What do you know about your corporate records?

J. Edwin Dietel

One of the often overlooked and ignored activities of corporate counsel is paying attention to and dealing with the information and knowledge contained in corporate records. This is an area of significant potential legal liability for corporations and their leaders that is frequently not even recognized for its potential trouble.

The basic question is why should you be interested in effectively managing corporate information and knowledge? Everything your legal department works on, from security compliance, EEO, intellectual property, tax, or any other legal subject, requires some familiarity with issues involved with your corporation’s records because those records contain vital data, information, and knowledge that may be directly on point to their subject matter advice. Managing corporate records may seem to the uninitiated to be a simple, straightforward matter, often the responsibility of file clerks, who pay little or no attention to the details of the content of those records. Managing the data, information, and knowledge in corporate records is by far a quite complicated subject that must be the responsibility of critically thinking individuals who are familiar enough with corporate operations to be able to evaluate the quality and appropriateness of that data, information, and knowledge.

Corporate counsel should be able to quickly and accurately answer such questions as “What is a corporate record?” and “How long does a particular corporate record have to be maintained in corporate files?” These are just two of the most fundamental questions with which you must be familiar and comfortable answering because those answers absolutely govern the fate and longevity of the data, information, and knowledge the records contain.

Complicating this situation is the fact that today records are no longer pieces of paper in a physical file somewhere in the corporate facilities. For several decades now, many, if not most, of corporate records involve technical electronic systems that are involved in their creation, transmission, storage, and maintenance. These technical electronic systems not only speed the creation and communication of corporate data, information, and knowledge, but also often frustrate their being quickly located, identified, and used for the purposes that corporate lawyers need to make of them. For these and many other reasons, you need to have enough familiarity with corporate record management practices to be able to retrieve the data, information, and knowledge that they need to assure that their practices are providing the most sound legal advice possible.

Mismanagement of the data, information, and knowledge can be the cause of enormous legal liabilities as recent corporate disasters have shown. The Sarbanes-Oxley Act has tried to rectify some of these situations and prevent them happening in the future. Corporate compliance with all the myriad of laws, regulations, and other requirements is a tremendous legal challenge, but one book goes beyond compliance to suggest to corporate counsel how they might anticipate legal problems before they occur and head them off so as to avoid potential liabilities.

In order to avoid issues and liability around corporate records, a few “exceptional” practices are recommended:

• General counsel/ other corporate executives should insist that their corporate counsel be fully familiar with all the legal mandates applicable to the company in order to effectively oversee the corporate records management program.
• In turn, corporate counsel should formulate a list of “Do’s and Don’t’s” so that employees will know what the quality of the data, information, and knowledge in their records should be.
• General counsel/other corporate leaders should expect its corporate counsel to take the corporate records management system beyond mere compliance so that its data, information, and knowledge anticipates potential corporate problems and helps everyone in the organization proactively head them off before they occur. For example, some records may be in perfect compliance, but show bad judgment, poor decision making, blunders, and a myriad of other unsavory attributes, many of which could be the source of significant and serious corporate liability.
• The corporate records management program should affirmatively and systematically have a process to record the tacit knowledge that is only stored in employee’s brains but would be lost forever if the employee leaves the company or is, for any number of reasons, not available to lend his or her tacit expertise.
• The corporate records management practice should include a systematic and regularly performed records audit program to assure that the company’s record management policies and practices are being fully carried out and are up to date.

About the author

J. Edwin Deitel addresses these problems and situations in Designing an Effective Corporate Information, Knowledge Management, and Records Compliance Program (West/Thomson Reuters), originally written and is annually revised. That publication is now in its 23rd edition, published in 2015. The aim of this publication is to address corporate information, knowledge and records issues from the most basic to those at the cutting edge of the subject matter.

Ed Dietel consults with national organizations on legal management and leadership issues and records, as well as information and knowledge management matters. He is a retired senior official of the Central Intelligence Agency. He practiced in the CIA's Office of General Counsel for almost 20 years, serving for 10 of those years as the Deputy General Counsel responsible, as the senior career lawyer, for managing their 120-person legal practice. After his retirement from CIA, he served for several years as a senior consultant in knowledge and records management in several companies, including SAIC.

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