21 Aug 2014
Check yourself before you wreck yourself: Document management systems and being Dispute Ready
by Sarah Frost, Tim Jones
The importance of the interaction between good corporate governance and sound document management cannot be overstated.
We've already discussed the concept of good corporate governance and the critical role that it plays in an organisation being Dispute Ready, and set out the six simple and immediate steps that an organisation should take in order to be Dispute Ready.
Corporate governance also is an important part of the second element in being Dispute Ready: document management.
With the onset of the age of email and continual streams of data in an organisation, document management has become a central and critical part of every dispute. In all disputes, identifying documents critical to the dispute is key.
A sound document management system can be the difference between getting off to a flying start in any dispute, and even winning or losing it.
Managing an increasing volume of information in an increasing number of digital formats, how can your organisation ensure that it is Dispute Ready? Before identifying the manner in which good corporate governance can assist, it is useful to understand:
- what a document management system is; and
- what makes it "sound".
What is a document management system?
This is a relatively straightforward concept. A document management system is the system or method by which documents (both hard copy and electronic formats) are created/captured, indexed, stored, retrieved and managed.
What makes a document management system "sound"?
There are document management systems and there are document management systems.
What is the difference between a document management system and one that is "sound"?
Any sound document management system should have as a minimum the following six features to be Dispute Ready:
- documents and information should be created and stored in a digital format wherever possible. Only retain hard copies where required by law to do so;
- documents and information should be stored by subject matter or project, rather than only by custodian or department, so that it is easier to isolate those documents pertaining to a particular issue;
- users should be restricted as to where they can create and store information. It is important for example that electronic information created and stored by your in-house legal team is kept separate and access restricted;
- the organisation should avoid creating and storing duplicate and near duplicate documents in multiple locations throughout the organisation. Consider a system of version control;
- information created by obsolete software and hardware is accessible by conversion to a new format, or the software and hardware needed to access the information are retained; and
- electronic files, laptops, PDAs and backup tapes are secured and files not deleted via document retention policies.
How can good corporate governance assist in establishing and maintaining a sound document management system?
Good corporate governance can assist when an organisation is seeking to create or improve a sound document management system as it will set out the ground rules for the system, such as:
- provide guidelines to staff on what documents to keep in what format and in what location, which should address the statutory and business requirements for retaining documents;
- implement Human Resource and IT policies which ensure that information is not lost from the organisation. Instead of mailbox size restrictions and auto-delete policies, implement a system to capture the information created by employees, particularly before they depart the organisation;
- ensure that the formal document management policy expressly prohibits the destruction or concealment of documents for the purpose of preventing those documents from being used in evidence in legal proceedings;
- ensure that the document retention periods set for different categories of documents are defensible by reference to legal, business and risk management needs;
- align the organisation's formal document management policy to equivalent policies in Government agencies;
- train staff on these policies and take disciplinary action for non-compliance;
- create a mechanism for periodic review of document retention policy;
- conduct regular audits to ensure that the organisation's document management policy is being consistently applied; and
- encourage business managers and IT staff to form closer working relationships to understand the role of information in the business and the likely requirements to identify and produce information in the event of a dispute.
Why invest in a sound document management system?
There can be significant time and cost expended in the initial stages of establishing a sound document management system or reviewing and improving the system that an organisation already has in place. So what incentive does an organisation have to make that investment?
In short, the greatest incentive is improved business efficiency. Improved efficiency saves time and creates cost savings day to day.
This cost saving is further enhanced when an organisation is required to prepare for, or become embroiled in a despite. If an organisation has in place an established sound document management system, it should be Dispute Ready and able to avoid the following pitfalls:
- significantly increased costs relating to the gathering and collation of the organisation's documents because the documents are not stored logically or in an ordered fashion;
- if documents are not readily available, the organisation may need resort to retrieving documents from back-up tapes or to purchasing obsolete software to convert the documents. Resorting to back-up tapes or obsolete software to recover documents is both expensive and can be insufficient;
- significant delays involved in the gathering of documents can expose an organisation to costs incurred in defending applications (that were otherwise avoidable) and possible consequential cost orders; and
- allegations by the other side as to the veracity of the organisation's disclosure and document management system. This kind of allegation will be difficult to refute in circumstances where the organisation cannot demonstrate that it has a sound management system and the transparent and reliable approach used to interrogate and retrieve the documents from the organisation. This may result in adverse findings on credit of the organisation or employees of the organisation.
The importance of the interaction between good corporate governance and sound document management cannot be overstated. The finest technical systems in the world are of no use if they are not used or maintained in a way that meets your legal obligations or business needs, especially in a crisis.
If you'd like advice on how to establish and implement a document system, or improve a system from a technical point of view, including running a health check, please do not hesitate to contact us.
In Part 3 of the series, we will explain why managing and maintaining stakeholder relationships is important in ensuring that your organisation is Dispute Ready.
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