The financial costs of not keeping proper data records, part 1

As business people, we know that we need to keep electronic records – especially accounting records. For example, we might get audited by our government’s taxation office (IRS, HMRC, ATO) and need to show receipts for purchases and tax deductions.

However, most business people don’t know the importance of keeping other types of data – for example, emails, Office documents, calendars, and designs. These records can become crucial when business owners and working professionals unexpectedly become involved in other people’s legal cases – and the consequences for not keeping these records can include fines and other financial losses.

This is the story of two business owners who unfortunately were caught up in other people’s legal cases, and suffered losses because of inadequate record keeping.

Case Study 1: Satisfying a subpoena for work done for a client

Note: Names have been changed for the sake of anonymity and details simplified for brevity.

The first example involves Mr Jones, the founder and owner of a successful marketing company. Earlier this year, Jones was issued with a subpoena. A subpoena is a written order instructing a person to attend a court of law or to produce documents meeting a certain set of criteria. Failure to comply with the subpoena is an arrestable offence, and further penalties such as payment of costs can result.

The subpoena demanded that Jones produce all documents relating to work done for a particular client of his marketing company – everything from emails, the engagement contract, and files generated as part of that engagement. The client was a defendant in a legal battle involving a totally unrelated plaintiff. Jones had no association with that legal case or the plaintiff, but due to the plaintiff’s desire to prove certain claims involving ownership of intellectual property, the plaintiff issued a subpoena on Jones’ marketing company.

This was a major hassle for Jones, who was already busy running his business. Not only was he overseas at the time of receiving the subpoena, but the request was for documents dating back 6 years. The data in question was located on old servers that had since been decommissioned and put into storage. In order to satisfy the subpoena, Jones had to employ his I.T. service provider to recommission those old servers, then search, retrieve, and extract the relevant data.

While the cost and inconvenience of satisfying the subpoena was substantial, unfortunately Jones was late in complying with the subpoena. Despite explaining the difficulties encountered to the court, Jones was penalised for the lateness and ordered to pay costs. The financial penalty simply added insult to injury.

Lessons learnt

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 legal system doesn’t care if you are busy, nor does it care about the inconvenience it causes to others. It’s your responsibility to ensure you can comply with legal requests when (not if) they come. ScramGet downloads your cloud-based data to your local computer. Once downloaded, it’s yours to keep forever. You can use the normal search tools (such as Windows Search, Mac Finder, Unix based grep) to locate relevant data, making it fast and easy to find matching data to satisfy legal requests.
Keep archives of data on a medium that’s readily accessible. If records were on a hard drive, USB flash drive, DVD or BluRay disk, they could be accessed easily. In contrast, data on an old server, tape drive or defunct cloud service can be hard or impossible to access. ScramGet will download data onto easily accessible media like hard drives and USB flash drives. Data can also be burned to DVD and BluRay disc easily.
Make sure your data is in a format that is easily accessible. Try to stick to common file formats – like ZIP, PDF, PST, CSV, and so on. When data is locked in proprietary formats, it can be extremely difficult to load, collate, search and export. ScramGet stores your data in common data formats that are easily accessible. Files are stored as files; emails are stored in a format that can be opened easily (PST on Windows, with Mbox).

Continue onto part 2 of this article.

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Please don’t be an unsuspecting victim of bad luck

Keeping proper electronic data records is now more difficult than ever.

A typical business will have data spread across many places in in the cloud, making it nearly impossible to properly retrieve and collate all that data.

Using ScramGet is a superb solution to this problem. ScramGet will download your cloud data to a central location that you control so you can backup and archive your valuable business data.

Download the free trial of ScramGet, and see how easy it is to download and backup your cloud data.

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