Making the Resolution to ‘Trim Down’ Those Records
It’s that time of year…you know, the one where people make resolutions to better themselves over the course of the next year. This is the time of year I always make the resolution to trim down…and I don’t mean by hitting the gym each day. I actually use this time of year as my reminder to purge things I don’t need any more and re-evaluate what I do have…clothes, furniture, collectibles, my social media platforms, and the list goes on. It’s a liberating feeling, really. Which got me thinking even about my professional life. What documents and records do I have on hand that I can get rid of? What rules surround record retention? Should you purge or not?
Speaking to the Architects and Engineering world, in particular, it’s no surprise design firms often find themselves drowning in documents. There are the usual plans, reports, and schedules. Add on the inevitable requests for information, technical calculations, memos, and other correspondence. These various records mount across a variety of mediums, including hard drives, CDs, blueprints, email attachments, photographs, and reams of office paper. So much for the paperless office we all heard about, right?!
Once a project is complete, there’s the question of what to do with all of the documents, plans, correspondence, and other records that have been generated. Should you keep them all? If so, how long should you keep them? What records must you keep at a minimum to meet your risk management needs?
Protection from Stale Claims
The issue of how long to retain your records largely revolves around the potential need for documentation to defend your firm against charges of negligence and professional liability. Simply put, a consulting firm that provides professional services may find itself sued for negligence long after the design work is done and the project is completed. Professional liability claims can come years or sometimes a decade or more later. Whatever the timeframe, your firm will likely remain the principal target of any lawsuit, even if the problem was the result of poor maintenance rather than design errors or omissions.
Regardless of why a claim occurs, your firm’s defense will largely rest on its ability to produce records of what actually happened during design and construction phases of the project. This is especially true if the claim occurs years after project completion as there are few other means (such as statements of witnesses) to confirm your side of the story.
State laws have traditionally offered design firms some protection against “stale” claims — those instituted long after the project was completed. These protections are usually embodied in two areas of law: statutes of limitation and statutes of repose.
Statutes of repose timeframes vary from state to state. Some are as short as four years and others run as long as 15 years. A few states do not offer a statute of repose, while others may impose different lengths of repose for different types of claims. NOTE: State statutes change frequently, like in Iowa recently. So, check with your attorney to verify the current statute of repose and statute of limitation within your state.
Record Retention Policies
Because of their specific time limits, statutes of repose offer design firms a stronger level of protection against stale claims. They also help dictate the minimum lengths of time firms should retain their records. Generally speaking, firms should keep records for the length of repose plus two or three years for a safety margin.
Keep in mind that approximately 9 out of 10 claims are brought within five years after project completion. What’s more, nearly all claims are filed within 10 years of substantial completion. Therefore, there’s little reason to keep records beyond the length of your state’s statute of repose plus a short safety margin.
While the statute of repose in your state gives you a good guideline for how long to keep project documents, that’s only half the battle. The other half is determining what to keep.
Fortunately, your firm doesn’t have to keep all of its records for 5, 10 or even 15 years. In fact, it is often best that your firm not keep everything. The reason is “discovery.”
What do I mean by this? Well, discovery is a legal process that allows opposing attorneys to get access to all of a firm’s record relating to the project. All, in this case, I mean, every plan, every schedule, every memo, and every piece of correspondence, including email. In short, every piece of information that a firm or its employees has kept, whether it knows that it has the information on file or not, is discoverable.
Discovery can turn up some ugly surprises if a firm has not taken a consistent and systematic approach to record retention. For example: Records can be scattered among several locations. They can include drafts of plans that were later discarded due to discovered errors or omissions. True dynamite in a plaintiff’s attorney’s hands are copies of informal communication among team members. Informal correspondence, such as emails or memorandums, can include provocative remarks about a client or project, or raise questions about the quality of work performed.
The solution to limiting discovery is to develop and enforce a company-wide record retention policy that clearly states what kinds of records are to be retained, sets out schedules and methods for record destruction and outlines how and where records are to be stored.
5 Tips for Record Retention
What does this all boil down to? While there is no single record retention program that fits all companies, there are some simple rules of thumb you can follow. Talk with your attorney about the following 5 suggestions:
- Documents retained should include contracts, approvals, drawings, specifications, calculations, reports, design criteria and standards, records of phone calls, advisory letters, product research, submittal logs, site visit reports, correspondence with contractors, owners or agencies, change orders, and close-out documentation.
- “Working” documents, drafts, and notes should be scheduled for destruction soon after the final documents are created. Keep only the final document, not all the iterations that lead up to it. Those early versions may contain incomplete or inaccurate information that could mislead a judge or jury.
- Archive electronic records on an appropriate storage medium and consider keeping a duplicate copy offsite. Remember, however, to destroy both copies in accordance with your record retention policy.
- When the time comes, destroy the records as completely as possible. Discarded papers may be retrievable, so be sure that they are destroyed through shredding, burning, or other irreversible methods. Consult with information system specialists to determine the most permanent method of deleting electronic data from your computer network.
- Make sure your record retention plan is consistently applied from project to project. You don’t want to be caught doing a little too much “house cleaning” on that one job that went south. Courts have shown they are willing to accept a company’s explanation that records were destroyed in accordance with company policy only if the firm can show that its policy was consistently implemented. It’s critical that all employees know, understand, and are held accountable for implementing your firm’s record retention policy.
Using the applicable statute of repose in your jurisdiction or jurisdictions, it is well advised to establish and then follow a formal record retention policy. Have it drafted or thoroughly reviewed by legal counsel and then distribute it to all appropriate employees and clients. Such a system can go a long way toward eliminating the clutter of unnecessary paperwork while ensuring appropriate records are maintained in the event of a future dispute or claim.
And, after reading all of this, if you have any questions, don’t hesitate to reach out to us. We’d be happy to talk with you about this, because, as I said, state statutes do change frequently.
Published on: 01.08.18