Survey of Records Administrators Shows Negligent e-Records Management is Creating “Stunning Business Risks”

A poor or missing litigation hold procedure creates a legal land mineA new survey of records managers by Cohasset reveals continued neglect in the management of electronic records. The survey shows 40% of organizations do not include electronic records in their retention schedules and 55% do not include emails; only 14% always follow their records retention policy; 44% do not include electronic records in their litigation hold procedures; and, 46% do not think their electronic records are accurate, reliable or trustworthy.  These statistics are amazing to me, especially when you consider this survey is limited to those organizations with full time professional records managers. It is reasonable to assume that the statistics are far worse for companies that do not have a records management department. The bottom line of the study is that:

The majority of organizations are not prepared to meet many of their current or future compliance and legal responsibilities.

The outstanding challenges associated with the management of electronic information assets have the potential to be devastating in terms of costs, professional careers, and even corporate reputations.

The number and magnitude of organizational and operational problems reflected in the survey findings collectively represent stunning business risks.

The integration of electronic records into the organization’s records management program should be a priority, and electronic records control gaps should be the focus of immediate corrective action.

In a hopeful sign for the future, the survey shows that senior management of corporations and governmental entities are beginning to understand the consequences of this neglect, and take steps to resolve it. Also, believe it or not, the survey shows improvement from prior years.

This work has a high degree of credibility and should be a wakeup call for corporate America. It was co-sponsored by the leading professional associations in this area, ARMA (Association of Records Managers and Administrators) and AIIM (Association of Information and Image Management, a/k/a Enterprise Content Management Association). A white paper entitled Call for Collaboration, by Robert F. Williams and Lori J. Ashley, reports on the survey. It was based on information from more than 1600 respondents in 2007, and a total of more than 5500 respondents in the survey’s four prior years – 1999, 2001, 2003 and 2005.

Although much of the report is written in polite and correct jargon, it does not mice words as to the significance of most organizations’ failure to have a functioning litigation hold procedure:

The indisputable fact: an extraordinary number of organizations are negligent with regard to a formal system to ensure records hold orders are successfully administered. For any organization which is the likely target of litigation or regulatory inquiries, the absence of a formal plan to respond to discovery requests must be considered an unacceptable risk. Not having such a system is a legal land mine waiting for detonation. Where there is no formal system for records holds orders in their organizations, records management professionals need to work aggressively with their legal colleagues to correct this significant deficiency. (emphasis added)

Land Mine in the desert

Another interesting finding is that most IT departments administer electronic documents, but they have no understanding of the basic premise of records management, that all records should have a “life cycle.”  That is, they are born, have a useful life of some duration appropriate for the type of record involved, and then die. In other words, records are only supposed to be retained for as long as they are needed to meet the organization’s legal and business requirements.  After that, they are supposed to be destroyed, or in some rare instances, like with historical documents, archived for preservation. 

Records Life Cycle

The survey shows IT has no clue about “records life cycle” (or at least that is what the records managers think). For this reason, IT tends to treat all electronic records like the original paper Constitution. They try to archive everything so that it will last forever, usually in multiple, ever spreading copies.  They tend to backup and preserve electronic records forever, or at least for as long as the latest technology permits, and are lax in the destruction of records.  IT fears that the day after they destroy a record someone in senior management will have a rush demand to retrieve it. The mistaken desire for immortal records has had draconian consequences well described in this report:

Higher Storage Costs – If electronic records are retained without a clearly defined disposition trigger (as determined by an organization’s retention schedules), the volume of records will grow rapidly and that growth will be mirrored in the cost for electronic records storage.

Greater Discovery Costs – Since unnecessarily retained records can be the subject of legal discovery, the costs associated with producing records that should have been destroyed are totally unnecessary expenses.

Unwittingly Assisting Plaintiffs – Unnecessarily retained records can be used against the organization in future litigation. This is potentially the most significant cost.

In line with the fundamental premise of this “e-Discovery Team” blog, the authors of this report recommend that senior management begin to address these problems by forming a

cross-functional team (business, legal-compliance, IS/IT, records management) and collaborative approach to ensure an integrated and sustainable records management program.

The advice to in-house counsel is similar. They recommend that legal

Establish an ongoing interactive relationship with IS/IT and records management regarding the organization’s management of its valued information assets, especially electronic records.

I could not agree more. The “stunning business risks” created by the negligent management of electronic records is a high priority problem. It is too big and too complicated a problem for any one branch of a large organization to solve on its own. It is time for the legal departments, IT, records management and operations management to stop working in isolation. They have to work together on this common task. Every study seems to reach this same conclusion. Only an interdepartmental approach will succeed to fix this interdepartmental problem. Companies have to begin by forming, and empowering, a cross-functional team with members from each department, what I call an “e-discovery team.”  Only an e-discovery team can possibly clear the “legal land mine waiting for detonation” which was uncovered by this study, and many others like it.

2 Responses to Survey of Records Administrators Shows Negligent e-Records Management is Creating “Stunning Business Risks”

  1. […] Blog entry by Ralph Losey posted on e-Discovery Team, October 6, 2007: A new survey of records managers by Cohasset reveals continued neglect in the management of electronic records. The survey shows 40% of organizations do not include electronic records in their retention schedules and 55% do not include emails; only 14% always follow their records retention policy; 44% do not include electronic records in their litigation hold procedures; and, 46% do not think their electronic records are accurate, reliable or trustworthy.  These statistics are amazing to me, especially when you consider this survey is limited to those organizations with full time professional records managers. It is reasonable to assume that the statistics are far worse for companies that do not have a records management department. The bottom line of the study is that: The majority of organizations are not prepared to meet many of their current or future compliance and legal responsibilities. […]

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  2. For those of us who work in this arena, these statistics are, regrettably, not really that surprising. We consistently encounter organizations that are paying the price for inadequate records management processes. This price is paid in the form of often significant legal and businesses consequences that ensue from ill-conceived or negligent efforts. Too frequently, still, companies find themselves trying to sort out their electronic data after legal action has started, rather than proactively addressing it as part of a sound records management and retention program. And we heartily endorse the notion of a cross-functional approach to records management that spans the business owners of the data, the legal department, and IT staff. To this we would add the important role played by third party vendors like Cataphora that can provide advanced technologies and significant specialist expertise that reduce the risks and costs that poor or inadequate records management processes entail.

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