A document-retention policy is a firm’s written policies regarding which documents to retain and where and how to retain them. Document-retention policies serve a number of purposes, including maintaining whatever is needed to conduct business, what is needed for legal and regulatory purposes, and what is needed in case of litigation. The first rule in creating a document-retention policy is to be constantly saving everything that is needed to conduct business. Following the September 11 tragedy, most companies operating in the World Trade Center were able to reestablish their operations due to continuous data backup systems located elsewhere. Many CORPORATIONs have since reviewed and revised their document-retention systems. The second rule in document-retention policies is retaining what is required by law. For example, the SECURITIES AND EXCHANGE COMMISSION (SEC) and INTERNAL REVENUE SERVICE (IRS) regulate how long companies and individuals must retain financial documents. The IRS can audit tax-related records for up to seven years back. The third rule in document-retention policies is to retain anything that may be subject to existing or pending litigation. In the United States, courts usually notify defendant parties when a lawsuit is initiated. Destroying documents once litigation has begun is called “spoilation.” Attorney Brett Dorny defines spoilation as “the intentional destruction of evidence that is material to an ongoing or imminent litigation matter.” Once litigation has commenced, both sides to a lawsuit engage in discovery, where each party is allowed to interrogate witnesses, take depositions, and request documents from the opposing party. Discovery often is expensive. In most cases each party to a lawsuit bears its own expenses of discovery, including the costs of producing the documents requested. A wellorganized document-retention system can mitigate these costs and allow a firm access to documents needed for its defense. One of the problems associated with documentretention policies is constantly changing technology. Often firms find they cannot easily access old documents saved under different software platforms. Document-retention policies became widespread in the 1990s and drew public attention in 2002 during the Arthur Andersen LLP-Enron Corporation collapse. In the aftermath, former Arthur Andersen executive David Duncan pleaded guilty to obstruction-of-justice charges. He admitted participating in a meeting where Andersen partners decided to advise staff members assigned to Enron that they should begin implementing the firm’s documentation- retention policy. The Andersen policy required personnel to destroy all files that were not supposed to be included in the firm’s permanent records, including draft memos that often provide insight into the firm’s decisionmaking process. Duncan testified that another Andersen executive suggested staff members be told to take care to not do “any more or any less” than the document-retention policy required. The government’s case against Andersen was based on the theory that when Andersen partners and employees directed staff members to implement the policy, they knew that an investigation of Andersen’s audit of Enron was imminent. Ironically, Arthur Andersen, one of the country’s “big five” accounting firms, created a nearly 500-page source book entitled “Document Retention . . . in the Face of Pending or Threatened Litigation,” which has been licensed to many Fortune 500 corporations.