Schulte Roth & Zabel LLP Records Retention Policy

Transcription

1 Schulte Roth & Zabel LLP Records Retention Policy RETENTION AND MANAGEMENT: DEALING WITH THE TECHNOLOGICAL AND MANAGERIAL ISSUES ACREL SPRING 2006 WORKSHOP Gregory P. Pressman Schulte Roth & Zabel LLP New York, NY I. What are the current practices followed by law firms today? A. See survey materials - reflects practices as of October B. Ethical guidelines - must be guided by obligations to keep complete client files. C. Dilemma - how to balance firm record keeping obligations with need for individual access to s, while preventing the system from becoming overloaded and while also eliminating old and potentially troublesome s. D. The hypothetical phone call asking for all s relating to a specific client that were sent or received in what would a response be today? II. Available Technologies for Management, Retention and Recovery. A. software itself. 1. Microsoft Outlook/Exchange 2. Lotus Notes B. Archiving solutions. 1. KVS Enterprise Vault - vendor is Symantec. C. Back-up Tapes. 1. Used for business interruption and recovery. 2. Not a "solution" for management and retention problems. 3. Not available on-line. D. Electronic Records Repository. 1. Software is part of file database September 1, 2005

2 2. s are electronically stored as part of firm's permanent client files. E. Document Management System s and attachments can be saved as if they are documents. Available to all users (unless made private), but not a permanent record. III. Using Deletion Policies and Software; Back-Up Tapes. A. The problem - when stores become too large, system performance declines and individual boxes become unmanageable. 1. Comparable to never emptying the garbage. 2. Software vendors have recommended deletion practices. B. What is, or should be, automatically deleted? 1. Generally, s in only "Sent Items", "Inbox" and "Deleted Items". 2. Deletion reduces stores and encourages people to do something affirmatively with s older than a certain date. C. How can user save s from deletion? 1. Folders - create them and store s in them. 2. Print them out - saving the old-fashioned way. D. "Deleted" s may still be recoverable - still available within disk storage medium for a period of time, until actually overwritten. E. Unless they are Draconian - i.e., all s older than a certain date are deleted - deletion policies do not provide solutions to storage problems Severe deletion policies create other problems. People use s as repositories of information and depend on having them available. likely. 3. May force greater use of transferring s to electronic records, but not IV. Archiving Solutions. A. When coupled with a deletion policy, makes stores manageable and preserves system performance. 2

3 B. Essentially, s older than a certain date (e.g., 60 days) are moved from folders to an electronic "vault". 1. Still available on desktop. 2. Attachments in s are also available. 3. Still can be deleted from the system. C. Unlike automatic deletion, s in the vault remain part of the system until (1) they are affirmatively deleted or (2) the box itself is deleted because the user has left the firm. D. Archiving is automatic, and is fundamentally a data management tool, not a record keeping solution. V. Preserving s in the Electronic Records Repository (or Database). A. s that should be made part of the firm's permanent records are stored electronically in a separate records management database. 1. Requires affirmative action on the part of a lawyer or assistant. 2. A decision is made that the should be a permanent record. 3. Available to all within the firm who have access to files. B. Software is integrated with system 1. LegalKey is a prominent vendor. 2. Provides for s to be "declared" into a designated file. 3. Organized by client and matter. 4. s declared into LegalKey can be automatically deleted from the e- mail system or remain in an Inbox, as the user chooses. C. Drawbacks. 1. Many lawyers won't do it - pain in the --- factor. 2. s are saved indiscriminately; whole folders are declared into LegalKey, rather than someone spending the time to sort through them and decide which to save. 3. Compared to the box interface, which is familiar to everyone, the e- mails within this database appear different. 3

4 D. Benefits. 1. Firm is complying with its record-keeping obligations. 2. Paper saving; eliminates need to print out s and attachments and send them to files. 3. Fully searchable - key words and category headings. VI. Using the Document Management System. A. At present, s and attachments can be saved, either separately or together, as documents within the Document Management System (DeskSite (formerly imanage) or DocsOpen (formerly PC Docs)). 1. Integration at this point is somewhat primitive - profile has to be created each time an is saved. 2. Convenient to save attachments. 3. Not permanent - not a record-keeping solution. 4. Not subject to deletion policies - potentially troublesome. VII. The Future - Trends and Possibilities. A. DMS vendors will promote integration with systems. 1. "Matter-centric". 2. System will create folders; when s are dragged, then profile in DMS system is created automatically. 3. Uses Outlook as a model, taking advantage of familiarity. B. Enhancements in records software, such as LegalKey. 1. Will automatically distinguish between internal and external s when folders are saved. C. Unified messaging. D. Instant messaging 1. "Experts" claim that IM will overtake s as primary electronic communication method. 4

5 Statement of Firm Policy. The Executive Committee has determined that current and accurate client files are to be maintained in accordance with the procedures set forth below. For any and all client-related documents and records that are not to be retained as required, or have reached the end of their retention period, it is the policy of the firm to have such documents and records destroyed promptly. The record retention policy applies to each attorney and other professionals at the firm. Our record retention policy does not specify criteria by which each and every document or may be evaluated for retention or destruction. All lawyers and paralegals, under the supervision of the partner responsible for any matter, must exercise judgment as to what materials rise to the level of importance requiring preservation in Files where retention is not specifically required by our policy. As a general matter, substantive communications, in hard copy or electronic form, should be retained. Communications that are mere substitutes for non-substantive conversations need not be retained. Documents to be retained should be sent to the Records Department (Files) promptly, and documents which are not to be retained or which are indicated herein to be destroyed when a matter is closed should be deleted or destroyed promptly. Keeping copies of documents in a lawyer s personal files (or retaining s in an electronic folder or archive) is not a substitute for sending material to Files. Retention and Deletion Policy. The retention and deletion requirements stated above apply to electronic communications with parties outside the office and to internal e- mails. To facilitate desktop access to current s for a reasonable period of time while promoting good record-keeping practices we have adopted the following specific retention policy for s: (a) All client-related incoming and outgoing communications through which are to be retained must be sent to the Records Department by declaring them into the LegalKey database through the firm's Outlook program. (b) messages in your INBOX and SENT ITEMS folders that are older than 60 days from the date they were received or sent will be permanently deleted. This also includes messages saved to subfolders in your INBOX and SENT ITEMS. messages that have been moved to folders inside your CABINET (or moved to other folders outside of your INBOX or SENT ITEMS) that are older than 90 days from the date they were received or sent will be archived to the KVS Enterprise Vault and will still be accessible via Outlook. The use of archiving does not, however, make theses messages a part of the Record Department's files, and all substantive client-related communications must still be declared into the LegalKey database as set out in paragraph (a) above. Messages that are in the DELETED ITEMS folder that are more than 10 days old will be purged. The actual deletion and purging will take place late in the evening on Saturdays and early morning Sundays. (c) Notice of Pending Deletions. Each week you will receive a warning message advising you about the upcoming automatic deletion of s. Please be sure to clean out your Outlook mailbox on a 5

6 regular basis. We recommend that you keep the number of messages in your Inbox to a minimum. Please remember that, once deleted from the network, messages cannot be retrieved. Records Retention and Destruction Rules. The retention policies for paper records stored in the Records Department and electronic records saved on the firm's systems are indicated on the chart below. In order to ensure consistency between the firm's paper and electronic records retention policy all electronic files maintained in the firm's document management system (currently imanage) or messages declared into the firm's records management system (currently LegalKey) which are older than seven (7) years will be purged from those systems with specific exceptions as outlined in the retention chart below. Attorneys and legal assistants who maintain copies of any client or other records should ensure that those records are not kept beyond the retention periods set forth in this policy. 6

7 Schulte Roth & Zabel LLP Records Retention Policy Practice Area / Business Department Firm-wide Documents to be permanently retained Audit Letters: Final versions of legal letters to auditors should be permanently retained, with copies sent to the Audit Correspondence binder set up by the Records Department for each client and to the Correspondence & Memos binder for the matter involved. Documents to be destroyed 7 years after matter is closed or after final conclusion of the transaction or proceeding Documents to be destroyed when the matter is closed Audit Letters: Drafts of Audit Letters should not be retained. Corporate Documents: Corporate minute books, resolutions, stock certificates and ledgers, board and committee meeting minutes, and corporate seals. Opinion Letters: Final versions of opinion letters should be retained and sent in triplicate to the Records Department pursuant to the firm s separate opinion procedures. Opinion Letters: Copies of legal memoranda and other documents relied on as the basis for an opinion should be kept for a period of seven years. Opinion Letters: Drafts of opinion letters should not be retained. Retainer Agreements / Conflict Waiver Letters: All client retainer agreements, client conflict waiver letters and close-out letters and memoranda regarding document retention must be permanently retained. Retainer Agreements / Conflict Waiver Letters: Drafts of Retainer Agreements, Conflict Waivers, and close-out letters and memoranda should not be retained. Time Records / Billing: Attorney time records (Elite), Client invoices, Client invoice correspondence, Client invoice detailed billing report (dbr's), Write-off documentation. Time Records / Billing: Time loads reconciliation; Attorney time entries (DTE); Collection correspondence. September 1, 2005

8 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Practice Area / Business Department Business Reorganization Documents to be permanently retained Bankruptcy proceedings binders, correspondence and memoranda files, final versions of affidavits, original signature pages, pleadings, complaints, discovery requests and responses, chronologies. Documents to be destroyed 7 years after matter is closed or after final conclusion of the transaction or proceeding Drafts of papers filed with court or provided to opposing parties; deposition summaries and witness outlines; notes. Documents to be destroyed when the matter is closed Drafts of court papers not filed nor provided to opposing parties. Documents produced by parties and non-parties, hearing transcripts, monthly operating reports, fee applications, financial reports and valuations, transcripts. Business Transactions Finance General Corporate Investment Management / Regulatory Real Estate Structured Finance Due Diligence Material: Outstanding credit agreements and other material contracts and documents reviewed in connection with due diligence investigations performed as part of our representation of underwriters or issuers in connection with public offerings, Rule 144A offerings and private placements should be retained, in non-annotated form, unless the partner in charge of the matter gives specific retention instructions otherwise. Documents reviewed and memoranda analyzing issues raised in connection with the due diligence on private acquisitions should be retained in an inside folder labeled Due Diligence Memos & Back-Up Acquisition of. Copies of due diligence request lists, and the responses to such request list (non-annotated), should be retained in all cases. Due Diligence Material: Documents (other than memoranda analyzing issues) prepared in connection with due diligence investigations as part of our representation of underwriters or issuers in connection with public offerings, Rule 144A offerings and private placements should not be retained following the closing or abandonment of the transaction, unless specific retention instructions are given by the partner in charge. In particular, notes taken in connection with meetings or the review of documents are not to be retained after the transaction has closed or has been abandoned. 8 September 1, 2005

9 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Practice Area / Business Department Business Transaction Finance General Corporate Investment Management / Regulatory Real Estate Structured Finance Documents to be permanently retained Executed Documents: Executed versions of contracts, leases, mortgages, deeds and other negotiated documents, as well as all closing instruments, should be retained permanently. Documents to be destroyed 7 years after matter is closed or after final conclusion of the transaction or proceeding The only drafts of documents that should be retained are drafts of deal documents, unannotated, that are exchanged with other parties in a transaction; such drafts should be retained for a period of seven years. Regulatory Applications and Filings: Final versions of regulatory applications and filings should be retained for a period of seven years. Drafts should not be retained (unless such drafts were filed and are publicly available (in which case they should be retained for seven years)). S.E.C. Filings / Disclosure Documents: Final versions of disclosure documents (10-K s, 10-Q s, registration statements, prospectuses, offering circulars, tender offer documents, private placement memoranda, proxy statements, etc.) should be retained for a period of seven years. Documents to be destroyed when the matter is closed Drafts that are sent to clients or that are internal drafts or contain SRZ lawyers' marginal notes or comments should not be retained. S.E.C. Filings / Disclosure Documents: Drafts of such documents should not be retained following the filing or completion of the documents. The only time that drafts of such documents should be retained is if the draft was filed with the SEC and is publicly available (such as preliminary proxy statements) or if copies of the drafts have been given to prospective purchasers of the securities (such as drafts of private placement memoranda that are shared with potential investors). In such event, only those clean copies of drafts that are publicly available or were given to actual or potential investors should be retained for a period of seven years. Employment Law and Employee Benefits Collective bargaining and Union agreements. Pension plan documents in final form. All other documents aside from drafts. Drafts. 9 September 1, 2005

10 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Practice Area / Business Department Environmental For all Business Transactions, Finance, Litigation or Real Estate matters involving Environmental issues, the retention policy for each of those practice areas should apply to the retention of any environmental documents. Documents to be permanently retained Settlement Agreements, Insurance Policies, Environmental Escrow Agreements, Environmental Indemnity Agreements and Permits should always be permanently retained. Documents to be destroyed 7 years after matter is closed or after final conclusion of the transaction or proceeding For documents not related to Business Transactions, Finance, Real Estate or Litigation matters Permit Applications or other governmental filings may be destroyed after seven years. Documents to be destroyed when the matter is closed For documents not related to Business Transactions, Finance, Real Estate or Litigation internal drafts may be destroyed when the matter is closed. 10 September 1, 2005

11 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Individual Client Services While Client Is Living: Going forward, drafts being sent to files should generally be limited to drafts of Wills (and even those, only where necessary and appropriate), but ordinarily not other drafts. Drafts of Wills in files should be retained until after the client dies and the Will is admitted to probate (see section II A). Drafts of other documents should generally be discarded periodically (or not sent to files initially). Except where specifically decided to the contrary by the partner in charge, all other files should be retained during the client's lifetime. After Client Dies: Superseded Wills and drafts of Wills should be discarded six (6) months after the Will is admitted to probate (unless there is reason to believe they are relevant for other pending or anticipated litigation). Living wills and health care proxies of the client (originals and copies) can also be discarded after the Will is admitted to probate. Powers of attorney (originals) should be retained until an IRS closing letter is received. B. After the client dies, the balance of the client's file should be reviewed to determine what, if anything, can be discarded at that time. If we are not representing the client's estate, we should send the client's file to the estate's attorneys (or executors), other than attorney notes or other work product that is appropriate to retain. C. At the conclusion of the administration of an estate, the file should be reviewed to remove all drafts and, if possible, all duplicates. Ten (10) years after the completion of the estate administration, unless the Executor(s) wish to retain the file, the estate file can be discarded except (i) the probate binder (including letters testamentary and letters of trusteeship), (ii) settlement documents on any estate litigation or other miscellaneous estate proceedings, (iii) a full binder of Form 706 and all attachments, and (iv) a full binder of all accounting documents, including any court decree settling the accounting or Receipt and Release agreements informally settling the accounting. Correspondence should be also discarded at that time unless the partner in charge directs otherwise (in whole or in part). Foundation Clients: Since these clients are typically "perpetual," their files should be reviewed periodically to discard duplicates, drafts and any unnecessary items. Otherwise, these files should be retained indefinitely. Trusts: Retain original and one (1) copy of trust agreement indefinitely. Retain all bank statements and income tax returns until one (1) year after an accounting is settled (informally or formally), provided, however, that no income tax return should be discarded before the applicable statute of limitations expires. The rest of a file relating to a trust should be reviewed periodically to discard any duplicates or unnecessary materials. 11 September 1, 2005

12 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Intellectual Property Patent / Trademark Prosecution Files: One year after issuance of a patent or trademark, prosecution files should be stripped of all drafts, attorney notes, prior art and duplicative copies except: the Specification as filed; Papers issued by the Patent and Trademark Office (PTO); Responses to and/or Official Correspondence with the PTO. Permanently retain these documents and any necessary to maintain the patent or trademark. Patent / Trademark Prosecution Files: Seven Year Period: Canceled, expired or abandoned Patent and Trademark Application files. Life of Patent plus Seven Years: Patent Assignment agreements. Correspondence with client. Priority documents. Patent / Trademark Prosecution Files: Drafts of Patent and Trademark applications which were not filed (upon issuance of the patent). Pre-Filing Patentability Opinions and Search results (upon issuance of the patent). Documents that establish the date an invention was made (i.e., lab notebooks, research papers, key data, etc.). Records regarding payment of maintenance fees. Transactional Documents: License Agreements. Disclosure of Invention documents. Invention Declarations. Patent Appeal or Interference Proceeding documents. Due Diligence investigation material. Opinion letters regarding validity and infringement. Cease and Desist letters. Transactional Documents: Correspondence relating to agreement, except those having significance concerning interpretation of the agreement. Employee Confidentiality agreements. Records documenting the identified infringements of patents and trademarks, and action taken other than litigation. Records documenting the administration of patent licensing agreements and collection of fees. Litigation Documents: The IP Group will follow the same retention rules as the Litigation Group. Litigation Documents: The IP Group will follow the same retention rules as the Litigation Group. Litigation Documents: The IP Group will follow the same retention rules as the Litigation Group. 12 September 1, 2005

13 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Practice Area / Business Department Litigation Documents to be permanently retained The retention of trial preparation files and legal research should be decided by partner in charge of the matter based on statutes of limitations. Litigation binders, trial and hearing transcripts are to be retained. Documents to be destroyed 7 years after matter is closed or after final conclusion of the transaction or proceeding Documents produced by parties and non-parties, transcripts of depositions and deposition exhibits. Drafts of papers filed with court or provided to opposing parties. Correspondence and memoranda files, notes, final versions of affidavits, pleadings, complaints, discovery requests and responses, chronologies, deposition summaries, witness outlines. Documents to be destroyed when the matter is closed Copies of client documents, document productions, subject matter document files, and privileged documents may be destroyed unless there is a possibility that the matter might be significant to another case or related matter. Drafts of court papers not filed nor provided to opposing parties. SRZ Marketing Department Historical firm materials: Brochures; Photographs; Photo Books; Publications; Client lists. Seminar presentation materials; firm advertising. 13 September 1, 2005

14 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Retention Policy of SRZ Human Resources Department: Certain federal and state laws and regulations contain provisions requiring certain Records to be retained for specified time periods. The firm will comply with all applicable legal requirements and the Human Resource Department's separate internal policy regarding document retention. Retention Policy of SRZ Accounting Department: Certain federal and state laws and regulations of the U.S. Treasury Department, Internal Revenue Service and various banking agencies contain provisions requiring certain Records to be retained for specified time periods. The firm will comply with all applicable legal requirements and the Accounting Department's separate internal policy regarding document retention. Confidentiality. When disposing of any materials that are not required to be retained under this policy, care must be taken to ensure that any confidentiality associated with such material is maintained. A bonded document destruction company will be hired to immediately destroy any documents the Records Department so designates. Certificates of Destruction will be kept by the Records Department for all destroyed material. Destruction of Documents. Once seven years has passed since the matter was closed by the partner in charge, or since any significant activity has occurred, the Records Department will have its staff members review the file in accordance with the Records Retention Policy. They will remove any documents that should be permanently retained and have a bonded document destruction company destroy all other material. The entries on LegalKey will be updated to indicate the status of each file. Suspension of Policy. Pursuant to Rules 26 and 34 of The Federal Rules of Civil Procedure and the Sarbanes-Oxley Act of 2002 all destruction of hard copy files, s, electronic filings and attorney work product must cease immediately when a litigation, arbitration, governmental or self-regulatory organization investigation or audit is reasonably foreseeable, pending or in progress for a matter. The partner in charge of the matter must notify the Records Department and any attorneys or legal assistants involved and inform them of a suspension of the Records Retention Policy and of the need to preserve all materials relating to the subject matter of the litigation, investigation or audit. An index to all files for the matter should be compiled by the Records Department and sent to the partner in charge of the matter and any attorneys authorized to provide the requested records. Only the partner in charge of the matter or, in the absence of such partner, the Chairperson of the relevant department shall decide when the Records Retention Policy may be reinstated. 14

15 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Firm Cadwalader (Lotus Notes) Usage and Retention Policy We hope to have a retention policy in place 1st quarter of It will be 90 day retention. Integration with Records System / Backups In August 2004, we made declaring to LegalKey available. Comments Lotus Notes . Chadbourne (Outlook/ INBOX and SENT ITEMS messages older than 60 days and DELETED ITEMS older than 10 days are purged. Any message moved to another folder structure is retained indefinitely. We occasionally suspend the policy on re-use of our backup tapes when circumstances require it Cleary Gottlieb (Lotus Notes) We have a size limit of 500MB. Numerous lawyers have surpassed their limit. DELETED ITEMS cleared nightly. Otherwise, there are no automatic deletions. We limit the size of lawyers' mail databases which tends to impose a certain amount of discipline. Developed our own system using an imanage back end; very successful but has led to no changes in the retention policy.. Beginning to implement a policy of automatically deleting older messages from users' Inboxes. Clifford Chance (Outlook DELETED ITEMS purged after 60 days. This policy will become stricter soon and Inbox messages older then 60 days will be moved to the deleted items folder. Client folders will be retained as required.. Piloting LegalKey. Once it is a proven and viable solution, believe it will have a big impact. The major pushback from attorneys is that they have no alternative for storing this correspondence, therefore they need to keep client communications in their . Policy currently under review. Cravath (Lotus NotesA) Messages are automatically deleted after 45 days. Users can move messages to a local archive. Backup tapes overwritten after 45 days. Davis Polk (Eudora) In October 2004, stated that there is no retention/ deletion policy at Davis. This implies that everything is saved perpetually. Debevoise Plimpton (Outlook/ Inbox content and sent items are deleted after 35 days. Subfolders are indefinite retention. Attorneys can send directly to records system. Backup tapes are recycled on a 5 week rotation. We encourage users to send messages to records and discourage storing messages in folders for long-term record keeping. 15

16 Survey Results of Comparable NY Law Firm Technology Retention Policies As of October 2005 Firm Dewey Ballantine (Lotus Notes) Usage and Retention Policy Inbox, Sent and Drafts folders deleted after 30 days. Personal folders kept indefinitely. Integration with Records System / Backups No Comments Fried Frank Automated deletion of 45 day old in Inbox, Outbox, Sent folders. Automated deletion of 5 day old mail in Deleted folder. Automated deletion of 45 day old voic s (unified messaging) from all folders. comprising the correspondence on any given matter is to make its way to central records, though we are still futzing around with how it makes its way there. We have settled on imanage 8 for filing, but will not implement until Backup tapes are recycled after 30 days. Kaye Scholer (Lotus Nootes) 90 days retention for internal and 18 months retention for external. We also have an archive where the retention policy is not in place, but it takes manual intervention to get an into the archive. The archives have a different backup cycle. The implementation of the storage of s in the records management system really did not affect the retention policy. Backup tapes recycled after 10 days Kelley Drye In June 2003 the policy statement made by our managing partner included the directive to use the LegalKey integration with Outlook, i.e., LKDeclare, to file messages and attachments directly into the RMS, after which they can be deleted from the mailbox. In other words do not print and send the hard copy to Records. Latham & Watkins Inbox: Messages inactive for 30 days will be moved to Deleted Items Sent Items: Messages inactive for 30 days will be moved to Deleted Items Deleted Items: Messages inactive for 60 days will be permanently deleted Messages stored in folders other than those mentioned above will be retained indefinitely but they are subject to automatic archiving using EAS from Zantaz. Our selection criteria for the automatic archival of messages is for those messages that are over 10K in size and have been inactive for over 6 months. 16