Piles of files

By Peter H. Geraghty
Director, ETHICSearch

Three lawyers have been practicing as the ABC partnership concentrating in real estate and probate matters for the past 30 years. During this time, they have represented hundreds of clients and have amassed thousands of client files for various matters, most of which are now closed.

Lawyer A intends to retire at the end of the year.

Up until now, the firm has been storing these files in the firm office, but will soon run out of space and will be forced to rent additional storage space.

The lawyers would like to have a system in place whereby they can review the files and make decisions as to which files they should keep and which files they can destroy. For those files they decide to destroy, which items in each file should be returned to the client?

What are the ethical considerations lawyers should keep in mind when deciding whether to keep or destroy closed client files?

Discussion

This is one of the most common inquiries posed to ETHICSearch: How long do I keep my closed client files?

ABA Informal Opinion 1384 (1977) put forth seven basic considerations to keep in mind when considering whether to keep or discard a client file:

1. Unless the client consents, a lawyer should not destroy or discard items that clearly or probably belong to the client. Such items include those furnished to the lawyer by or in behalf of the client, the return of which could reasonably be expected by the client, and original documents (especially when not filed or recorded in the public records).

2. A lawyer should use care not to destroy or discard information that the lawyer knows or should know may still be necessary or useful in the assertion or defense of the client's position in a matter for which the applicable statutory limitations period has not expired.

3. A lawyer should use care not to destroy or discard information that the client may need, has not previously been given to the client, and is not otherwise readily available to the client, and which the client may reasonably except will be preserved by the lawyer.

4. In determining the length of time for retention of disposition of a file, a lawyer should exercise discretion. The nature and contents of some files may indicate a need for longer retention than do the nature and contents of other files, based upon their obvious relevance and materiality to matters that can be expected to arise.

5. A lawyer should take special care to preserve, indefinitely, accurate and complete records of the lawyer's receipt and disbursement of trust funds.

6. In disposing of a file, a lawyer should protect the confidentiality of the contents.

7. A lawyer should not destroy or dispose of a file without screening it in order to determine that consideration has been given to the matters discussed above.

8. A lawyer should preserve, perhaps for an extended time, an index or identification of the files that the lawyer has destroyed or disposed of.

Informal Opinion 1384 is still very widely cited in state bar ethics opinions. See, e.g. New Jersey 692 (2002), West Virginia Bar Opinion 2002-01(2002), California State Bar Opinion 2001-157 (2001), The Association of the Bar of the City of New York Opinion 1999-05 (1999), Pennsylvania Bar Opinion 99-120 (1999), Arizona Bar Association Opinion 98-07(1998), Wisconsin Opinion E-98-01 (1998), Utah State Bar 96-02 (1996) and South Dakota Opinion 94-6 (1994).

Rule 1.15 Safekeeping Property of the ABA Model Rules of Professional Conduct also provides some guidance in this area. State bar association ethics opinions have recognized that this Rule applies not only to client trust fund accounts and records but also to other client property. See, e.g. Connecticut Bar Opinion 98-23 (1998) that states as follows:

The Rules of Professional Conduct, as adopted in Connecticut, relate to this issue through Rule 1.15 Safekeeping Property, subsection (a). While the section generally refers to the maintenance of financial and clients’ funds accounts, it also provides, in a pertinent portion, “other properties shall be identified as such and appropriately safeguarded.” This language has been universally understood to require an attorney to take appropriate, reasonable steps to safeguard file documents which are property of the client, and any important original documentation from the client.

New York Opinion 1999-05 (1999), applied DR 9-102 (the New York Code of Professional Responsibility corollary to Model Rule 1.15) when it discussed a lawyer’s obligations to safeguard missing client’s wills when the lawyer retires or the lawyer’s firm is undergoing dissolution and concluded:

…that a retiring lawyer—or one whose firm is dissolving—may communicate with clients to arrange the return of original Wills to them or to obtain consent to dispose of those Wills. However, as to those clients who cannot be located, the lawyer’s obligation to retain the Wills in safekeeping continues indefinitely or in accordance with law. The original Wills remaining in the lawyer's possession could be placed in storage or in the custody of a successor attorney (indexed and stored in a manner that will protect client secrets and confidences), unless it is appropriate to use available procedures for filing original Wills with a court for safekeeping.

An excellent article entitled “Records Retention in the Private Legal Environment: Annotated Bibliography and Program Implementation Tools,” by Lee R. Nemchek, is available on the American Association of Law Libraries Web site.

When a lawyer retires: Joint responsibilities toward client files

There are several state and local bar association ethics opinions that have discussed a lawyer’s and the firm’s obligations with regard to client files when he either retires from a firm or the firm he was associated with dissolves. In general these opinions state that a lawyer has joint and several responsibilities with the firm to ensure that the files are disposed of properly.

…A lawyer who leaves a law practice, due either to retirement or dissolution of a law firm, has joint and several responsibilities with other firm members for the proper disposition of client files. In the case of closed client files, the lawyer may destroy all documents that belong to him without notice to the client unless extraordinary circumstances exist. As for documents belonging to the client, the lawyer must offer to make them available to the client and may follow the client’s instruction as to their disposal. If the client fails to respond in a reasonable period of time, the lawyer should review the files to determine which files he must salvage because of legal requirements or because the documents establish client rights. The lawyer may then destroy the remainder of the files in a manner that preserves client confidentiality. He must notify the client of any documents that must be salvaged and forward any documents the client is required by law to maintain. If the client is deceased or incapacitated, the lawyer may deliver the files to the client’s representative. If delivery to the client or his representative is not possible, the lawyer must retain these files until the expiration of the legal retention period or the period of reasonably foreseeable need by the client but may charge the client the cost for maintaining the files. NY State Opinion 460; DRs 1-102(A)(5), 4101(B)(1)(D), 9-102(B)(D)(G); ECs 1-5, 4-4, 4-6, 7-1, 7-8, 7-11, 7-12.

Nassau county opinion 93-23 takes a similar view to that expressed in the New York State opinion, but addresses it in the context of lawyers who leave a law firm after it dissolves, but leave their client files with a group of lawyers who stay to form a successor firm.The lawyers who leave the firm send a letter to the new group of lawyers and ask them to send them approximately 30% of the files and to destroy the rest. The Nassau county bar opinion states again that the lawyers have joint and several responsibility for the files and that they cannot be simply discarded. The opinion states:

…If there are any members of inquiring counsel’s current firm who are not members of the predecessor law firm in dissolution, they are nonetheless equally ethically bound since the present firm, of which they are members has custody of the files. As this Committee opined in Nassau County Opinion 89-43 and restated in Nassau County Opinion 92-27, an attorney voluntarily assuming custody of the files of another lawyer’s client has the same ethical obligations for the files as if they were his or her own files.

See Also Masachusetts Bar Opinion 76-7 (1976).

Destruction of client files and the protection of client confidentiality

If a lawyer decides to destroy a client file, he should take steps to protect against the disclosure of client confidences. See, the following excerpt from the treatise section of the ABA/BNA Lawyers’ Manual on Professional Conduct that provides a summary of recent ethics opinions on this topic:

New Jersey Ethics Op. 692 (Supplement) (2002) (when destroying client files, lawyer must take appropriate measures to ensure confidential information is protected from improper disclosure; “simply placing the files in the trash would not suffice”), New York State Ethics Op. 641(1993) (lawyers complying with recycling ordinance must learn how paper is to be recycled in order to determine whether protective measures, such as shredding, are necessary to protect client confidences); and Oregon Ethics Op. 2005-141 (2005) (law firm contracting with recycling service to dispose of office files must take reasonable care to prevent company from disclosing or using confidential client information; firm must instruct company about lawyers’ duty of confidentiality and company must agree to safeguard all such materials).

West Virginia Ethics Op. 2002-01(2002) (method of destroying closed files of former clients must protect confidentiality of contents); Wisconsin Ethics Op. 98-1, 14 Law. Man. Prof. Conduct 291 (1998) (in disposing of closed files of former clients, lawyers must exercise due care to insure that confidential information is not disclosed). 55 Law. Man. Prof. Conduct 111.

Conversion of paper to electronic files

Storing closed client files can be very costly. Can the conversion of paper to electronic files be a solution for the lawyer who is trying to reduce storage costs?

There have been several state bar opinions on the storage of client files in an electronic format. See, for example State Bar of Arizona Opinion 07-02 (2007), New Jersey Opinion 701 (2006), State Bar of Virginia Opinion 1818 (2005) stated that a lawyer may maintain paperless client files, but that he must obtain the client’s consent before destroying a current client’s paper documents. The opinion also stated that before destroying a client’s paper file, the lawyer should carefully review the documents in the file to ensure that paper documents that have legal significance only in their paper form such as testamentary documents, marriage certificates and handwriting samples are not destroyed.

Some of these opinions also caution that if a lawyer does decide to store files in this manner, care should be taken to maintain a copy of the software used to create the file so that the lawyer will be able to open it should the client ever request a copy.

For further information on this topic, See the Eye on Ethics column entitled From Paper to Kylobytes - updated (2007). This article has links to many state and local bar opinions that have discussed ethical issues as they relate to the conversion of paper to electronic files.

Conclusion

When putting together a client file retention policy, check your local rules and ethics opinions. If there are no opinions on point in your jurisdiction, contact your state or local bar. Chances are they have fielded this question many times!

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