Vol. 76, No. 4, April
Managing Records Effectively
Well-managed records can speed up disaster recovery. If your files
are in A shambles now, expect a longer recovery period if disaster
strikes. This column covers the fundamentals of an effective records
management plan. Future columns will address electronic records
management and document recovery techniques following a disaster.
by Ann Massie Nelson
Ann Massie Nelson is a
regular contributor to Wisconsin Lawyer and communications
director at Wisconsin Lawyers Mutual Insurance Co.
Your law firm's ability to recover from a fire, flood, tornado, or
other disaster is greatly enhanced by a well-thought-out and executed
records management plan.
Lawyers' professional responsibilities survive even the worst
disaster. If your files were destroyed or inaccessible, could you
provide competent and diligent legal representation? How would you
communicate with clients? What steps would you take to assure client
Electronic files that are backed up weekly or daily and stored
off-site provide some reassurance. However, records management experts
point out that storing information on a computer server or back-up disk
does not guarantee the information can be retrieved when needed. The
volume of data that must be restored could delay law firm operations for
days or weeks following a disaster.
The File Conundrum
One of the questions most frequently asked of risk management
advisers is, "How long do I need to keep my files?" The answer always
sounds like a riddle. Consider the following:
- Well-documented files can save you and your clients time, money, and
embarrassment. On the other hand, information in your files is
discoverable and could be used against you in future litigation. If only
a chosen few files are lost or destroyed, your records management policy
will look suspect.
- The value of files changes over time. New laws and events can make
old records either more valuable or obsolete, depending on the
- Records storage is a service many law firms use as a marketing and
client retention tool. However, you assume the cost and liability of
storing and safeguarding client files. As a lawyer, you have an ethical
duty to protect client confidentiality.
- A records management plan can streamline information handling and
decision-making. With efficiency comes a need to educate staff members
to exercise judgment rather than blindly following a policy, as Arthur
Andersen management claimed employees were doing when they shredded
Enron audit files.
- Research conducted for one client could be mined and reused for
another client with a similar matter, if your files were managed so you
could easily find the information. The dilemma for lawyers who bill
hourly is how to charge the second client.
- The "save everything" philosophy may give you a sense of security,
but the task of retrieving the right information at the right time is
more difficult. Furthermore, finding and recovering valuable or
irreplaceable documents may be impossible if the records are damaged by
water, fire, smoke, or wind.
No Easy Answers
These dilemmas underscore the need for legal expertise in developing
a records management policy for your firm. Lawyers and staff need to
work together to ensure that your records policy:
- meets your firm's (and your clients') needs for timely access to
- supports the requirements of different areas of practice
- complies with laws and regulations regarding records
- upholds the rules of professional conduct for lawyers
A records management policy needs to be written in such a way that a
new employee could answer the following questions.
1. What measures are necessary to comply with the
law? Compliance with regulatory requirements for record keeping
needs to be the number-one priority for your firm and the business
clients you advise.1 In your records
management policy, specify how to red-flag files for regulatory
2. When should a new file be created? What
situations call for a new file to be opened? If a potential client comes
in for an initial consultation but doesn't retain your firm, do you open
a file? When a current client retains your firm for a new matter, do you
open a new file?
3. What type of information belongs in the file?
Develop a file inventory checklist to make sure the right information is
recorded in the file. For example, your checklist might include the
client intake form, copies of the engagement letter and fee agreement,
conflict of interest documentation, and space to record externally
created records. Also note what information does not belong in
the file, such as clients' original documents.
4. How are files identified and labeled? Whether
simple or elaborate, the important thing is to create a system for
labeling paper and electronic files that is universally understood and
used. Make sure your identification system can accommodate a growing
number of files.
5. How are records stored? Active, inactive, and
closed files may be housed in different places, but all records need to
be protected from prying eyes, theft, and physical damage.
Fire-resistant, locked filing cabinets are ideal. Store files off the
floor, where water damage is less likely to occur. Encourage employees
to put files away at the end of the workday.
6. Where is the master directory of records kept? A
directory or spreadsheet that lists each file and pertinent information
about the file, such as where the file is stored, could be invaluable in
disaster recovery. Make sure more than one person in the office can
access the directory. Note when files are disposed of; you will save
time spent looking for files that no longer exist.
7. What is the procedure for checking files in and
out? Besides knowing the whereabouts of each file, you may need
some guidelines for who has access to which files. Be sure to explain
the need for confidentiality to new employees, who may be unaware of the
hazard of leaving files on their desks or in their unlocked briefcases
8. How long are records to be retained? Ask lawyers
to assign future review dates at the time they close the file. As noted
earlier, file retention depends on a host of factors, such as the type
of matter, the ages of minor children involved, and the likelihood that
the file will be reopened. Some lawyers specify in their retainer
agreement how long they will retain the client's file, for example,
seven years from the date the file is closed. Keep in mind that the
statute of limitation for lawyer malpractice is six years from the date
the error or omission is discovered, not the date the matter is
closed. Grievances may be investigated for up to 10 years.
9. What is the process for reviewing, purging, and discarding
files? Who is responsible for reviewing files? How often? What
criteria are used to evaluate files? How are records and other
confidential information disposed of? Law firms that are cognizant of
client confidentiality shred all documents before disposal.
10. If files are damaged, in what order will they be
recovered and restored? Imagine the office sprinkler system
malfunctions and all of your law firm's files are water-soaked. The
process of recovering and restoring all documents is costly,
time-consuming, unnecessary, and possibly hazardous to the health of
persons handling them, but how will you know which files to save and
which ones to send to the landfill? Consider labeling or color-coding
files in a way that will help you quickly identify active or
mission-critical files, in the event your files are damaged but
Learn about document recovery techniques in the June Wisconsin
1The Sarbanes-Oxley Act of 2002,
passed in the wake of recent corporate scandals, creates new obligations
for record keeping by publicly held companies and public accounting
firms. Although beyond the scope of this column, privacy legislation
(Gramm-Leach-Bliley Act, Health Insurance Portability and Accountability
Act, and Fair Credit Reporting Act) also mandates new confidentiality
For more information, please see Dean Dietrich's ethics column, "Determining
Disclosure Under SEC Reporting Requirements," in the March 2003