Retention and Preservation — What's the Difference?

by Deidre Paknad

As the revisions to the Federal Rules take effect December 1, many companies are looking at their processes to determine risks and gaps and to address them. This can be a daunting challenge and certainly the hurdles the Rules present are significant. It's made more daunting by confusion on the terms "retention" and "preservation". Both retention and preservation arise from law, but they have different meanings, disciplines, and implications.

To make corporate process enhancements easier and more efficient, PRESERVATION should be used to refer to the duty to preserve information that arises in anticipation or actual litigation. This duty trumps all normal procedures and processes for managing data and information and applies to all types of information, including those things classified as "company records" and those things not traditionally considered records such as draft versions of agreements, forecasts, and so on. Preserving information requires very explicit actions, communications, and record keeping and is closely associated with the duty to produce information in litigation and investigation. The Zubulake Checklist offers a concise description of these duties and the practice of them.

RETENTION, when described as a program or practice, should be used to refer to how companies retain documents and information to comply with various state, Federal, and international statutes and laws and to serve their business interests by retaining information important to the corporation. There are nearly 15,000 different laws that prescribe retention periods for specific types of information in the U.S. alone. The information retained for statutory or regulatory compliance or for its business value is generally referred to as a "record". Retention schedules prescribe the legal or statutory retention periods based on careful legal research on applicable laws and on internal assessments of business need. The goal of most retention programs is to prescribe a finite, specific lifecycle for information and to dispose of it at the end of the lifecycle because its value has evaporated while its cost to manage continues. (Note that the Supreme Court in over-turning the Anderson verdict validated that retention programs are perfectly legitimate, acceptable methods for companies to manage and dispose of the ever expanding volume of information.)

Records management and retention programs are long-standing disciplines in many corporations while formal legal holds and preservation practices are just coming on line in most companies. The revisions to the Federal Rules are forcing the two to be practiced in concert in all new ways. Unfortunately, a number of lawyers and practitioners in the discovery arena use "retention" and "preservation" interchangeably because of their similarity in plain English and because of their lack of familiarity with the records retention discipline. This confusion of terms creates a real potential for misunderstanding, risk, and over-spending. More often than not, when you hear the term "retention memo" it is more properly described as a "preservation memo" - a memorandum alerting people to their duty to preserve information in anticipation of or actual litigation or government investigation.

To crystallize the difference in retention and preservation, focus on the disposition or disposal of information. Record retention is for a specific period of time from the point the record is created until the end of its business utility and the end of any statutory or regulatory obligation to retain the record, whichever is later. For a marketing document, for example, the retention period required by a regulatory agency such as SEC might be 3 years and the business value of the marketing document may be one year. A proper retention schedule would prescribe a retention period of 3 years. Preservation, on the other hand, disrupts the retention schedule to effectively and decisively "suspend" disposal of the record even after its proper retention period has expired and the records schedule authorizes its disposal. The duty to preserve trumps the schedule and the record must be "held" from such disposal. This hold is how the more popular term "legal hold" arises. Legal holds are increasingly a core corporate discipline in the wake of Zubulake and a number of other high profile verdicts in litigation. Legal holds processes are driven out of litigation, where attorneys have clear ethical and legal obligations to preserve information and to communicate to those who may have potentially relevant information in litigation. The legal holds process over-rides any retention program and attorneys must take explicit steps to ensure that records that may be due for disposal in the retention program are not disposed of when they may be relevant to anticipated or actual litigation. As such, it's a good idea to 1) be crystal clear about the difference between retention and preservation, and 2) have robust but synchronized processes for both .

About the Author

Deidre Paknad is the CEO of PSS Systems and the founder of CGOC, a professional community on retention and preservation. She is a recognized thought leader on enterprise retention and legal holds issues. As CEO of PSS Systems, Deidre launched the innovative Atlas solution, the first enterprise legal holds and retention management software suite. Her point of view reflects the deep research she’s conducted in this field, the powerful flow of dialogue through the many CGOC events each year, and by providing software solutions for and partnering with companies like Citigroup.