Non-U.S. Companies Struggle to Implement U.S.-Style Document Retention Policies

Many of us in the U.S. legal community know that developing and implementing a defensible document retention policy is important, if not crucial, to a company’s data management. It can speed up the procedures in, or reduce the costs associated with document preservation and document production.

This common understanding, however, is often times not understood well enough by non-U.S. companies. Except for truly global companies that have plenty of experience in U.S. litigation, many non-U.S. companies do not know how broad and burdensome the discovery process can be. Similarly, many of them do not know that there is an obligation to preserve relevant documents pre-litigation. Accordingly, they are not always fully aware of the importance of a defensible document retention policy.

Our experience with Japanese companies has been that many of them do not have “U.S.-style” document retention policies, that is, document retention policies that are intended to be defensible in U.S. litigation. Those companies usually have document retention policies that have been developed in the past in accordance with their home country standards. Furthermore, some of the practices in Japanese companies become obstacles when trying to implement U.S.-style, company-wide document retention policies. For example, it is not uncommon for each business department to have its own information system or its own encryption method.

This gap between U.S.-style document retention policies and Japanese-style practices was one of the focuses when we spoke at a recent seminar titled “Laws and Practices of E-Discovery 2014”. The seminar, sponsored by Deloitte Tohmatsu Financial Advisory Co., Ltd, was held in Tokyo, Japan to an audience of mainly Japanese companies doing business in the U.S.  At this seminar, we emphasized how important it is to develop and implement a U.S.-style document retention policy, should a company foresee a reasonable possibility of becoming involved in U.S. litigation. Through the many questions raised during the Q&A session, we felt the growing interest on this topic.

More and more non-U.S. companies are starting to re-examine their document retention policies. They do not want to be disadvantaged in U.S. courts, just because they had “non-U.S.-style” policies. Just as much as a U.S. company – or even more so – it will take careful preparation and extra effort for a non-U.S. company to develop and implement a defensible “U.S.-style” document retention policy.