Corporate Lawyer Richfield Utah
A business owns sensitive and valuable records and information that are in need of protection from damage, loss, and unauthorized disclosure. Safeguarding such records can preserve rights under the law, fulfill legal and other obligations, and prevent losses. In the normal course of business, a company might be in possession of another party’s records and information, which must be treated in much the same way as the company’s own records. When certain business records are not properly protected, any loss or damage could result in legal actions, the inability to rightfully collect money due, loss of competitive advantages, or other consequences. Speak to an experienced Richfield Utah Corporate Lawyer to protect your business from such fate.
What to Protect
At the heart of business records are those with real or potential financial, administrative, operational, or legal impact on the business. Business records also may have historical importance. Or a business may be in possession of records and information that are the property of others.
Some records have more value than others, and the sensitivity of certain records may cause harm when they are disclosed to the wrong parties. Every business has valuable and sensitive records and information. Valuable records are those that affect income and profit or that represent a tangible asset. Sensitive records are those which must not be disclosed indiscriminately to others, within or outside of the organization. A method to classify business records helps identify the various levels of sensitivity and value. Clearly stated guidelines for each classification then prescribe how those records should be protected. A record can be both sensitive and valuable, and its classification within these two categories may change as circumstances change, or after a designated time period.
Unfortunately, the terminology used to describe sensitive and valuable records and information has not been standardized within the business community. “Confidential” may be used by some businesses to describe sensitive records that are dubbed “private” by others, and “private” sometimes is used to include “proprietary” information. “Proprietary” and “trade secret” are frequently used interchangeably, though, in the true meaning of the word, proprietary is a broad category that includes trade secrets. Until standards exist, the needs and preferences of an individual organization–along with consideration of privacy, security, and secrecy issues–best determine how the categories of value and sensitivity are defined.
Private Records and Information
Private records and information are those that are sensitive and should not be disclosed indiscriminately within or outside the organization. Disclosure usually requires the prior approval of the record’s owner. Employee and customer records are typical records in this classification, and a number of federal, state, and local record-keeping requirements exist regarding such records. They specify the types of records to be maintained, for how long, and guidelines for the proper use of and access to these records. Privacy issues are a primary concern regarding employee records, which contain personal data. Customer records may be subject not only to privacy regulations, but also to proprietary restrictions and other government regulations.
Litigation and Investigation Records
Records and information relevant to any potential, current, or past litigation or government investigation are considered sensitive and, in some cases, valuable. These records must be protected from alteration or loss, and a number of restrictions may be necessary regarding their disclosure.
In the event of a natural or manmade disaster, certain business records are critical to the organization’s ability to continue operations or to resume business after the disruption. These records, and any records required to handle the crisis situation, are considered vital records in that they preserve the company’s rights and help fulfill company obligations.
Business records, as the corporate memory, provide an accurate portrayal of business development and activities over time. Examples of records that may be considered historical include:
• advertising materials
• architectural drawings
• board minute books
• financial records
• materials unique to the business or industry
• newsletters and other publications
• officers’/executives’ correspondence
Intellectual property is a special type of intangible personal property. It represents the scientific, artistic, creative, or commercial endeavors of an individual or an organization. In terms of business records and information, the intellectual property of greatest concern is proprietary information. Proprietary information is the broad term used to encompass various types of information that have some value to the owner. This value could be diminished or destroyed if the information is disclosed to others or disclosed without appropriate restrictions. The basic criteria for proprietary information are:
• the information is not generally known
• the information gives an advantage to the proprietor over others
• reasonable efforts are made to protect its secrecy
Proprietary information can be information, records, software, and other work products that are developed on behalf of a company or by using the company’s facilities. It is information that was difficult or costly to develop, or that has an intrinsic value.
Protection for certain types of proprietary information is provided under the law in the form of trade secret, patent, copyright, trademark, and service mark statutes. A trade secret is any formula, process, method of operation, pattern, device, or compilation of technical, financial, or business information used in the production and delivery of goods and services that provides a distinct advantage over a competitor who does not know it or use it. It is usually determined or developed at considerable expense of time, effort and/or money, and is known only to those who made that investment. There should be a substantial element of secrecy. Others must find it difficult to acquire the information except by the use of improper means.
Information Belonging to Others
In the normal course of business, a company may come into the possession of records that are the property of another individual or organization. Contracting organizations and those involved in joint business ventures often require valuable or sensitive information that belongs to another party–especially government contractors. A business in the role of a contractor also may create or use records, which become the property of the contracting organization. If your business in Richfield, Utah is dealing with information belonging to others, speak to an experienced Richfield, Utah Corporate lawyer.
A business is responsible for the proper use and control of others’ information and for compliance with any provisions set forth in a licensing agreement, contract, law, or government regulation. Failure to maintain adequate security for these records and information–including proper disposal of the documents–may result in a law violation, litigation, and other consequences.
Unless it is in the best interests of the company, it is best to avoid unnecessary possession of others’ records and information, and thus any unnecessary obligations to protect such information. On the occasions when another party wants to provide unsolicited ideas, suggestions, or inventions for consideration, it is wise to formalize this submission process by requesting a written proposal that omits details prior to acceptance of full disclosure.
Keeping records current
The more dynamic–or quickly changing–a company, the more difficulties it will have keeping its information systems current and responsive to its end users, government requirements, and legal obligations. Government investigations and litigation tend to increase during organizational change, and records must be readily available for these proceedings. Records and information security also becomes more urgent when an enterprise is expanding, contracting, or relocating. When a business changes, grows, or shrinks, easy-to-use records and information systems become even more critical as energies of a changing workforce are diverted to new endeavors.
Growth and Change
A start-up business often experiences a fast pace of change and growth in its first few years. Ideally, a records and information management program should be established along with other internal systems and processes at the time of start-up.
As a business changes, the records and information management program must be updated so that it may continue to support changing business functions. A well-designed records and information program will be dynamic enough to adapt easily to organizational change so that it may continue to be compatible with and supportive of new organizational directions.
Facilities relocations present many challenges and opportunities for records and information management. The challenge is not to disrupt daily activities any more than necessary. A relocation also is an opportunity to settle into a new location with a new or updated records and information management program in place.
Good planning for an office move begins far in advance of the move and should involve the records manager. The records manager determines how much space, types of equipment, and any special environmental requirements will be necessary for the various records forms. Unnecessary and valueless records should be purged to eliminate the expense of moving them to the new facility. To further reduce space requirements for records in the new facility, it may be appropriate to transfer inactive records to a records center or to convert designated records to microfilm prior to or during the move. If a move is across state lines, the records retention schedule may need to be revised to reflect the record-keeping requirements of that state.
Security measures will need to be stepped up in preparation for a move, during the move, and throughout the settling-in period. If employees resign or are terminated as a result of the move, the probability of employee sabotage is greater. Security threats also increase from outsiders during the chaos and confusion of a move.
Workforce Reductions, Facility Closures, Sales of Business
When a business decides to tighten its belt or change its market focus, it often turns to workforce reductions, facility closures or consolidations, or the sale of part of its business. Similar to the determination of whether or not to buy another company, records are required to analyze what tasks, jobs, functions, or business sites may be eliminated within the new business strategy. Because of the higher risks of litigation or government investigation–especially regarding employee actions or agreements with other parties–more careful attention will need to be given to accurate and complete record-keeping throughout this change process. Government information disclosure requirements also may be applicable, as in the federal law that requires 60 days’ notice to employees and local governments of any plant closing or major layoff, or an employee’s right to continue health insurance coverage.
Surviving employees of a workforce reduction do not need excessive burdens as they take on expanded responsibilities with fewer resources. Decision-makers may find it easier to cut a larger number of lower-paid positions than a smaller number of higher-paid positions, but they may be short-sighted when they cut too deeply into staff and clerical position and the higher-paid managers end up spending too much time on routine chores, such as correspondence and reports production. The principle that elimination of work and streamlined internal processes should go hand in hand with the elimination of workers also applies to a records and information management program, which should always be easy to learn and use, within the legal and practical constraints.
When a facility is closed for reasons other than a sale of the business, the company remains responsible for the assets and liabilities of that facility’s operations. The tendency on the part of many enterprises is to dispose of records from a facility as part of its closure procedures. However, without the records necessary to clarify its position, it would be difficult for the business to defend itself or to file claims against another party should the occasion arise.
Threats to the security of records and information can arise from a number of environmental conditions. The greatest–and probably most ignored–environmental threat is a natural disaster such as a rain or wind storm, hurricane, flood, tornado, or earthquake. The sentiment that “it won’t happen here” tends to make a business discount the potential consequences of such an event. Even if a tornado does not make a direct hit on a business, the company still may suffer serious damage if the tornado hits its power source or communications network. Speak to an experienced Richfield Utah corporate lawyer to know how you can insure your business against this threat to your business records.
Richfield Business Lawyer Free Consultation
When you need legal help with your business in Richfield Utah, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506