Managing Files in the Digital Age

Volume 39 Number 6

By

About the Author

Jim Calloway is director of the Oklahoma Bar Association Management Assistance Program. He publishes the blog Jim Calloway’s Law Practice Tips and produces, with Sharon Nelson, the monthly podcast The Digital Edge: Lawyers and Technology for the LP Division. 

Law Practice Magazine | November/December 2013 | The Marketing Issue

Lawyers have been keeping client information in client files for as long as there have been lawyers—or at least since paper was available. Today, many law firms have digital client files as the primary client file, and every law firm has at least some digital client records, including email, billing and word processing files.

Law firms that have not examined their file or records management policy for some time would be well advised to do so, as crafting policies relating to file opening, retention and destruction are more complex in a digital age. In this column, I discuss parallel issues with client files that are primarily paper and those that are primarily digital. But my general observation would be that the less your firm relies on paper files, the better, for an increasing number of reasons, including saving time and that old standard, the tendency of paper files to be lost or misplaced.

OPENING A NEW CLIENT FILE

Opening a new client file is a positive event for a law firm. New clients bring in new revenue. Law firms should have a standardized checklist for opening a new client file, including opening billing records, verifying a retainer agreement has been signed, checking conflicts and a host of other matters. A slightly different process is needed for opening a new matter for an existing client with several open files. These checklists need to be written down and available to everyone on the firm’s network, with periodic training for those who handle this part of the work. The process should also be reviewed annually.

As the new client file is born, preparing for its death and internment also starts. As a part of the opening process, the client should be informed of, and consent to, the firm’s records retention and destruction policy. This can be accomplished in the retainer agreement or by some other document acknowledged by the client. While the information in the file may belong to the client, it is also an important business record of the law firm.

FILE RETENTION POLICY

How long should a client file be retained? That exact time frame depends on the jurisdiction. The ABA Center for Professional Responsibility ETHICSearch has a free online resource titled “Materials on Client File Retention,” which can be found at the ABA website. It outlines which jurisdictions have retention requirements of five, six or even seven years. Missouri has a special rule, Rule of Professional Conduct 4-1.15(m), which provides a “safe harbor” that the file shall be deemed abandoned by the client and may be destroyed if a client does not request the file within 10 years after completion or termination of the representation.

If the retention time frames are not clear, the law firm should consult the ethics counsel or other appropriate individual for the jurisdictions in which all of the firm’s lawyers are licensed.

However, ethics rules generally provide that records related to funds or other property held by an attorney in connection with a representation shall be kept and preserved for a period of time. Five years after termination of the representation is suggested in Rule 1.15(a) of the ABA Model Rules of Professional Conduct. That obviously includes trust account banking records. But because much of the documentation of authorization of disbursements (such as settlement agreements, acknowledgements of receipts of property and the like) is kept in the client file, it seems that a law firm file destruction policy would need to provide for retaining files for a minimum of five years in jurisdictions that have adopted the Model Rules.

If the firm uses paper files, it should maintain an index of the box or boxes where each closed file is stored. This index must be retained for a very long time, even after the files have been destroyed. It can be very helpful when a former client comes in and is incorrect about the year in which they were represented. This, combined with other records, is the firm’s diary of when files were destroyed.

Is it appropriate to scan closed files and destroy the physical file more quickly while maintaining the scanned images for the requisite period? This question will be increasingly less relevant as more law firms convert to paperless processes and digital files. If all original documents that need to be retained on paper have been returned to the client, there seems to be no real concern, as long as the digital copy of the file is properly backed up. But checking with local ethics authorities is warranted.

Finally, a retention policy should take note of any applicable statutes or regulations and allow for special exceptions to the rule. For example, often a minor plaintiff would be allowed some time after reaching majority within which to file a claim that he or she was not properly represented. Because there are often no statutes of limitation relating to a claim that a lawyer acted in violation of ethics rules, the file of a disgruntled client who threatened to do that might be retained for a longer period.

WHAT GOES IN THE CLIENT FILE?

This is one area where the thinking has evolved over the years. In the “old days,” lawyers tended to keep originals of almost everything and let the client have copies, with the originals returned at the close of representation. Now most law firms make copies (or scanned images) and give the client back the originals unless the firm needs to retain them as evidence or for some other reason.

OTHER RETENTION ISSUES

Because former ABA Law Practice Division chair Tom Mighell is a senior consultant at Contoural Inc., where he advises businesses on records retention and destruction, we put a few questions to him.

LP: Many law offices still primarily use paper files. Some use digital files. But everyone has some digital client computer files, such as email and word processing files. Is there any difference in the rules for file retention and destruction for digital versus paper files?
TM: No. The retention rules for records are governed solely by the content of the record. The format of the record—paper, electronic, voicemail, email, video, etc.—does not matter. The place where the record is stored—in a paper file, an electronic file server or on your desk—does not matter. And it does not matter whether the record is active (meaning you use or refer to it a lot) or inactive (meaning you don’t use or refer to it that often but you still must hang on to it for retention purposes). All that matters is the content of the record when determining how long it should be kept.
LP: Lawyers often reuse prior legal documents and other work for new matters. Does a file destruction policy mean a firm can no longer have a “brief bank” or “forms bank”?
TM: No, a brief bank or forms bank is perfectly acceptable. We consider those records to have a retention period of “active”; as long as the form or brief is current, it can be retained. But once you revise the form, or once the brief becomes outdated, then dispose of that information as soon as you have new forms or updated briefs in place. While keeping copies of pleadings filed in court and legal research for future reuse is likely perfectly acceptable, documents that were not publicly filed should be sanitized of client and other party names before being sent to the brief bank.
LP: Often, extra copies exist of digital files that one might not think about, such as one copied to a flash drive for review offsite, or copies of email stored outside of the normal places. Is this as big an issue for law firms as for corporate America?
TM: Yes, definitely. When anyone gets sued—corporations and law firms alike—the preservation obligation attaches, and all relevant records must be preserved and collected. When records are not managed in a centralized location, it is easy to forget that potentially relevant information lives in many other locations: a USB drive, email printed out or emailed to a home email address, or boxes of paper stored in someone’s garage. If this is the case, then even if you have a reasonable document destruction program and think you are destroying records according to your retention schedule, in the event of a lawsuit, investigation or other legal matter, you may need to locate and produce information the employees were allowed to store in other locations.

SUMMING UP

Even a relatively pedestrian topic such as retaining and destroying files becomes increasingly complex because of technology and regulatory changes. Pay attention to such changes. The policy that works perfectly well today may well be inadequate 10 years from now.

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