Wisconsin Lawyer: Ethics: Closed Client Files: Hold ’em or Fold ’em :

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    Ethics: Closed Client Files: Hold ’em or Fold ’em 

    In poker, not knowing when to hold ’em and when to fold ’em may mean you leave your stake on the table and stumble away hat-in-hand. In law practice, not knowing when to hold closed client files and when to destroy them might expose you to an ethics violation. Neither result gets you to the kitty. 

    Dean R. Dietrich

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 82, No. 3, March 2009

     

    Question

    I would like to destroy my closed files because of the increase in cost of storing those files. Are there any problems with doing that?

    Answer

    Whether closed files may be destroyed is a question that is frequently asked as the cost of file storage continues to increase. Many law firms are adopting file retention and file destruction policies and communicating those policies to clients in their letter of engagement or through direct correspondence to existing clients. Many firms are indicating that they will destroy closed files after notifying the client of the client’s right to retrieve the file. Most law firms wait 10 years after closing the file or ending the representation before considering the destruction of the closed file.

    Several factors must be considered before deciding to destroy a client file. In 1977 ABA Informal Opinion 1384, the ABA Committee on Professional Ethics set forth several basic considerations for a lawyer when deciding to keep or destroy a client file. These considerations are:

    • Unless the client consents, a lawyer should not destroy or discard items that clearly or probably belong to the client. Such items include those furnished to the lawyer by or on behalf of the client, the return of which the client could reasonably expect, and original documents (especially when not filed or recorded in a public records depository).
    • A lawyer should not destroy or discard information that the lawyer knows or should know may still be necessary or useful in asserting or defending the client’s position in a matter for which the applicable statutory limitation period has not expired.
    • A lawyer should not destroy or discard information that the client may need, has not previously been given to the client, is not otherwise readily available to the client, and the client may reasonably expect the lawyer to preserve.
    • In determining how long to retain or when to dispose of a file, a lawyer should exercise discretion. The nature and contents of some files may indicate a need for longer retention than for other files, based on their obvious relevance and materiality to matters that can be expected to arise.
    • A lawyer should take special care to preserve, indefinitely, accurate and complete records of the lawyer’s receipt and disbursement of trust funds.
    • In disposing of a file, a lawyer should protect the confidentiality of the contents.
    • A lawyer should not destroy or dispose of a file without screening it to determine that consideration has been given to the matters discussed above.
    • A lawyer should preserve, indefinitely, an index or identification of the files that the lawyer has destroyed or disposed of.

    These considerations speak to the weighing of options and alternatives for deciding whether to destroy a client file and whether to preserve information from the client file. It is important to notify a client of the intention of destroying a client file and to give the client an opportunity to take possession of the file rather than having it destroyed. A final decision about the destruction of a file will certainly depend on the client’s wishes and the need to preserve client documents and information in accordance with SCR 20:1.15, known as the lawyer trust account rule. Also, under SCR 20:1.16(d), a lawyer, “upon termination of representation shall … surrender papers and property to which the client is entitled….” A lawyer is therefore required to ensure the integrity of the client file and surrender client documents to the client unless the client agrees to the destruction of the client file.

    Dean 
Dietrich

    Dean R. Dietrich, Marquette 1977, of Ruder Ware, Wausau, is chair of the State Bar Professional Ethics Committee.

    The State Bar’s Professional Ethics Committee has issued an opinion on the steps a lawyer should take when considering the destruction of a closed client file. E-98-1 gives guidance to Wisconsin lawyers on how to proceed with the decision of whether to destroy closed files. The considerations are similar to those outlined in the ABA Formal Opinion:

    • The lawyer has specific responsibility to hold client property in trust under SCR 20:1.15. The lawyer must be satisfied that the file has been adequately reviewed. To do otherwise, such as conducting only a spot check, would run the risk that client property or original documents would be destroyed.
    • The existence of client property, or information that could not be replicated from other sources if necessary, and the age of the materials in the file are all factors that should be considered in determining the reasonableness of the decision to destroy the file. For example, client property or original documents such as wills or settlement agreements ordinarily should not be destroyed under any circumstances, and the level of effort to locate a missing client should be more diligent if there is actual client property involved than if, for example, the file is a long-resolved collection file. See S.C. Ethics Op. 95-18, ABA/BNA Man. Prof. Conduct 45:1208.
    • At a minimum, a file should not be destroyed until six years have passed after the last act that could result in a claim being asserted against the lawyer. Cf. Keith Kaap, The Closed File Retention Dilemma, 1 Wis. B. Bull. 25 (Jan. 1988).
    • In the ideal situation, the lawyer would have discussed the issue of file retention and destruction in either the engagement letter with the client or in the letter terminating or completing the relationship or engagement. Absent an express agreement with the client, the lawyer should at a minimum try to reach the client by mail at the client’s last known address, should advise the client of the intent to destroy the file absent contrary client instruction, and should wait a suitable time (perhaps six months) before taking action to destroy the file. See Los Angeles County Ethics Op. 475 (1993), ABA/BNA Man. Prof. Conduct 1001:1703.
    • The lawyer should keep for a reasonable period of time a record or index of files that have been destroyed. See ABA Informal Op. 1384.

    These considerations give further background for a lawyer’s decision- making about destruction of files. Nerino Petro, the State Bar’s law practice management advisor, offers additional guidance in his April 2006 Wisconsin Lawyer article entitled “Retaining Client Files.”

    One final consideration is the need to exercise great care in maintaining client confidentiality during the destruction process. Lawyers should ensure that the person who destroys the files uses a shredding process that will guarantee the confidentiality of client information. The same is true when considering the destruction of electronic information stored on the attorney’s computer. Precautions must be taken to ensure that all client information will be destroyed and will not be recoverable in any fashion or manner. The confidentiality of client information must be maintained at all costs.

    Destruction of client files may be undertaken after the lawyer has exercised several precautions and has considered several factors related to the destruction. Lawyers should be sure to follow the client’s wishes in returning the client file or records to the individual client.




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