Presenting a live 90 ‐ minute webinar with interactive Q&A Drafting Records Retention Policies for Construction Projects Implementing Document Management Policies to Mitigate Risks, Reduce Costs and Minimize Discovery Challenges TUES DAY, MARCH 29, 2011 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: T d ’ f l f Richard G. Erickson, Partner, Snell & Wilmer , Phoenix, Ariz. enior Vice President & General Counsel, Sundt Construction , Tempe, Ariz. Randy Nye, S Ralph Ketchum, S outhwest Regional Manager, Austin Commercial , Los Angeles The audio portion of the conference may be accessed via the p y telephone or by using your computer's speakers. Please refer to the instructions emailed to regist rants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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DRAFTING RECORDS RETENTION DRAFTING RECORDS RETENTION DRAFTING RECORDS RETENTION DRAFTING RECORDS RETENTION POLICIES FOR POLICIES FOR CONSTRUCTION PROJECTS CONSTRUCTION PROJECTS Ralph Ketchum Rick Erickson Randy Nye SW Regional Mgr SW Regional Mgr Litigation Partner Litigation Partner General Counsel General Counsel Austin Commercial Snell & Wilmer, LLP Sundt Construction (310) 421-0269 (602) 382-6540 (480) 293-3046 rketchum@austin- k t h @ ti rerickson@swlaw.com rrnye@sundt.com ind.com 4
RECORDS RETENTION STATISTICS RECORDS RETENTION STATISTICS • Average project manager or g p j g superintendent receives 20 ‐ 80 messages daily (emails, texts, calls). • Over 90% of project records are created or shared electronically (schedules, pay apps, change requests). • Ability to deliver a paperless project is the owner’s expectation. 5
RECORDS RETENTION STATISTICS RECORDS RETENTION STATISTICS • About half of the construction industry does not include electronic records in their retention schedules. • About half of the industry has no retention policy for emails. • About 40% are unfamiliar with About 40% are unfamiliar with litigation hold requirements and have no formal policy. have no formal policy. 6
TRENDS IN RECORDS MANAGEMENT • Contractors are “training up” to meet the d demand of electronic records management d f l t i d t and paperless projects. • Good records management is seen as good litigation management litigation management. • The burden of preserving archival records is • The burden of preserving archival records is not infinite and is governed by a reasonableness standard. reasonableness standard. 7
TRENDS IN RECORDS MANAGEMENT • Owners, contractors and design professionals are budgeting for independent consultants to manage their project records. Dilemma: Who is ultimately responsible for record keeping that p p g goes wrong or does not conform with set policies and legal requirements? p g q 8
TRENDS IN RECORDS MANAGEMENT • Social media (Facebook, Linked in, etc.) presents a new minefield of problems: presents a new minefield of problems: ‐ What do you do with social network postings about the project by an employee p g p j y p y or project representative? ‐ Do you hinder free speech on social networks by claiming such postings as k b l h projects records? ‐ Can you bar employees from posting Can you bar employees from posting disparaging comments about the project on their Facebook page? 9
CONSTRUCTION RECORDS • Bids, contracts, addenda, submittals… • Schedules, payment applications… , p y pp • Payroll, personnel files, labor agreements… • Change requests, orders, contingencies… Change requests, orders, contingencies… • Plans, specifications, drawings… • Emails, letters, text messages… Emails, letters, text messages… • Daily logs, reports, meeting minutes… • Requests for instruction supplemental instructions • Requests for instruction, supplemental instructions, other design directives… 10
RECORDS MANAGEMENT TECHNOLOGY TECHNOLOGY • Online collaborative networks and suites centralize records management (typically software driven and expensive). • FTP (File Transfer Protocol) or other data domains (temporary and limited to uploading periodic records to a password protected website via login) 11
RECORDS MANAGEMENT TECHNOLOGY TECHNOLOGY • Some suites use document sync features allowing all users to transfer project records ll i ll t t f j t d with a click of the mouse. • Most suites recognize need for retention of M i i d f i f project records and provide an “electronic close out” feature allowing records to be stored in a searchable format. • Suites are ideal for immediate and up to p date organization of project records and may expedite the payment process. 12
LEGAL CONSTRAINTS ON INDUSTRY RECORDS INDUSTRY RECORDS • No regulations or statutes specifically govern the construction industry. construction industry. – Unlike federal statutes (like Sarbanes Oxley) governing records in the accounting industry. governing records in the accounting industry. – Unlike NASD and NYSE Conduct Rules governing securities brokers and dealers. governing securities brokers and dealers. – Unlike federal regulations governing health care providers. care providers. 13
LEGAL CONSTRAINTS ON CONSTRUCTION RECORDS CONSTRUCTION RECORDS > Some construction records must be legally retained for specified times: • Personnel payroll and employment Personnel, payroll and employment records • Employee benefit plans applicable • Employee benefit plans applicable during the project • Any reports or records of site accidents A t d f it id t or occupational injuries 14
DESTRUCTION OF RECORDS • After all retention requirements expire • Subject to an established policy S bj bli h d li • Best when based on confirmation of legal counsel counsel • Personal information on former employees (like bank account information employees (like bank account information for direct deposit) • When no litigation is anticipated (best to When no litigation is anticipated (best to assume the records are relevant to a potential dispute) 15
RECORDS RETENTION FOR LITIGATION LITIGATION The $8 568 633 question in Qualcomm The $8,568,633 question in Qualcomm, Inc. v. Broadcom Corp .: Did attorneys and their clients work Did attorneys and their clients work together to ensure that both understood how and where electronic documents, records and emails were stored and maintained in order to decide how best to locate, review and produce responsive documents? 16
WHAT IS SPOLIATION? The intentional destruction, mutilation, alteration, or concealment of evidence, usually a document. , y 17
DUTY TO PRESERVE & SPOLIATION > In most states, there is a duty to preserve records: records: • known to be relevant in litigation; • reasonably calculated to lead to the y discovery of admissible evidence; • reasonably likely to be requested during discovery; or discovery; or • subject to a pending discovery request. Spoliation does not have to be intentional S li i d h b i i l or in bad faith to warrant sanctions. Negligent or unintentional spoliation is Negligent or unintentional spoliation is sufficient. 18
DUTY TO PRESERVE & SPOLIATION Consequences vary: ‐ Adverse inference charge g ‐ Adverse jury instructions ‐ Monetary sanctions ‐ Exclusion of evidence ‐ Dismissal 19
RECORDS MANAGEMENT & RETENTION POLICIES RETENTION POLICIES • Ideally starts with legally required records • Identifies exact dates for destruction of records • Takes into account any pending claims or k d l other reasonably likely disputes • Assigns managers and administrators A i d d i i t t • Considers statutes of limitations barring claims claims • Directs and informs all staff and employees 20
E ‐ DISCOVERY RULES • In 2010, 323 judicial decisions on Rules governing E ‐ Discovery • Dictated by additions to the Federal Rules of Civil Procedure (2006 & 2010) • Influenced by think tank experts at y p the Sedona Conference • High stakes risk in cases where the • High stakes risk in cases where the Rules are “weaponized” 21
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