Data retention laws define how companies store and manage records produced from everyday business. These records include sensitive data such as personal information, profit and loss data, account numbers, tax documents, and other relevant information.
In today’s technology-driven world, data is the most valuable commodity a company owns, but it also poses a great risk. Because of this, data retention laws are strict. Companies must adopt defensivedata retention practices and prepare legal departments against the possibility of future litigation surrounding their data.
It’s important to use best practices whether your team is just starting to design your data retention policies or if you’re looking to update to comply with new operations and technology.
Here are some critical things to know to comply with data retention laws in the United States.
Data Retention Laws in the United States
There are a variety of state and federal data retention laws in the United States. These laws dictate the types of data that must be retained and for how long. Companies must comply with all these regulations at once, as well as maintain data retention periods that vary depending on the kind of data you’re dealing with. These variations include state and industry.
A company may be required to retain data anywhere from 30 days to three years. So, it is good practice for companies to engage their legal departments to help to adopt data retention periods that comply with the laws and regulations in the areas where they do business.
An effective data retention policy, in compliance with data retention laws, will prepare a company for lawsuits and ensure an improvement in the overall efficiency of your company’s operation.
Effective retention is easier said than done. A lot of planning and care has to go into developing an effective data retention policy. Effective retention policies guard against costly loss of records and decrease the stressors associated with court-ordered data discovery.
Companies struggle to implement effective policies because their policies are often complicated and require constant, manual effort. Due to this, two major data retention challenges companies face are implementing their own policies and determining who will oversee the policy.
Many companies put the onus of data collection and retention on departments other than legal. IT, for instance, may seem like the natural choice to manage data. But by cutting legal departments out of the process, companies put themselves at greater risk. There are many legal implications for not properly retaining data that IT departments aren’t aware of.
To prevent costly errors, legal departments should create, organize, and oversee data retention schedules and procedures, even if they work in conjunction with other departments. In the event of litigation or lawsuits, having properly collected and organized data speeds up a court-ordered discovery process and reduces legal costs.
Once the onus is decided, companies must address how to reduce the strain retention has on their resources. No matter who has the responsibility to manage your policy, their resources are limited compared to the amount of data you’re piling up. It’s important to adopt technology or a legal technology partner that can automate the tedious processes of data organization, review, and deletion.
Data Retention Policies Best Practices
There is no canned approach to retaining data. However, there are a few data retention best practices to take into consideration when designing your procedures. Individual needs vary from company to company, but many data retention best practices will remain the same.
Here’s a basic list of data retention policy best practices to consider in your policy.
Best Practices Include:
Understanding retention laws – Not all data needs to be saved. Learn what your local state regulations are and review the data retention laws in the United States.
Encouraging collaboration – Ensure all departments affected by your new data retention policies give input on how they can realistically carry out policies. This collaboration encourages teams to put the final policies into practice.
Data retention period – Sometimes the most effective aspect of data retention is knowing when to free up archives. Look up your local laws to determine how long your data retention period is. Once that period ends, properly destroy or return personal data to the appropriate persons.
Storage requirements – Determine how your data must be stored, whether in digital or physical formats, on-premises, or in the cloud.
Technological solutions – Data retention, especially backup, cross-referencing, and browsing, is simplified and more powerful with AI-assisted technologies. These solutions can reduce time and costs.
Authority structure – Policies are useless without proper enforcement. It’s important to choose who will be in charge of making decisions about data retention, deletion, and conducting self-audits.
Protocols for violations – Determine procedures for unlikely scenarios, such as policy violations or lawsuits.
Other best practices include assessing your data retention policies regularly. Changes in your industry, in laws and regulations, and internal changes to companies will create new challenges to address. You can also partner with companies like UnitedLex to systemize and automate retention.
A legal department’s primary concern with data retention and data management is following statutes and regulations. That being said, if the data retention policies implemented are well designed, they will increase efficiency across your entire organization.
Data Retention Law Compliance is Simple with UnitedLex
UnitedLex helps legal departments and lawyers create and execute an effective retention policy. We are a technology and legal services company committed to delivering full-scale Digital Legal Transformation. The world’s most forward-thinking law departments rely on our expertise to automate their retention policies in more than 25 global jurisdictions.