GPSolo Magazine - July/August 2005
Reinventing Your File Management System
What to keep and how long to keep it are questions that have plagued lawyers since the genesis of law. “The only difference is, paper files are somewhat easier to manage than stone tablets,” says Sally E. Anderson, vice president of claims at Wisconsin Lawyers Mutual Insurance Company. Here are some questions to ask yourself when developing a strategy for managing your client files.
What are your goals? File management takes many forms, depending on the size and longevity of the firm, areas of practice, available technology, and local standards of care. In general, a written records management plan should
- serve the members of the firm and its clients with timely access to information;
- answer the fundamental questions—who, what, when, where, why, how, and how much;
- satisfy regulatory and legal requirements; and
- conform to rules of professional conduct for lawyers.
What information or measures are needed to comply with the law? New regulations (notably, the Sarbanes-Oxley Act of 2002 and the Health Insurance Portability and Accountability Act of 1996, or HIPAA) call for more transparency in the boardroom and more privacy in the examining room. You and the clients you advise must be ever vigilant about the rules governing the types of information you collect, store, and safeguard.
When should a new file be opened? New clients and new matters for current clients call for new files. But what about the prospective client who meets with you for an initial consultation but does not retain your firm? Or consider the friend or relative you represent as a favor and don’t consider a “real” client. Anderson recommends you open a file, even if you immediately close it, to make sure the names and pertinent information are entered into your firm’s database. “You cannot predict when or where the person or issue will surface again. You don’t want a 15-minute consultation or a casual conversation to create a conflict of interest that could disqualify you from representing other clients,” she says.
Does the firm have a file-opening checklist? Make a list of the standard documents that should appear in every file, such as the client intake form, conflict-of-interest check, credit report, letter of engagement documenting fee agreements, and assigned attorney and staff. Pay special attention to dates and make corresponding entries in your calendar or tickler system.
How do you notify clients of your file retention policy? Many attorneys routinely include a statement about their file retention policy in their fee agreement or letter of engagement and ask the client to acknowledge in writing their understanding of the firm’s file retention policy. (See the sidebar “Sample Retainer Letter ” on page 40.)
What information belongs in the file? Some lawyers keep every draft of every document, correspondence, phone message, voice mail record, and bill, at least until the representation is concluded. Others are minimalists, keeping only the bare essentials. All original documents should be returned to the client or filed with the appropriate jurisdiction as soon as possible. Make a photocopy—at your expense—for your reference.
Keep in mind that you are the custodian of the file, not the owner. Most ethics opinions state that the file and associated work product are the client’s property. The attorney has a professional obligation to safeguard client property and to avoid prejudicing clients’ interests by withholding information.
Anderson says if you’re having trouble deciding what goes in and what goes out, ask yourself the following questions: Could an attorney representing you in a professional liability insurance claim reconstruct your actions? How would a jury view your level of care in the representation if the file became an exhibit in a legal malpractice suit?
How long should you keep the file? The answer depends on many factors, including:
- Type of legal matter. The life cycle of a real estate or estate planning matter is much longer than that of a bankruptcy or traffic violation.
- Ages of the parties. Matters involving minor children, for example, will require longer retention.
- Statutes of limitation on attorney malpractice and grievances. As Anderson notes, “some jurisdictions have a discovery rule, in which the statute begins tolling when the claimant discovers the problem, regardless of when the representation occurred.”
- Likelihood you will need to reopen the file. Some matters have a clear-cut end; others never reach final resolution.
- Comfort level of your client and yourself.
Do you use a standard organization for files? Adhere to the philosophy of “a place for everything and everything in its place,” and you will impress your clients with your brilliant organizational skills. Include a place to list documents that have been filed elsewhere, returned to clients, or disposed of. Otherwise, you’ll waste countless hours searching for “missing” documents.
How are files identified? Your firm may not need bar codes and scanners to keep track of files, but you do need a naming convention that is consistent, logical, and universally understood. Some firms use one naming convention for open, active files and assign a different identifier at file closing.
Alphabetizing by surname or entity name is a good starting point; however, multiple parties and matters can create confusion. Consider adding dates, area of practice codes, or numeric extensions to the client name to further identify files.
Diary files for future attention, such as when an agreement expires, when a UCC continuation statement should be filed, or when a relevant law changes. Keywords or codes embedded in the file name or description could prove invaluable if you have to search a database to find a file.
Where are open files kept? Who has remote access to information? Lawyers and staff should develop a habit of returning files to filing cabinets, where they are less likely to be damaged, misplaced, or viewed by curious eyes. You need to exercise extra vigilance to safeguard confidentiality of documents accessed remotely. Remind lawyers and staff of their professional responsibility to maintain client confidences, even when they are using a laptop to retrieve files from home, the airport, or the corner coffee shop with a wireless network.
Does the firm maintain a central filing system? Keep active files outside your private office where staff or assisting attorneys can access them. That way, many routine administrative or procedural questions can be answered quickly and without interrupting you. Introduce clients to your staff person or assisting colleague early in the representation and invite clients to contact him or her with questions.
What is the procedure for checking out files? Attorneys and staff need to adopt a common procedure for tracking files’ whereabouts. Circulation software is available, but manual checkout procedures will suffice for smaller firms. Office supply stores sell brightly colored, file-size index cards to hold the place of a removed file. Identify the removed file, its current custodian, and the date. If appropriate, assign due dates and someone to follow up on files that have been checked out for extended periods.
What is the firm’s file-closing procedure? Consider developing a file-closing checklist to make sure you have
- completed all tasks related to the representation;
- documented decisions and results;
- calendared future actions that you or the client must take;
- submitted time and billing records for final invoice;
- written and mailed a letter of disengagement, restating your file retention policy and any future actions the client needs to take;
- forwarded original documents to the client;
- removed redundant or unnecessary documents;
- clearly and unambiguously identified the file; and
- assigned dates for the file to be reviewed, purged, or destroyed.
No file should go to storage without the responsible attorney’s careful examination and seal of approval. “In part, what you’re looking for are original documents or information of special interest to the client that may not be readily available through another source,” Anderson says.
Where are closed files kept? Recently closed client files often are stored on-site, sometimes using storage systems that compress the files to save drawer space. Long-term storage off-site is more economical but also more subject to loss or damage. Store paper files where they are protected from water, wind, fire, sunlight, insects, rodents, mold, and curious third parties.
Red flag your firm’s vital or mission-critical records for first priority in document recovery following a disaster. Although outside the scope of this article, a number of document imaging solutions are available to law firms, including old-fashioned, low-tech, always-readable microfiche. (For a discussion of creating a paperless, electronic filing system, see the article “Setting Up the Paperless Office” in the December 2003 issue of GPSolo, www.abanet.org/genpractice/magazine/dec2003/setuppaperless.html.) Store backup media in a secure location away from the paper documents they are intended to duplicate.
How does the firm track files? Keep a spreadsheet or master index of files, creation and destruction dates, and storage location. Don’t waste countless hours looking for files that have been sent to deep storage or no longer exist. And ask clients to sign and date a receipt for documents or files they take.
If a client asks your firm to release his or her file, do you attempt to find out why? “The reason may be simple; for example, the client could be moving away and want to have ready access to the legal file,” Anderson notes. “On the other hand, the client may be dissatisfied with your firm’s representation.”
Either way, better that you learn the news directly from the client than from the client’s next attorney. If you uncover a potential malpractice claim, notify your insurance carrier immediately to “trigger” coverage. Failing to report a claim under your current policy could jeopardize your coverage.
What will happen to your client files if the firm ceases operations? Sole practitioners, in particular, need to provide for the future care, custody, and control of client files. Consider developing a mutual aid agreement with another sole practitioner or law firm to maintain your files for a period of time, should you become unable to practice. Partnerships or firms that disband will need to provide for the storage of and access to closed files.
Do you attempt to notify clients before discarding their files? Good practices require a law firm to attempt to locate past clients, inform them of their files’ status, and give them the opportunity to pick up the files before destruction. “If, at the time clients retain you, you inform them in writing of your file retention policy and ask them to acknowledge your policy, you have probably covered your bases,” Anderson says.
What method will be used to discard files? Your duty to protect client confidentiality and safeguard identity extends well beyond the end of representation. Shred all paper and electronic documents before sending them to the landfill.
Your words may not be written in stone, but the paper trail you create during your legal career is enduring—and lengthy.
Case File Quandries
Sample Retainer Letter
A standard paragraph in your letter of engagement or fee agreement can release you from the real or perceived obligation to save client files indefinitely or attempt to notify clients before destroying their file. Consider adapting the following language, written by Pamela Phillips and Merri A. Baldwin in “Client Files: Handle with Care,” an article that appeared in California Lawyer, May 19, 1998:
After our services conclude, [Law Firm] will, upon [Client’s] request, deliver the file for this matter to [Client], along with any funds or property of [Client’s] in our possession. If [Client] does not request the file for this matter, we will retain it for a period of [ ] years after this matter is closed. If [Client] does not request delivery of the file for this matter before the end of the [ ]-year period, we will have no further obligation to retain the file and may, at our discretion, destroy it [without] or [after] further notice to [Client]. At any point during the [ ]-year period, [Client] may request delivery of the file.
Copyright 1998, California Lawyer.
Ann Massie Nelson is a writer living in Madison, Wisconsin. She may be contacted at firstname.lastname@example.org.