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Should New Jersey businesses retain all their electronic records?

Many residents of New Jersey these days have gone "paperless" when it comes to receiving bank statements, utility bills and other financial data, and businesses are no different. Most data accumulated by businesses these days is stored electronically. This means, however, that the amount of electronically stored information (ESI) is getting bigger and bigger as time marches on.

Eventually, just like any other business records, ESI eventually becomes outdated and in general, is no longer needed for the business's daily operations. But, businesses are often not certain about whether they are required to preserve their ESI. Out of an abundance of caution, some businesses spend a lot of money preserving all of their ESI.

Practically speaking though, storing all of a business's ESI is not necessary and in some cases, does more harm than good. This is because the sheer amount of ESI stored makes managing such systems difficult, can cost a great deal to search and review, should the business be subjected to a lawsuit, and can increase the possibility that the business could be sanctioned by the court for not properly managing its data.

Of course, especially if a business believes it may be subject to a lawsuit, it should retain its ESI, and it should also retain its ESI when required to, per state or federal laws or regulations. ESI should also be retained if retention is contractually required, or if internal policy or industry standards requires the retention of ESI.

Finally, ESI should be retained if there is reason to believe there will be a third-party discovery request. However, if there is no affirmative obligation to retain ESI, businesses may be able to establish company policies regarding the destruction of unnecessary or outdated ESI after a certain amount of time has passed.

When a business has a plan that outlines when ESI can be eliminated, the business's attorneys can provide solid advice, should the company be subject to business litigation. It can also make the discovery process easier. Moreover, such plans provide businesses with a solid defense against spoliation motions. Therefore, formulating a company policy regarding the retention and deletion of ESI can be beneficial. But, since this post does not provide legal advice, businesses that have questions regarding ESI may want to consult with an attorney.

Source:, "Why Every Business Should Have a Document Retention-Destruction Policy," Zachary N. James, Feb. 23, 2017

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