September 30, 2019 Top Story

Lawyers May Impose Conditions on File Destruction

Bar association says protections against future lawsuits are appropriate

By Martha L. Kohlstrand

Although a client always has the right to have copies of its documents destroyed at the end of representation, an attorney may have an equal interest in maintaining a copy. In Ethics Opinion 1164, the New York State Bar Association ruled that lawyers may condition destroying client files on the receipt of specific reasonable protections against future lawsuits, including indemnification.

An attorney may conditionally retain a client's digital data

An attorney may conditionally retain a client's digital data

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Future Lawsuits in Mind

The attorney who sought guidance from the bar association had previously represented a client in an intellectual property matter and had obtained digital data relating to the matter. After the attorney-client relationship had begun, the client decided to obtain different representation and ended the relationship with the first attorney. The first attorney returned the data to the former client, but maintained back-up copies.

Subsequently, the former client settled the matter in a confidential agreement that required the former client to destroy all data related to the dispute. Although the first attorney was not a party to the agreement, the former client requested that the attorney destroy the data in question and certify as to its destruction. The attorney was concerned, however, that the information might be necessary if either the former client or the adverse party in the original lawsuit brought a lawsuit against the attorney. Therefore, the attorney sought the bar association’s guidance on whether it was permissible to condition file destruction on a release and indemnity from each party to the settlement agreement, and to keep an index of the files.

Indemnification for Data Destruction

Before addressing these questions, the bar association discussed Rule 1.15(c)(4) of the New York Rules of Professional Conduct, which states that a lawyer shall “promptly…deliver to the client…as requested by the client…properties in possession of the lawyer that the client…is entitled to receive.” The association further noted that Rule 1.16(e) provides that “upon termination of representation, a lawyer shall take steps, to the extent reasonably practicable, to avoid foreseeable prejudice to the rights of the client,” including “delivering to the client all papers and property to which the client is entitled.” But, the association observed, the rules do not specify which papers and property the client must receive.

Beyond referencing the rules, the bar association also cited its own Ethics Opinion 780, in which it addressed whether an attorney could retain a copy of documents over a client’s objection. There, the association concluded that this was generally acceptable because, under Rule 1.6(c)(5)(i), a lawyer may reveal or use client confidential information if the lawyer reasonably believes doing so is necessary to defend against a wrongful conduct accusation. A release from the client was also an acceptable way to protect oneself.

In this particular case, the association advised that the lawyer could request a release from the former client in exchange for the document destruction. However, the association cautioned that a pre-destruction release and indemnity from the non-client adverse party would not be enforceable. Regarding the former client, the association reasoned that the client had a strong claim to the documents and, because it was an intellectual property dispute, they were certainly sensitive. The settlement agreement was a legitimate basis for destruction. Because the documents were stored electronically, they would not be difficult to destroy. And the bar association could see no increased risk of liability associated with the lawyer’s document destruction. The bar association opined that the lawyer should be permitted to keep an inventory of the documents, however, providing additional protections against a future lawsuit.

Implications of Ethics Opinion 1164

“This is a very unusual case, but the New York Bar Association’s opinion makes perfect sense,” says John M. Barkett, Miami, FL, cochair of the ABA Section of Litigation’s Ethics & Professionalism Committee. “Given the balancing test laid out by the bar association, it’s a reasonable result,” agrees Paula M. Bagger, Boston, MA, cochair of the Ethics Subcommittee of the Section of Litigation’s Commercial & Business Litigation Committee. “The detailed inventory is a common-sense solution.”

“Your engagement letter should cover your best practices for keeping and destroying documents at the end of an engagement,” Barkett recommends. “Or if your engagement letter doesn’t address this, include it in your closing letter,” he continues. Bagger has similar advice. “As part of your disengagement letter, spell out what your practices are for document destruction,” she counsels. “However,” she warns, “make sure to check your state rules on retention and destruction. They are always changing—for example, my state, Massachusetts, has just added Rule 1:15(a), a very drilled-down scheme on document retention and destruction.”

Barkett has some words of caution on this topic for the electronic age. “Nowadays, many of us do not even know where all of our client documents and data reside,” he observes. “The documents may be stored on a server, within removable media, or in Outlook folders. An assistant who left your firm may have put it on a thumb drive and you don’t know where that drive is. You may have sent something to your personal email to review at home. This opinion prompts some important questions about data-retention practices.”


Martha L. Kohlstrand is an associate editor for Litigation News.

Hashtags: #ethics, #documentretention, #documentdestruction, #clients, #newyorkbarassociation

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