September 28, 2018 Top Story

Court Clarifies Duty to Provide Entire Client File on Termination

Ethics rule requires attorneys to provide more than end product to former clients

Catherine M. Chiccine

A recent court ruling has cemented the majority view that attorneys have an ethical duty to turn over their entire file to clients upon termination of representation, including privileged communications and confidential settlement agreements.

Attorneys have an ethical duty to turn over their entire file to their client upon termination of representation

Attorneys have an ethical duty to turn over their entire file to their client upon termination of representation

Pexels | Pixabay

The ruling rejects an interpretation of  ABA Model Rule 1.16 that requires only the return of end product to former clients. ABA Section of Litigation leaders caution attorneys to be aware of their jurisdiction’s interpretation of Rule 1.16 to avoid sanctions.

Client Seeks Entire File after Termination of Representation

The dispute in TCV IV L.P. v. Tradingscreen, Inc. began after a group of shareholders sued the company’s CEO and board of directors for breach of fiduciary duty. A majority of the board then voted to oust the CEO, but the CEO refused to accept the decision. The remaining board members filed another lawsuit to determine whether the CEO remained in place. Although the CEO and board members were represented by a single law firm during the first lawsuit, the ousted CEO and his board member brother took positions adverse to the other board members during the second lawsuit, creating a conflict that required their lawyers to withdraw.

After the withdrawal, the other parties reached a settlement agreement in the original suit. The CEO and his brother objected to the settlement and contended it could not be implemented over their objection. They filed a motion to compel production of their former counsel’s entire litigation file because it not been provided when the law firm withdrew from representing them. The law firm refused to do so based on the other board members’ assertion of attorney-client privilege.

Notwithstanding the privilege objection, the Court of Chancery of the State of Delaware ordered the law firm to produce the litigation file. The firm produced over 5,000 documents, including all pleadings, invoices, and emails. The CEO filed another motion to compel, arguing the law firm had still not produced the complete litigation file, including the settlement agreement reached in the original lawsuit.

Entire File vs. End Product

The Tradingscreen court ultimately required production of the entire litigation file, including the settlement agreement, clarifying the requirements of ethics Rule 1.16 regarding termination of representation.

Rule 1.16 of the Delaware Lawyers’ Rules of Professional Conduct states that “upon termination of representation,” a lawyer must provide to the client the “papers and property to which the client is entitled,” but does not explain what “papers and property” means. The Delaware Rules of Professional Conduct, like the ethical rules adopted in many jurisdictions, are patterned after the ABA Model Rules of Professional Conduct. Therefore, the court looked to decisions from other jurisdictions that have adopted Model Rule 1.16.

The court concluded that the majority of jurisdictions have interpreted Model Rule 1.16 as requiring a lawyer to provide a former client with the entire litigation file, with a few narrow exceptions. Courts adopting this approach have reasoned that it best comports with the lawyer’s duty to the client and is also consistent with the client’s property interest in his file, the court noted. The Tradingscreen court fell in line with the majority, reasoning that the entire-file approach “best comports with an attorney’s heightened duties to his or her clients and the candor and transparency that characterize the attorney-client relationship.”

The court declined to follow the minority end-product approach, which distinguishes between a lawyer’s external and internal work product. Under this approach, the client is not entitled to a lawyer’s internal work product, which includes documents such as lawyer notes, drafts of pleadings and instruments, and internal legal memoranda and research materials. The end-product jurisdictions reason that the lawyer’s internal work product reflects the “rough” thoughts of the lawyer and the “lawyer’s interest in them outweighs any value in their disclosure,” the court explained.

Case Law Provides Clarity

Tradingscreen provides a reminder that “attorneys should be aware of what their jurisdiction requires regarding retention policies for their files,” says Scott E. Reiser, Roseland, NJ, cochair of the Section of Litigation’s Ethics & Professionalism Committee.  “Know what you would reasonably be expected to turn over to the client in case of termination of representation,” he adds. In many jurisdictions, the language of Rule 1.16 is unclear, Reiser explains.  “The problem for the former attorneys in this case is that the rule does not define what the client is entitled to,” he notes.

In those instances, Section leaders emphasize that it is important for attorneys to keep up on case law regarding this issue. “Here, what the client was entitled to receive was something outside of the rule itself,” comments Michael P. Downey, St. Louis, MO, cochair of the Legislation and Rules Subcommittee of the Section’s Ethics & Professionalism Committee.  “The rule says that the client is entitled to ‘property,’ but we have to look at case law to define ‘property,’” he explains.

In addition to case law, the court can serve as a resource, say Section leaders. “Here, the law firm would have been well-served to seek guidance from the court rather than producing based on one approach and risk getting sanctioned afterward,” Downey advises.

 

Catherine M. Chiccine is an associate editor for Litigation News.


Hashtags: #ethics, #legalethics, #termination, #withdrawal, #clientfiles

Related Resources


Copyright © 2018, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).