[co-author: Laura Roberts]*
This note examines the importance of document management as a risk mitigation strategy for corporations and provides a “Top 10 Tips” list for setting up and using a DMS. Be it a company of one or a hundred thousand and one, it can be difficult to manage data manually. Ultimately, any company irrespective of size or industry will benefit from having a system in place to enable document organisation, collaboration, and retention.
Document management, or the use of a Document Management System (DMS), concerns the electronic storage, organisation, and tracking of documents, using computer systems and software.1 Documents can be either electronic by origin (e.g. emails) or converted to e-documents from hard copy data (i.e. any original document, which has been scanned and processed electronically — a letter, report, drawing, etc). With the days of dusty filing cabinets now largely obsolete, we have seen a marked transition from paper-only records to hybrid paper/scanned documents, to now almost all documents deriving from, and being stored within, electronic sources.
Importance of Document Management
There are several advantages to using a DMS, including that it:
- reduces paper, printing, and storage costs as well as the time cost of trawling through physical documents;
- provides a secure forum to store, organise, and track data;
- enhances efficiency and productivity by allowing for easier access, review, and retrieval of documents; greater process control; and better collaboration globally;
- enhances accuracy of document searching with a concomitant reduction in the scope for error; and
- demonstrates a commitment to the environment.
From a legal risk mitigation perspective, there are also several advantages:
- protecting and securing data;
- preventing loss of data or lack of data availability;
- limiting reputational damage from data breaches; and
- ensuring regulatory compliance.
Moreover, in the event of dispute with a counterparty, when developing and advancing a strong position, an organised, complete record of documents is invaluable. In order to gain a clear understanding of the dispute, it is often necessary to review a large number of documents, which may include both favourable evidence (i.e. documents that support the position), and less favourable evidence (i.e. documents that may not support the position).
Documents may also assist with memory recollection so that those concerned may better remember details of past events and complete any gaps in information to gain a more complete view of the circumstances surrounding the dispute. In contrast, an incomplete record of documents, combined with the inability to sort and filter documents by criteria such as time or project matter, may hamper the preparation of a strong position.
A lack of good contemporaneous document management creates a number of legal risks:
- In the event of dispute, there is often an immediate and urgent need for document identification, collection and review. If the data is not already organised, this may slow preparations and the ability to develop a strong position.
- There is also a risk that important documents will be lost or difficult to locate. It can be all too easy, for example, to recall an email or letter that may have been sent, only to be faced with a complete inability to find it.
- For any witnesses or relevant persons who need documents to review or assist their recollection, if those documents cannot be found, their story may be incomplete. Even if they can be found, the lack of organisation will make completing the story or refreshing their recollection more cumbersome.
- It can also be more costly to set up a DMS on an urgent need basis, since significant resources may be required both internally and externally to meet that demand.
In short, the selection of a DMS now is an important exercise in legal risk mitigation.
“Top 10 Tips” for Good Document Management
Listed below are a few suggested guidelines for setting up and using a DMS:
- From the outset, seek guidance to select the right type of DMS to organise documents in a way that makes sense for your business.
- Limit the number of folders and avoid folder proliferation, which may create doubt as to where a document is held.
- Set up and use default folder and file structures, with a logical hierarchy. For every distinguishable project, create a single path for this “root” folder, with relevant sub-folders.
- Ensure a reliable date marking system is in place.
- Set-up and follow intuitive file naming conventions for ease of identification.
- File as you go. It is far better to file documents on a regular basis than to let the task snowball, which results in a greater risk of inaccurate/missing documents, and then attempt to “catch up” retrospectively, or in response to an issue or problem.
- Back up files regularly using a centralised back-up system supported by IT specialists.
- Archive redundant files to avoid permanent deletion.
- Maintain a Document Retention and Destruction Policy, which sets out when documents are to be retained and destroyed.
- Communicate to all employees good document practices to ensure alignment and make it clear that each member has an ongoing obligation to follow company policy.
When it comes to document management, an ounce of prevention is worth a pound of cure. Setting up and adhering to an ongoing DMS may seem costly and time-consuming, but the benefits of doing so outweigh the potential adverse consequences. Having an accurate and efficient system in place today and “getting your docs in a row” not only enhances efficiency and productivity, but can also help to mitigate legal risk.
* Laura Roberts is a Litigation Support Executive in the Dubai office.
1 Broadly, there are four types of DMS: server-based; data-based; web-based; and cloud-based. Whilst there has been a definite shift towards cloud-based platforms within the last few years, ultimately, every company will have its own unique set of requirements and individual workflow; it is therefore important to consider the variances that each offers and select the appropriate type of DMS for your company.