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If you thought the “e” in e-mail stood for”electronic,” wise up. Nowadays, good old e-mail islikely to be “evidence” if you, your company or any ofyour employees is the target of a legal attack.

That’s the lesson being hammered home across the countryover the past few years, beginning with Bill Gates’ televisedfailures to recall embarrassing e-mail dredged up duringMicrosoft’s antitrust hearings. Gates and Microsoft escapedthat incident without serious damage, but the costs of failure topolice e-mail are going up. Last fall, for instance, a manager at aWall Street investment firm was sentenced to one to three years injail, fined $400,000, and barred from the securities industry forlife for destroying e-mail sought by prosecutors in a tradingscandal.

Your chances of being caught in a similar trap are going up,too. In a 2001 survey conducted by the ePolicy Institute, aneducation and research organization, 9 percent of U.S. companiesreported being ordered by a court or a regulator to cough upe-mail. In 2003, the same survey found the number had risen to 14percent. “E-mail has become a real target of almost every typeof business litigation,” says Michael R. Overly, an attorneywith in Los Angeles and author of (AMACOM).

Unfortunately, e-mail presents a daunting challenge forentrepreneurs. The problem starts with its image. Many people treate-mail as if it were casual and informal, when it is anything but.It may not carry a company letterhead or a signature, but e-mailhas the same legal weight as any memo, letter, report or otherwritten document your company prepares. “It’s when peopleforget that they have the same responsibilities as when they werenegotiating a contract that they run into trouble,” saysStephen Northcutt, director of training and certification for TheSANS Institute, a Bethesda, Maryland, computer securityorganization.

E-mail also seems less permanent than other writtencommunication, but e-mail may be more permanent than printeddocuments, warns Rick Edvalson, president of IntegriNet SolutionsLLC, a Boise, Idaho, computer services firm. Copies of e-mail arecreated on your computer and recipients’ computers as well ason any mail-server computers that relay the mail. Some copies willbe backed up to tape and stored indefinitely. “They acquire aneternal life of their own,” says Edvalson.

Any of those e-mail messages could become key evidence in civilor criminal litigation involving your firm. What to do? Expertsrecommend three steps:

1. Have a written e-mail policy. It should govern whatcan be said in e-mail as well as how long e-mail is to be kept.SANS Institute guidelines suggest keeping e-mail on administrativeand financial matters for four years and general correspondence forone year. “Ephemeral correspondence” such as personalmessages and status reports can be destroyed after reading. See asample policy at .

2. Train employees in the use of the policy. Forinstance, teach them to categorize e-mail as administrative,financial or other types with a line at the top of the message,making it easier to sort and dispose of e-mail as appropriate.Explain the purpose of the policy as well as penalties for failureto follow it.

3. Enforce those penalties. Twenty-two percent ofcompanies surveyed by the said they had fired people for failing to followcompany e-mail policy. That kind of enforcement may convince ajudge or jury that you tried to control your e-mail in good faithand save you embarrassment or worse.

Whatever you do, don’t forget that e-mail can be evidence.”E-mail is a document like any other,” says Edvalson.”These files are not benign and innocuous. They carry meaningand importance that can affect the well-being of thecompany.”

Mark Henricks writes on business and technology for leadingpublications and is author of .