenging to navigate when those with relevant institutional knowledge are no longer available to provide guidance and advice.  Developing an effective legacy disposition program is not a one-size-fits-all.  It will require information gathering and strategic planning to best understand your areas of opportunity (think low hanging fruit) vs. potential areas of risk.  You will likely find buckets of information that can be addressed quickly, and most certainly those that require in-depth analysis (either by people, software, or combination of both).

On the other hand, while still having its complexities, a “go forward” retention and disposition policy is a bit more straightforward from a defensible disposition standpoint. This policy will explicitly detail the length of time a company will retain certain information and what happens to the information at the conclusion of this period. That said, it is important to make an investment in training and awareness along with monitoring and auditing, lest the piles of unstructured and unclassified information continue to proliferate.  An ounce of prevention is worth a pound of cure; implementing a go-forward program is also the ideal time to ensure you’ve addressed proactive measures such as explicitly stating in the client engagement letter the firm’s position on retention and disposition and capturing any requirements that may be set forth in outside counsel guidelines.  Account up front for the identification and capture of precedents so that your go-forward program is designed so well that your legacy disposition issues aren’t repeated.

Alright, you’re convinced, you need an effective disposition program at your firm—now what? If you’ve been involved with IG for longer than a minute, you no doubt have heard about the next steps including identifying a program sponsor and working with key stakeholders to bolster support for the project and increase acceptance and adoption among the firm. While these are the most common points most disposition advocates suggest, they are nonetheless important and need to be considered before a starting a disposition program. Your program sponsor should be someone who not only understands the goals of the project and the reason behind it, but who is also senior enough to be able to initiate and propagate company-wide change (typically CIO or General Counsel). Equally as important, your program sponsor can help define items that will not be considered for disposition—items of historical relevance or that continue to serve a business purpose.

Of perhaps equal importance, your stakeholders will help navigate the politics of change management, either by helping to influence or in some instances mandating policy compliance for those who remain steadfast in their current practices.  Key stakeholders will differ from firm to firm (depending upon size, culture, internal political dynamics, etc.), but are often director-level employees who can take the project and pass along instruction to the departments to increase adoption.

True IG requires participation by all firm lawyers and staff.  Everyone plays a role—some big, some small—and it is important not only for you to understand those responsibilities but that those performing them do as well.  A successful IG program requires an interdepartmental, coordinating effort. For example, IT may need to develop a workspace to track project developments and reports to help isolate key data. Paralegals and other timekeepers may need to help identify legal holds, preventing disposition of client files. Office assistants and secretarial staff can be instrumental in identifying client contacts and coaxing support out of otherwise busy and (probably) disinterested attorneys. The list could go on. And this is just for the execution of the program you will design.  Deliberate focus should be given to ensure people know the “who, when, where, why, and how” when retaining information in the first place.

As you can see, there is a lot that goes into a successful disposition program. It could be tempting to rush through a lot of these steps and start with an aggressive disposition program, however the benefits of proactive planning and working closely with as many departments within the firm as possible and even closer with the responsible attorneys should not be overlooked.

Historically, cost savings has been the primary driver motivating the implementation of disposition programs; however, the script has flipped.  Disposition initiatives (and really, IG as a whole) are supporting endeavors aimed at allowing the firm to provide more accurate, reliable, efficient, and economical service to its clients. No amount of reduced offsite storage costs will make up for the loss of a client because they came looking for their records that may have been destroyed without proper due diligence, notifications or other checks and balances.  No reduction in the amount of time it takes an attorney to find and retrieve a record they need will rebuild the trust lost if you destroy a record of a client of theirs without consulting them first. Conversely, you don’t want your firm to be over-retaining information that you have no requirement to keep or that the client does not wish to have retained.  Many clients have their own defensible disposition programs and it is not uncommon for them to want their law firms to be compliant with it. It’s strongly recommended to check (and if warranted recheck) with responsible attorneys and clients to make sure disposition of client data is appropriate. In doing so, you’ll ensure your efforts are not only effective, but also defensible.

In the next article in the series, we will begin to sketch out what the program looks like in more granular detail. This will include: what to look for in a program sponsor, how to identify and capture key metrics, determining the scope of the program, and what a cooperative effort with your IT department can do for you. So, in short, tune in next time for even more legacy disposition fun!

 

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IGW Staff

IGW Staff

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