The Reckoning: A Strategic Approach to Cost Containment in Retention
by John Zahradnick, InOutsource
Broadly speaking, offsite records storage is more economical than storing a large volume of records in expensive office space. But as your inventory grows — and ad hoc spending on rush orders and deliveries start to add up — offsite records storage, too, can lead to rising costs.
At InOutsource, we recommend a multi-pronged approach to cost containment in records management and retention. Over the years, we’ve helped many leading law firms reduce costs and get the most out of their vendors in records and information management. The firms’ clients also benefit from reduced overhead and a more responsive client service.
Start with a Shared Vision
As you evaluate your current processes and procedures, we highly recommend engaging with firm management and practice leaders, as well as other operational leaders within the firm. This helps to ensure that your evaluation criteria are aligned with the firm’s long-term business objectives, that your information governance policies are aligned with your firm’s tolerance for risk, and that any changes you make are set up for success.
We’ll review several key considerations below:
Rethink firm retention policies.
Your existing retention policy may be focused primarily on physical files — but times have changed, and the reality is that most law firms have a large volume of electronic files as well. Do you have rules in place to determine which files should be stored physically and which are best kept in electronic form? How should duplicates be disposed? By establishing clear policies and procedures, you can reduce the volume of duplicate files kept by the firm, and reduce the risk that client files have been retained for longer than strictly necessary.
Review and manage client retention policies.
Clients are increasingly specifying strict retention requirements for their law firms as part of RFPs and outside counsel guidelines (OCGs). How is your firm managing client-specific requirements in practice? Are matter team members made aware of client-specific rules for retention? By getting a good handle on client-specific information governance policies and putting systems in place to track and manage retention schedules, you’ll be in a better position to deal with client file transfer requests, lawyers leaving the firm, and any future audits — which can all become very costly. You can also introduce steps to ensure that lawyers reach out to clients to discuss ongoing maintenance of their files when matters close.
Review and renegotiate vendor contracts.
Your offsite storage vendor contracts were most likely based on past usage patterns. As you reevaluate retention policies and procedures, it becomes important to forecast how you expect to use offsite storage in the future — so you’re better informed when it comes time to renegotiate with vendors. How much is your firm paying for monthly storage, as well as retrieval, refiles and deliveries? Is your firm more likely to save money with bundled or unbundled pricing structures? If the vendor offers archival destruction, permanent withdrawal of files and audit rooms for free, should you take it? Benchmarking your costs against peer firms, developing and managing an RFP process, and monitoring your ongoing satisfaction with vendor performance are all important factors in successful vendor management.
Implement technology and processes to simplify records management.
Many firms have historically relied on their storage vendors’ systems to manage their offsite inventory, in addition to information captured in a legacy records system (which itself poses risks due to lack of support from the original vendor). Over time, this becomes a difficult, convoluted and costly way to manage records.
Implementing a modern records management system like FileTrail can help to streamline records management and reduce IT and storage costs by providing a unified, searchable view of both electronic and physical documents and records, and efficient classification, storage, retrieval, archiving and disposition. Centralizing RM, integrating your records management system with the firm’s document management system, and automating workflows also helps to drive efficiency, ensure compliance with firm and client retention policies, and capture a record of all decisions, approvals and actions taken.
Assess existing records and reduce inventory.
Introducing a new records management system to streamline management of both physical and electronic documents and records presents a great opportunity to assess the overall health of your data, and identify any inconsistencies with existing information governance policies. Data cleansing may become necessary to ensure that your firm eliminates duplicate files and that the integration of data from various firm systems goes smoothly. It’s also a great opportunity to address issues such as physical files that have not been properly indexed or tracked, as well as any electronic data that may reside in unstructured repositories (such as shared drives) and files that have not been opened in years. Taking stock and reducing existing inventory helps to drive efficiency and reduce risk over time.
One thing is clear
As your records storage costs continue to climb, you can no longer put off reckoning with your growing inventory of physical and electronic documents and records. Taking a holistic approach to cost containment in records management helps you and your key stakeholders see beyond the price schedules associated with offsite storage vendors and make smarter investments in records management, information management and information governance which will position your firm for success in the future.