5th Nov 2018
Document Storing: How Long Should Law Firms Keep Closed Files and Why?
If you practice law, no doubt you wonder about document storing for closed cases. It doesn't make sense to keep every file from every case for all time. And, it's not smart to treat all case files in the same way.
The answer to file retention isn't a specific number of years. In fact, file retention and destruction is complicated. Establishing your firm's retention policy isn't easy either. You must coordinate legal obligations with cost and space issues. The policy must include both physical and electronic client materials.
Get input from the firm lawyers, management, records, and IT departments. There are important decisions to make on data storage, retention, and destruction. A policy helps your firm control records, manage risk, and meet legal responsibilities.
This article examines important aspects of legal document storage. Keep in mind no single policy exists to cover every situation. Each firm should establish its own file retention policy. Keep reading for more information and advice.
Reasons Lawyers Keep Files
There are plenty of reasons a law firm retains client files. The reason may benefit the lawyer, the client, or both. First, let's examine common reasons lawyers keep client files.
Protection Against Malpractice Charges
One reason for retention is to protect the firm against allegations of malpractice.
It's vital when the case documents are the only evidence available for defense against a claim. This can happen when information from other sources isn't available.
A negligence or breach of contract claim against a lawyer or law firm can happen long after the act occurs. There are some time limits, but each state's Statute of Limitations is different.
Legal malpractice lawsuits involve failure to meet the professional standards expected. Well documented, and retained client records protect against malpractice charges. To reduce or stop problems, use a detailed contract. Spell out the lawyer's role, client expectations, and each person's responsibilities. Then, store the contract and all the case files together.
An established company policy for file management reduces the risk of malpractice claims. It will:
- Save Time and Resources
- Maintain Safety of Correspondence, Work Product, and Pleadings
- Stop Loss of Essential Documents
- Smooth Transfer of the Case to Another Attorney
- Protect Client Confidentiality
- Reduce the Chance of Missed Deadlines
File retention is a critical issue when a law firm merges, adds or loses partners, or closes. An established retention and destruction policy determines who handles the files.
Reputation Management
There are dangers when you don't keep files. If you don't have detailed records, you can't defend your firm or reputation.
Not having records can mean a lack of evidence. Imagine appearing in open court to defend your firm without documentation. If you don't save records you risk penalties. Stay aware of federal, state, and local rules governing client record maintenance.
Never destroy a file or any of its contents if it harms the client's interest. Each case will be different. Remember, the law firm doesn't own the files. Your client owns the files even after the case closes.
Next, let's review the specifics of client files.
Client Files
Keep every client file organized. Save one copy of each document unless there's a reason for multiples.
Paper documents go in the paper file folder. Store electronic documents and data in the electronic document or file. The complexity of the case determines the use of folders and subfolders.
The important thing is to keep the client file concise and organized. Simplify file management and retrieval. If documents are in several locations create a single point of access.
Build every client file with its eventual closing in mind.
How to Close Client Files
Again, a firm-wide policy can simplify closing client files. The policy spells out the procedure for how and when client files close.
Only close a client's files after completion of everything related to the case. That includes:
- Completion of All Work
- Full Report from Lawyer to Client
- Client Account Paid in Full
- Every Task Satisfied
- Trust Conditions Met
- Credits Due Client Paid
Complete and confirm each point before prepping files for closing. There are four steps to the closing process.
Manage the Client Property
All documents go to the client at the end of the case, unless the client and lawyer make a different agreement. This means anything the client gave to the lawyer, and all documents the lawyer produced.
If a lawyer and client agree the lawyer retains the client documents, state it in writing. Spell out the specifics on the lawyer's responsibilities, storage, and retrieval fees.
The lawyer must decide whether to keep copies of client documents. Legal requirements and a file retention and destruction policy guide the decision.
Purge Unnecessary Material
Before closing the file, the lawyer should remove anything that isn't needed. If documents could be useful as precedents, or other legal matters, remove them from the file. Store them elsewhere. Remove all personal information. You must maintain client confidentiality.
You can remove documents stored elsewhere. But, first consider retrieval costs, and if the document will always be available.
Keep any draft copies when the draft documents the history of the situation. Save client instructions in case they're an issue later.
Communicate with Your Client
Review file retention and destruction policies should at the start of every case. Discuss how you manage client documents. Explain how they're managed and maintained during the course of the case and beyond.
Include the firm's file retention and destruction policy in the retainer agreement. Repeat it in the final report to the client.
Determine the Destruction Date
No lawyer is bound to keep client files forever. Each case has different needs. Lawyers must consider the following aspects of a case to determine how long to keep a file.
- Legal and Regulatory Requirements
- Client's Need
- Defend Against Allegations of Professional Negligence or Misconduct
- Nature of the Matter
- Clients Under a Disability: Minors and Incapable Persons
When a file closes, the primary lawyer reviews the file and sets the destruction date. Of course, a situation may arise during the retention period that changes the date. If so, the law firm should have a system in place that identifies when the destruction date changes.
Base destruction dates on legal, professional, and ethical standards first. Economic and practical matters are second. Each client file should be individually assessed. As noted earlier, there is no single retention period that works for every client.
Storage of Retained Files
Store a closed file onsite at the law firm or in another location. Either way, maintain confidentiality and security. Encrypt files stored electronically. Have a backup system in place to protect against loss or damage.
It's important that documents and related information are accessible during the retention period. As time passes, update older electronic formats to new formats.
Status Review for Closed Files
When the retention period ends review the client files once more. The best person to review the files is the primary lawyer. If that's not possible, have another lawyer review the files before destruction.
Determine if files destruction should continue as planned. If something changed, assess the situation and set a new destruction date.
If the firm has files set for permanent retention, review them every 10 years. Study each individual case to decide if destruction can take place.
Destruction of Client Files
The promise to keep client matter confidential is ongoing. Lawyers must protect client confidentiality and privacy when disposing of files. Shred or burn paper documents. The lawyer must guarantee that confidentiality remains intact throughout destruction and disposal
Destroy the entire contents of the client files. This includes paper documents, electronic documents, and any metadata related to electronic information.
Keep a Record of Destruction
All law firms should maintain a record of every file destroyed or returned to the client. The record should note:
- Client Name and Address
- Description of Legal Matter
- File Number
- File Closure Date
- File Destruction Date or Date Files Given to the Client
- Lawyer Who Authorized Destruction or Delivery
Accurate records protect the law firm from improper record handling. It eliminates charges that destruction of a client file was random.
Install a Document Storing Policy
Every law firm needs a document storing and destruction policy. Create a detailed policy that explains the procedures. Cover closing a file, storing it, transferring files for retention, and file destruction. Include guidelines for unusual situations.
Build the policy should with input from everyone who has a role in the procedures. Put the policy in writing and give a copy to every member of the firm. Make sure everyone reads and understands the policy. Create a training program if needed.
Remind employees that the law firm does not own the client files. Yet, the firm must safeguard the contents and protect clients even after the case closed.
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