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E&O Prevention: Document Disposal Procedures

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All agencies accumulate documents and other records containing information that should be destroyed when no longer needed. Many agencies tend to keep information far longer than reasonably necessary, and when they dispose of stored information they do so far too casually. Proper document disposal is necessary to maintain and protect the confidentiality of information which is personal and/or proprietary. That information may be the property of the firm itself, but often relates to clients or employees of the firm. A consistently implemented document disposal and destruction policy should be an integral part of any agency’s overall document handling and retention policy and risk management plan. Below are a few tips to manage document handling that can help agencies reduce and/or prevent errors and omissions:


Don’t disclose confidential client information to unauthorized parties.

Confidential client information may include information related to health history, personal finances, business financial dealings and other strategic business information. Confidential employee information includes medical, insurance and personnel related information. Drafts of documents such as client contracts and proposals, correspondence, memoranda and other documents containing business information about the firm could prove harmful if disclosed to unauthorized persons, claimants or competitors.


Maintain a document destruction timetable.

A document destruction policy should include a timetable for destruction of various types of documents. Documents containing relevant project records should be maintained as long as necessary to assist in defense of potential claims – in most cases at least as long as applicable statutes of limitations. Retention periods for other records may be dictated by statute or contract. Always document the exact date on which a record is destroyed.


Dispose of documents properly.

Recycling paper or sending documents to disposal sites is not sufficient to ensure continued confidentiality of the information contained therein, as recyclers and site operators generally have no obligation to keep information confidential. The actual destruction of documents must be done in a manner that insures that the information contained in the records destroyed cannot be used by unauthorized persons – such as by shredding paper documents or destroying computer hard drives or discs. Document destruction should always be total and absolute, and should occur before the document leaves the agency’s possession. Document destruction policies must be consistently followed- failure to do so can raise negative implications during litigation and diminish the overall credibility of the firm


What to do in case of an E&O insurance claim?

If an investigation, dispute, suit, or government action is filed or even reasonably foreseeable, documents related to those proceedings should be preserved or the firm could be subject to legal sanctions for obstruction of justice or spoliation of evidence.

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