Legal Records Management: Best Practices and Compliance

Traditional records management is time-consuming and labor-intensive, and that leads to inefficient processes, missed risks, and mounting costs. Legal professionals and firms need an all-in-one solution with the best document lifecycle practices for proper management.

Your firm needs a workflow that aids compliance efforts, satisfies data protection laws, and saves time and cost.

Risk of improper legal records management

Organizing via filing cabinets and sticky notes is a method of the past. A physical and digital document management system must support effective, thorough processes to avoid unnecessary risks, such as:

1. Poor Compliance

The inability to track and manage compliance requirements effectively increases the risk of violating standards like the General Data Protection Regulation (GDPR) and the California Privacy Rights Act (CPRA). Comprehensive tracking with easy-to-understand data trails and an effective management system support compliance efforts.

2. Excessive Risk

Poor retention and disposition management heightens the risk of unauthorized access and data leaks. An effective risk management system with access controls works to protect confidential information.

3. High cost

Ineffective legal records management can lead to legal liabilities, regulatory fines, and associated costs. It can also be expensive to run legal document management software—costs that compound over time when combined.  

Implementing an efficient records management policy helps reduce physical and electronic storage requirements, leading to lower storage costs, reduced office space needs, and savings on offsite storage facilities.

4. Poor security and confidentiality

Between significant cyber incidents and everyday attacks, the estimated annual cost of cybercrime in the United States reached 452.3 billion USD in 2024. Poor security and confidentiality contribute to this financial loss and put legal entities and clients at risk. Proper security guardrails designed to inhibit modern threat actors mitigate this risk and protect data.

Challenges in current systems of legal records management

Even straightforward document storage requirements, such as easy document retrieval, are a struggle for many modern legal teams. An Adobe Acrobat survey found that 48% of employees struggle to locate documents quickly and efficiently, while 47% find their company’s online filing system confusing and ineffective.

A poor record management system leads to improper record keeping, a lack of governance, and employee frustration. Unfortunately, many available solutions force legal teams to adjust their business processes to fit the software instead of allowing the software to adapt to the team’s unique workflows. This is exacerbated by the reality that many attorneys find these systems cumbersome and inefficient, leading them to seek alternative—and often ungoverned—file storage and sharing methods.

Enforcing policies across the board is difficult since legal teams tend to underestimate how much of their data actually exists in document management systems (DMS) in the first place. In reality, less than 10%—and sometimes as low as 2-3%—of a firm's data resides in its DMS.

The issue with data

Legal teams deal with excessive data fragmentation across numerous platforms, including:

• Shared drives
• SharePoint
• Teams
• OneDrive
• Unregulated tools like Box

Managing this sprawl is an ongoing challenge as many legal teams still store sensitive information in outdated systems, Excel spreadsheets, or non-integrated tools, limiting the effectiveness of centralized information governance solutions.

Traditional tools primarily act as metadata aggregators, but having all of the team’s data in one place is only one step of the process. Proper management also requires fully integrating and managing these files. Without integration, teams can’t properly organize and access this data.

A firm’s data retention enforcement policy often dictates the end of the road for most data. While legal teams often have policies to destroy client data after required retention periods, only about 1 in 10 organizations actually follow through with this process.

Best practices for organizing and managing legal records

Every organization, from an Am Law 200 firm to a small in-house department, has its own organizational method. Some legal teams utilize long-standing record management software, while others prefer novel, innovative tools that put them ahead of the pack.

Regardless of the approach your team takes, best practices for legal records management include:

• Using clear and consistent file naming conventions
• Maintaining a logical, organized structure
• Prioritizing strong data security measures
• Selecting the most effective system for your firm
• Providing comprehensive training for implementation
• Developing a comprehensive retention policy
• Leverage agile technology in records management
• Ensuring compliance with regulations

Developing retention policies

A well-structured document retention policy ensures compliance, security, and efficiency in managing records. Legal teams must develop a single policy, integrate multiple data sources, and leverage a central, authoritative platform for enforcing retention.  

Developing and/or refining a well-structured document retention policy is the first step ineffective records management for legal teams. Key considerations include:

1. Responsibility and oversight: Assign records managementto a dedicated team or shared task force—or, alternatively, take adecentralized approach among separate departments.
2. Storage: Define designated digital and on-site storage locations, ensuring coverage of electronic and physical records, including hard drives, slides, and discs.
3. Definition and compliance: Clearly define "business records" and ensure alignment with legal requirements, such as GDPR and CPRA guidelines.
4. Retention and disposal: Specify retention periods (automating, if possible) based on event occurrences, permitted formats, and overwriting policies for disaster recovery media.
5. Security and legal holds: Detail data security measures, disposal suspensions during litigation holds, and compliance with regulations such as the GDPR. Include provisions for electronic communication and data breach response.

Other steps include employee training, third-party policy updates, and carefully monitoring the use of cloud-hosted software.

FiT’s retention support

FiT helps legal teams mitigate risk and reduce costs through a centralized system.

• Centralized automation: Configure retention and disposition rules based on record series, area of law, or outside counsel requirements for seamless enforcement.
• Audit readiness: Streamline compliance audits and reduce resource demands with automated tracking that ensures accurate audit trails.
• Regulatory compliance: Automatically apply retention schedules to all records, mitigating legal risks and avoiding non-compliance penalties.
• Disposition oversight: Monitor record disposition from eligibility to completion via a centralized tracking dashboard.

Ensuring compliance with regulations

Legal teams must develop a standard operating procedure and use a platform that supports growth while maintaining compliance. Key steps include applying consistent retention rules and securely disposing of records when they are no longer needed. It's also important that legal teams adhere to the following measures.

1. Reduce errors

Contractual and filing errors can lead to serious consequences. Premier document automation software streamlines drafting via templates and stored data, reducing manual effort and improving accuracy.

2. Protect data

Data security is a key component of compliance, with 27% of legal teams experiencing a form of security breach in 2022. Teams need to choose software that is audited and compliant with SOC 2 and incorporates advanced security features such as encryption.

3. Identify conflicts of interest

Disorganized client data and case files make conflict checks time-consuming and error-prone. A centralized practice management system streamlines this process, enabling quick global searches to identify potential conflicts efficiently.

4. Do your due diligence

Customer due diligence (CDD) is essential for compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. Automated workflows that support due diligence and notate points of concern are invaluable.

FiT's compliance support

• AI-ready compliance: FiT delivers structured data governance so legal teams can adopt AI while maintaining compliance with evolving privacy regulations and preventing unintended exposure of sensitive client data.
• Automated compliance: Unlike competitors, FiT proactively detects PII, HIPAA, and other sensitive data, reducing legal risks through automated safeguards.
• Future-proof solution: Designed to evolve with industry regulations, FiT keeps legal teams ahead of compliance challenges.

Leveraging technology in records management

Some legal records management tools are more trouble than they’re worth. They may require extensive IT support for data migration and records management or require your team to adapt to a complex interface. Your firm needs right-fit technology that adapts to your unique needs. Here are some key features to look for:

1. Highly flexible workflow customization

Skip the rigid, out-of-the-box solutions. Legal teams should be free to customize their workflows without requiring IT to reconfigure the system. That way, you can mirror your real-world business processes rather than modify them to fit the software.

2. Empowering IG teams over IT departments

Tasks like lateral data transfers, report customization, and user-defined field creation are better handled directly by information governance (IG) staff. Look for a system that shifts data governance responsibilities away from IT, thus making IG teams more self-sufficient.

3. Adaptable hosting

Cloud hosting alone isn’t the recommended option for security purposes, but platforms that offer a choice between cloud and on-site hosting have their perks. Hosting flexibility ensures industry-standard security compliance, streamlined deployment, storage mobility, cost savings, and many other advantages. Your firm has unique needs and platform requirements, so a deployment team to assist with on-premise installations is advantageous.

4. Straightforward deployment

Look for tools that are designed for easy deployment and management. An entirely web-based solution will be highly configurable and simple to deploy. Additionally, a consistent codebase across all deployments ensures uniformity and efficiency.

FiT's technology support

• Mobile access
• Automated retention and disposition
• Powerful reporting
• Seamless integration
• Electronic job submission
• Easy IOS/based asset tracking

Discover how automation can transform your workflows, enhance compliance, and improve legal records management. Request a demo today to experience FiT in action.