Businesses routinely keep copies of correspondence and memos. Very often, however, they do not extend this practice to email correspondence. Email correspondence is no different than your normal paperwork. You should keep copies of everything to protect your business in any litigation.

Currently, only banks and broker-dealers are required to retain e-mail and IM documents for three years under US Securities and Exchange Commission regulations. As of July 2006, all companies Public companies are also required to do so under the Sarbanes-Oxley Act.

Notwithstanding these laws, it should be your custom and practice to keep copies of all email correspondence. Email is considered evidence and the courts are criticizing companies that do not keep email records. Judges often rule that failure to maintain and produce email records means the business in question is hiding key evidence.

In the recent Perelman v. The Morgan Stanley litigation, a judge’s ruling that Morgan Stanley did not produce the email, was a key factor in reaching a $1.45 billion verdict. Based on the failure to produce email records, Judge Elizabeth Maass issued a pretrial ruling that effectively found that Morgan Stanley conspired to defraud Perelman in a 1998 settlement. Morgan Stanley is not the only corporate advocate to have this problem.

In the summer of 2004, a judge found that the UBS bank had “intentionally destroyed” email evidence in a discrimination case. UBS was ordered to pay costs and a jury returned a verdict of $29 million.

email policy

To protect your business, you must have a procedure in place to keep email communications generated through the business. Failure to keep these records can lead to litigation rulings that your company deliberately destroyed evidence. If this occurs, the judge may impose significant monetary penalties, find you automatically liable, or take other harsh measures that ensure a victory for the Plaintiff. As if such developments weren’t bad enough, there is a second risk associated with email communications.

However, maintaining email communications can have a downside. The problem arises, of course, when a communication contains statements that are detrimental to your business. Yes, the proverbial catch-22 situation.

To avoid these kinds of disasters, your company should develop a clear policy on email communications and train all employees to comply with that policy. Employees must understand that the business environment is not one where jokes, strange comments, etc., should be made in email communications.