Use It or Lose It

The paperwork on your desk is multiplying. So what can you toss and when can you toss it?

By: Margot Carmichael Lester

There’s a pile of papers threatening to cascade across your desk. The documents folder is about to eat your computer’s hard drive. And then there’s the email inbox.

Even if you’re well-organized, documents have a way of multiplying and, in our litigious society, many people are afraid to discard anything.

So, what can you toss and when can you toss it?

Large travel companies spend lots of money developing document retention programs to protect them in litigation, tax audits, financial reviews and other such inquiries. Smaller agencies and home-based agents can get protection, too, but without paying a lot in fees.

A knowledgeable attorney can prepare a complete plan or you can try one of the templates available for a small fee on the Internet, like those at

Categorizing your documents is the first step in creating any retention plan. The standard categories are:

" Background Information

" Procedures/Guidelines

" Project Plans/Deliverables

" Communications


" Finance

" Contractual/Negotiations

" Sales Documentation

Once categories are established, it’s time to evaluate the documents. Dan Greenwood, an attorney and e-business consultant with, offers these tips:

Evaluate the legal or accounting reasons for keeping the document. And if there’s a doubt in your mind, check with your attorney or accountant.

Does the document apply to your taxes? Could it be used in a legal proceeding or an investigation? Could it be a factor in making a business decision? If the answer to any of these questions is yes, keep the document.

Could you easily and reliably recreate the document if it’s lost or destroyed?Could you get it from the Internet, a coworker, the library? It’s pretty easy to keep track of paper documents in safe deposit boxes and filing cabinets, but what about all the documents and e-mails that reside in the virtual world?

“To the extent it is electronic, keep a backup,” Greenwood said. “If possible, keep it somewhere else. But be careful to store the document in a format that can be accessed later. If you use a special software package, try just cutting and pasting the important info into a text or work document to save it.”

“Redundancy is a key component of effective storage systems,” said Michael Millar, president of Millar Technology Partners. “Not only must data be backed up, but the backups should have redundancy as well.

Keeping multiple backup sets spanning weeks or months is a smart strategy as it allows a company to retrieve previous versions of files which may have been since altered or corrupted.”

Companies commonly make the mistake of keeping only one backup set of computer data.

“This is a surefire recipe for disaster as many data corruption problems are not immediately detectable,” Millar said.

“It is easy to accidentally overwrite good data with corrupted data. The best strategy is to keep multiple backups on site and at least one full backup off site for use in the event of a catastrophe like a fire or flood.”

The next big question is: How long should records be kept?

There are state and federal regulations regarding certain papers that your attorney or accountant can explain. However, document retention experts note that there are some general guidelines.

For example, most sales records, including internal correspondence about the sale, should be kept during the transaction and for any limitation periods. Tax and financial records and all related documents generally should be retained for seven years.

In a litigious society, it can be tempting to go overboard in the name of self-protection. But Greenwood and Millar are far from suggesting that every scrap of paper or electronic document be retained.

“The key is to hold onto records and documents that will be useful in the event of an inquiry or establish the legendary ‘paper trail,’ ” Millar said.

In fact, Greenwood noted, it often is a good idea to destroy some types of business records on a general schedule.

“There are some types of correspondence or other extraneous records that can end up being made into a mountain by opposing counsel,” he explained.

If records are discarded on a regular schedule, he said, “Then, there is never any implication that the records might have been destroyed to avoid disclosure at a particular trial or other dispute.”

However, he added, it’s always wise to check with counsel before instituting a systematic purging of documents.

If records are discarded on a regular schedule, he said, “Then, there is never any implication that the records might have been destroyed to avoid disclosure at a particular trial or other dispute.”

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