Archiving your company’s email, messages and texts — all forms of electronically stored information (ESI) — frees you from several risks. If, however, you decide to pass up on or postpone archiving, you leave yourself open to:
- severe financial repercussions
- appearing unreliable
- appearing deliberately secretive
First, the financial risks. Just last year, LPL Financial, a brokerage firm out of Boston, was fined by the Financial Industry Regulatory Authority (FINRA) for “systemic email failures” to the tune of $7.5 million. FINRA also required LPL to create a $1.5 million compensation fund for their clients, bringing LPL’s price tag up to $9 million. LPL’s problem? Failing to retain and review emails sent out by their brokers and violating dozens of securities rules in the process (“LPL Fined $9 Million for Email ‘Failures‘,” WSJ).
Even if you aren’t regulated by an industry-specific set of rules, the financial risks of neglecting email archiving are significant. You can’t predict when or how often your company may come under litigation and the Federal Rules of Civil Procedure dictate that any company under litigation is responsible for producing all ESI ordered by the court. If you don’t have an email archiving solution in place you’ll likely be stuck using backups, which can be a costly process and one that does not allow you to produce the required information with confidence. More on backups vs. archiving in a future post.
In addition to the financial risks, not being able to produce email and other ESI in a timely manner can cause you to appear unreliable in court and in the press. Look no further than the recent case surrounding former IRS official Lois Lerner. The IRS claims to be unable to produce records of Lerner’s emails between 2009 and 2011. In the mix are Lerner’s crashed hard drive and a lack of reliable backups. Independent of the politics, these proceedings make the IRS look foolish at best, deliberately secretive and deceitful at worst. No matter the organization, if you neglect email archiving and end up in litigation, you put yourself in an indefensible position.