After the storm of financial scandals that erupted at the dawn of the last decade, the Sarbanes-Oxley Act of 2002 (“SOX”) was passed by Congress to ensure, among other things, more transparency from business enterprises. As it pertains to record retention, SOX often triggers the need for companies to preserve data regardless of whether a government investigation has actually commenced. 

Importance of Information Management Prior to Investigations
Where such investigations are reasonably anticipated, it is therefore all the more important to fully comply with established data preservation requirements. Fortunately, companies are able to proactively protect themselves by implementing legally compliant document retention policies capable of satisfying requirements and helping to steer them clear of obstruction of justice claims and related sanctions.

Determining what to preserve and what to delete
The most pressing issue that record retention policies must effectively address is determining when data may be purged and when it ought to be preserved. There are internal and external factors that must be considered before establishing how long records should be retained. Internal factors include: ongoing business use, internal audit requirements, and the historical value of data. 

Decision makers would be wise to give thorough consideration to internal factors when forming specific policies, such as an email retention policy. In the event that retention policy maximums must be increased in length, a risk assessment should be performed to determine the potential risks and costs that the company bears.

Statute of limitations and legal requirements
The key external factor relevant to forming data preservation policies is the applicable statutes of limitation laws. Statute of limitations laws proscribe the period of time during which an organization can either sue or be sued for a particular matter or how long a government agency can conduct an investigation or audit of the company.  With an informed retention policy in place, businesses should then create preservation notices to track and manage potentially responsive business records or other data. Accordingly, statutes of limitation periods must also be considered in determining how long records should be retained. While statutes of limitations are not required retention periods per se, they are a critical external factor that must be considered in forming effective data governance policies and procedures. 

With an informed retention policy in place, businesses should then create litigation hold notices to track and manage potentially responsive business records or other data. This can be proactively achieved by conducting automated disk imaging; targeting data collection by forensically preserving data from a central office; collecting data from other business offices through secure remote data collection tools; or even performing discrete data collection methods throughout an investigation. 
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With such thorough preservation and collection methods in place, the liability of obstruction of justice claims or related sanctions is even further mitigated.

A recent divorcee just dodged the mother of all bullets. He walked away from a nasty and rather lengthy divorce with 95% of his multi-million dollar marital estate. Wins like this don’t happen often, but when they do, it may be important to restructure your real estate holdings to make them more secure moving forward. Getting this client assistance with with developing new business entities that helped to insulate him against similar exposure moving forward was critical.

To be sure, divorce proceedings aren’t the only threats to real estate holdings. Lawsuits present a growing danger to real estate investors in today's hyper-litigious environment. When our client came to us in the wake of his divorce, all of his property was held under one umbrella—his own personal name. Despite having insurance policies on the properties, this "umbrella" was nonetheless riddled with holes. 

Although our client had insurance policies on the properties, it may not have been enough to cover sizable judgments. Moreover, because every piece of real estate was in his name personally, creditors could potentially reach any real estate holding armed with a judgment that exceeded the policy limit. If the roof caved in on his Naples property then his own personal home may have been up for grabs. Or conversely, if his lawnmower blew up and injured his neighbor, there may have no longer been a Naples real estate holding at all.

For reasons beyond the scope of this short article, Limited Liability Companies (LLCs) are the business entity of choice for real estate holdings. An LLC “limits liability” to the extent of the LLCs assets. For this reason, placing real estate holdings into LLCs is an important step in protecting real estate. But why stop at limiting liability between personal and investment assets when the investment assets themselves can also be insulated from each other? 

If multiple properties are held under one LLC, investors still find themselves facing a dilemma--liability although limited, isn't really limited enough. In order to maximize LLC protection real estate investors need to insulate each real estate holding from the liability associated with the others by creating a separate LLC for each real estate holding, This simple solution has had an exponential impact on the level of protection his real estate holdings have. When his luck does eventually run out, he'll be prepared to weather the storm. 

Before making decisions of this nature you should consult with your Attorney, Accountant or Business Consultant. The information contained in this blog is not being provided as a substitute for obtaining such professional advice.  

As Americans we have always been enchanted by the notion of free enterprise, the idea that, as a nation, our interests are best served when we have the freedom to pursue our dreams free from unnecessary government entanglement. Yet last Monday's 6-3 vote by the Colorado Springs' City Council to ban Marijuana Consumption Clubs suggest that, excepting Helen Collins, Jill Gaebler and Bill Murray, some prefer the rhetoric of free enterprise over the reality.

But, ironic as it may be, capitalism may be as much a factor in the Council's support of this ordinance as it is for its opposition. Frankly, to think that the revenue raising function of this legislation is merely coincidental would be insanely naive. Without a doubt, Consumption Clubs represent an untapped resource, a promising well that, for some municipal bodies represent their own brand of free enterprise. Undoubtedly, to them, imposing licensing requirements and the taxation that will inevitably follow is just one step in their goal of maximizing municipal revenues under the guise of regulations. 

In either case, regardless of whether this ban is affirmed and is able to withstand the inevitable constitutional challenges already in preparation, Consultus will continue to demonstrate the flexibility and creativity to ensure its Consumption Club clientele remain both compliant with these changes, and profitable. Forward thinking is a major selling point for our services. Staying ahead of the curve is the Consultus way!