Corporate Boards May Compromise Document Retention and Discovery Processes

London, October 26, 2011 – Corporate boards are vulnerable to breaching their own corporations’ document retention policies, exposing themselves to potentially time-consuming and costly discovery gaps, according to a recent survey of UK and global corporations conducted by Thomson Reuters Governance, Risk & Compliance (accelus.thomsonreuters.com).

“Information governance, which in practice can be very difficult, may not be a major priority for many corporations, but needs to be applied and practiced,” said Ely Razin, head of business law and governance, Thomson Reuters. “When sharing business-critical information with their boards, corporations must be able to manage their information effectively and appropriately, and also know where the information resides. And information governance is critical so that directors and executives can manage and authenticate the information’s validity and chain of custody.”

While board communications are usually covered under their respective corporations’ document retention policies, the survey revealed uncertainty as to the degree to which those communications are in compliance with those policies. For example, 70 percent of corporations surveyed say they are unsure whether board members destroy all print copies of board-related emails and materials in line with these policies.

The situation leaves many corporations with vulnerabilities in the event of a legal hold. If required to conduct a discovery process, the majority of corporations would need to canvass computers, files and other data storage maintained by board members at their homes and businesses, most likely at multiple locations. As most corporate boards include international members who travel extensively across borders, this process would require significant allocation of time and resources, creating uncertainty as to whether the legal hold could be executed in a timely manner, potentially exposing the company to legal sanctions.

The survey of corporate board members found that:

• Board emails and communications are included in organization’s document retention policy - 81%
• Unsure if board members are in compliance with organization’s document retention policies - 70%
• Board documents stored on personal computers at home or work - 79%
• Board member(s) keep board documents on their private mobile computing device - 75%
• Board documents and communications contained across multiple devices and servers - 69%
• Would need to canvass board members’ personal files, computers and data servers in a discovery process - 68%

“As corporations face daily challenges surrounding their information and its security, document retention and discovery at the board level is emerging as an increasing issue,” said Razin. “Many corporations have not harnessed all the benefits that technology can provide to protect the organization and its board members. Embracing technology can put the corporation in control of the information while giving its board members more effective tools to manage the information and also comply with stringent policies and procedures.”

The survey was conducted of UK and global companies polling general counsel and board members across a wide variety of industries. A detailed report of the survey’s findings involving board-level information can be found at: accelus.thomsonreuters.com/boardsurvey2011.