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Critical Business Procedure - Keep All Email Communications By Richard A. Chapo Businesses routinely maintain copies of correspondence and memos. Far to often, however, they do not extend this practice to email correspondence. Email correspondence is no different then your normal paperwork. You must keep copies of all of it to protect your business in any litigation. Currently, only banks and broker-dealers are obliged to retain e-mail and instant messaging documents for three years under U.S. Securities and Exchange Commission rules. Beginning July 2006, all public companies will also be required to do so under the Sarbanes-Oxley Act. Notwithstanding these laws, your custom and practice should be to maintain copies of all email correspondence. Email is considered evidence and courts are hammering businesses that do not maintain email records. Judges are often ruling that the failure to maintain and produce email records means the business in question is hiding key evidence. In the recent Perelman v. Morgan Stanley litigation, a judge’s ruling on the failure of Morgan Stanley to produce email was key factor in the issuance of a $1.45 billion verdict. Based on the failure to produce email records, Judge Elizabeth Maass issued a pretrial ruling that effectively found Morgan Stanley conspired to defraud Perelman in a 1998 deal. Morgan Stanley is not the only business defendant to have this problem. In the summer of 2004, UBS bank was found by a judge to have “willfully destroyed” email evidence in a discrimination case. UBS was ordered to pay costs and a jury returned a $29 million verdict. Email Policy To protect your business, you must have a procedure in place to maintain email communications generated through the business. Failure to keep these records can lead to rulings in litigation that your business willfully destroyed evidence. If this occurs, the judge may issue significant monetary sanctions, automatically find you liable or take other harsh steps that assure a victory for the Plaintiff. As if such developments are not bad enough, there exists a second risk associated with email communications. Maintaining email communications, however, can have a downside. The problem arises, of course, when a communication contains statements that are damaging to your business. Yes, the proverbial catch-22 situation. To avoid such disasters, your business must develop a clear policy on email communications and train all employees to comply with that policy. Employees must understand the business environment is not one in which jokes, flippant remarks and so on should be made in email communications. About the Author Richard Chapo is with SanDiegoBusinessLawFirm.com - Go to our article section to read more business law articles. Print-friendly version

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