Records Retention and Disposal

When Darren Malek studied law at DePaul University’s College of Law, he also held down a job as a paralegal at JPMorgan Chase. Among his responsibilities at the bank were working with the documents underlying the bank’s real estate and business loans, litigation support, and bankruptcy support. Currently the managing partner and principal at Veritas Law Group, Darren Malek addreses professional conferences and seminars on such topics as business lending, commercial loan documentation, and records retention.

Some businesses keep every single piece of paper since the day they first opened their doors, while others annually scrounge through their archives and discard everything more than seven or10 years old. Both approaches carry potential hazards. Even when storage is digitized, for example, keeping all records forever – credit card receipts, routine customer correspondence, supplies requisitions, etc. – makes no business sense, and could potentially prove embarrassing or worse, if discovered in litigation.

Some retention rules are easy to discern. Documents of incorporation, patents, trademarks, deeds and titles, and the like should be kept for the lifetime of the firm, and legal counsel should be obtained regarding their disposition after a company’s dissolution. Many consultants also recommend the retention of all tax documents, including cancelled tax payment checks, for the company’s lifetime.

The majority of the documents a firm produces, though, can be discarded at some point – some in as little as a year, while others should be retained for three or more years. Unsuccessful employment applications fall in this category, as do internal audit reports, insurance policies that have lapsed (4 years), bank statements, cancelled checks and reconciliations (7 years), and expense report analyses and distribution schedules (7 years).

When old records are disposed of, they should not simply be dropped in a trash receptacle or recycling bin. Identity thieves and other criminals love such lax procedures! Instead, firms should engage companies that specialize in document management and destruction to dispose of all discarded files and records.

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