The promise of the “paperless office” is a bust.  In reality, the ease by which documents are created has caused files to explode in volume, both in paper and in electronic format.  And since those documents are easily disseminated, multiple copies of the same report or email clog file folders, bankers boxes and hard drives and result in steep storage costs.  Further, documents are not limited to words on paper, but include any recorded data such as voice messages, photographs, and even text messages.

However, once a document exists, getting rid of it always carries a risk.  Remember, the cover-up—or the appearance of a cover-up—is often worse than the crime.  In the case of construction projects, this can translate into the appearance of responsibility or fault for construction defects or hamper your ability to defend yourself.

What to do?  This is where a thoughtful document retention policy comes into play.  To be blunt, every player in a construction project—that is, architect, engineer, contractor, subcontractor and owner—should have a written policy of what documents to keep and for how long, and they should follow that policy.  No one document retention policy fits all businesses, but a standard policy spells out what documents should be created, how they should be categorized and how long they should be kept.

Document Retention

The first category, those being what documents should be created, may sound a little strange for a “retention” policy, but you do not need to worry about keeping a document that is never created in the first place. What this generally means is: do not create an unnecessary paper trail, or worse, a damaging paper trial.  There is nothing like sifting through 100,000 emails just to find the important ones, and then running across those written at three in the morning using language appropriate only for cable. 

Document Categories for Retention

The categorization of documents is important for determining where and for how long they should be kept.  There are many statutes and regulations that govern how long many documents should be kept, which may be different from state to state.  Contracts between parties may also dictate how long various types of documents need to be kept, and possibly what format (electronic or paper).  Your friendly lawyer may also recommend that certain documents be kept depending on the applicable time limitation for bringing a legal action.  This again will vary from state to state and may depend on the type of project and whom the project is with.  In Oregon, limitation periods vary depending on whether the project is small or residential or whether it is large commercial.  Further, in some states and in many instances, limitation periods do not run against governmental entities.  So construction documents on government projects should likely be held for longer periods of time.

Document Destruction

As for the destruction of documents when the time comes, it should be done following the routine set out in the policy.  Courts have recognized the legitimate need to eventually dispose of old documents and that following a reasonable and routine policy does not carry with it negative implications.  However, and there is always a catch, once there is a reasonable likelihood that litigation may ensue, the document retention policy should include what is known as a “litigation hold.”  No documents related to prospective or pending litigation should be destroyed, even if the policy would otherwise dictate destruction.  The consequences for disposing of documents once there is a reasonable anticipation of litigation can be severe, ranging from the dismissal of claims or the baring of defenses all the way to criminal sanctions.

Document retention policies serve an extremely important function, and they will only become more important given the ever increasing amount of information involved in any modern construction project.  No business should be left without one.

Column first appeared in the Daily Journal of Commerce on May 24, 2017.

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