We continue our case study of the dangers of inadequate record keeping. Read part 1 of this article if you haven’t already.
Case Study 2: Legal discovery on a business partner for old emails
Note: Names have been changed for the sake of anonymity and details simplified for brevity.
The second example involved another legal case with three protagonists: two business partners (Johnson and Smith) and an unrelated 3rd party (Shytles).
Johnson and Smith had been partners in a small business for years. It was a productive business partnership based on a handshake agreement and old fashioned trust. Unfortunately, when Smith ran into personal difficulties, Shytles (a 3rd party unrelated to Johnson) sued Smith, demanding financial compensation.
Despite the fact that Johnson had no dealings with Shytles, and the fact that Shytles was suing Smith and not Johnson, a dispute over Smith’s asset ownership ensued. Shytles then made claims against Johnson and was able to issue copious amounts of “discovery” (a legal term for forcibly requesting documents relating to the case), including email correspondence between Johnson and Smith dating back over a decade, and between their respective accountants.
Unfortunately, record keeping by Johnson and Smith was not done vigorously. There had been simply no legal requirement for either Johnson or Smith to retain emails, so whatever data they retained was a function of I.T. policy rather than legal compliance. After numerous onerous discovery requests it subsequently transpired that Johnson had retained some subset emails, and Smith had retained a different set of emails, but there existed some emails not in the possession of both parties.
This was due to three common reasons.
1. Accidental loss – storing emails on laptops, and failing to correctly migrate all data across when upgrading laptops over many years. Further, the accountant had since moved overseas and no longer possessed his copy of emails, so there was no 3rd party source to corroborate or verify Johnson and Smith’s correspondence.
2. The cloud copies of the emails were also inaccessible. Due to mailbox size restrictions, old emails were deleted from the cloud after being downloaded to a local PST file. Other emails were stored on free services such as hotmail.com and gmail.com, but the accounts in question were unused for some years, and became deactivated by Microsoft and Google. When the accounts were reactivated to search for the emails, all that appeared was a fresh inbox – all past emails had simply vanished.
3. There was no legal requirement to archive these emails. Archiving would have been expensive from both a hardware and software perspective, so it was never implemented.
The inability of Johnson and Smith to produce the exact same copies of emails (from both sender and recipient ends) enabled Shytles to imply that the emails that were produced were either created after the fact, or that it was possible many more emails had been lost or deleted, further creating doubt.
Ultimately, the case was settled prior to trial. But by the time the case settled, Johnson had incurred legal fees in the hundreds of thousands of dollars, despite having no prior dealings with Shytles nor being involved in Smith’s personal affairs.
We can learn a number of lessons from this experience. These lessons also helped influence the design of ScramGet – a software application that downloads cloud data directly to a local computer for backup and archiving purposes.
|What can we learn from this?||How does ScramGet prevent these problems?|
|The law revolves around what you can prove. Documents such as emails can become important evidence in legal cases in the future. Even if a person has been conducting their affairs ethically and in accordance with the law, unexpected third-party action can put a person at risk.||ScramGet can keep comprehensive business records. In the case of emails, ScramGet will log into your email accounts and download the entire mailbox so you don’t lose any emails, even if they get deleted from the mailbox at a later date.|
|There may be no limit to the historical requirements for record keeping. Most people think they only need to retain 5 or 7 years of accounting records (as specified by their relevant taxation office). However, legal cases may require the production of documents dating back further.||ScramGet downloads are designed for long-term backup and archiving. Once your data is downloaded, it can be put on a long term storage device – hard drive, USB memory stick, DVD or BluRay disc. These devices can be retained forever at zero cost, or placed into a safe or vault.|
|Retaining data indefinitely in the cloud can be expensive. Proper records management may require you to keep all your cloud accounts active – incurring subscription fees even when a cloud account is no longer used. Once a cloud account becomes inactive, all data in that account is at risk of being deleted.||ScramGet removes the need to keep cloud accounts active. Once data is downloaded locally, the local copy will survive, no matter what happens to the cloud copy. In the long term, ScramGet will save money in data retention and compliance, and in legal cases, ScramGet may well save tens or hundreds of thousands of dollars in legal and settlement fees.|
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