Wisconsin Lawyer: Managing Risk Keeping Client Information Safe Until Disposal:

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    Managing Risk
    Keeping Client Information Safe Until Disposal

    Whether client files are in boxes in the basement or in electronic folders in the cloud, lawyers must know how to preserve them safely and when to dispose of or delete them.

    Thomas J. Watson

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    boxes of paper filesIn the old days, information-management issues for lawyers came down to finding storage space for all those boxes of old files. The law firm where I once worked had a basement full of hundreds of boxes, containing files dating back more than 25 years. While it probably wasn’t necessary to hold onto records from decades ago, the larger issue of losing those files to a fire or some other catastrophic event often went unaddressed.

    In today’s technology-driven world, file management and file storage are, of course, more complicated issues. The common refrain from lawyers is, “How long should I keep all those files I have at my office? And how do I keep them secure?”

    Like most things in the law, there is no magic answer. But there are some factors every lawyer should consider.

    Certainly you don’t have to keep all files permanently – that just doesn’t make a lot of sense. Nor is the solution as simple as a one-size-fits-all rule for when to destroy closed files (for example, toss everything after 10 years). File retention and destruction are more complex than that.

    Ownership of Files

    First, remember that the client, not the lawyer, owns the file. If a client or former client asks for a file, a lawyer must turn over everything that is reasonably practicable to protect a client’s interest. (SCR 20:1.16(d).) This Wisconsin Supreme Court rule follows the ABA Ethics Opinion, issued in 2015, that states, “Upon termination of a representation, a lawyer is required under Model Rules 1.15 and 1.16(d) to take steps to the extent reasonably practicable to protect a client’s interest, and such steps include surrendering to the former client papers and property to which the former client is entitled.”

    Keeping Closed Files

    There are several reasons to keep copies of your files. One reason is to help defend against a malpractice allegation or a grievance. Sally Anderson, vice president of claims at Wisconsin Lawyers Mutual Insurance Co. (WILMIC), says having written documentation of the underlying representation can make defending a claim much easier. “That is especially true if it contains evidence of the engagement and the work done on a particular matter. Often, written documentation, contemporaneous with the engagement, is the best source for that information.”

    “In some cases, our insured lawyer and the client disagree or have different memories of what was said and done. It is certainly more difficult to defend a lawyer in a malpractice matter if the lawyer does not have written correspondence, notes, and other documentation in the file.”

    The Computer Age

    Tim Pierce, ethics counsel at the State Bar of Wisconsin, says, “Many lawyers and law firms are making increased use of electronically stored documents, including scanning paper documents into digital format. Some firms store open and closed client files in electronic format. No current Wisconsin Ethics Opinion offers specific guidance on this practice. However, the ethics committees of many other states have addressed this issue and have found that the practice is ethically permissible, provided that certain precautions are observed.”

    Thomas J. Watsoncom Tom.Watson wilmic Thomas J. Watson, Marquette 2002, is senior vice president and director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison.

    Pierce adds that there is nothing in Wisconsin’s Rules of Professional Conduct for Attorneys that prohibits lawyers from maintaining client files in electronic format. “The rules clearly require a lawyer to protect and preserve open and closed client files, but the rules do not prescribe the form in which client files must be preserved. Thus, for example, a lawyer may keep a client’s file, to the extent possible, in an electronic format from the start of a representation by scanning paper documents and retaining them in the firm’s computer system, provided certain precautions are followed. Similarly, and again provided that precautions are followed, the rules permit a lawyer to convert closed client files to electronic format for ease of storage.” So, what are those precautions?

    Electronic Client Files

    As mentioned above, the file is the property of the client. Pierce cautions, “As the lawyer, you are obligated to safeguard the file’s documents. That means you must use reasonable care to ensure the confidentiality of electronically stored client files and ensure that any security measures are reviewed periodically so that such measures stay current.”

    If you back up your files with a third-party Internet service provider (ISP) or in the cloud, as many like to refer to it, you should ensure that 1) the third party understands your obligation as a lawyer to keep the information confidential; 2) the third party is itself obligated to keep the information confidential; and 3) reasonable measures are used to preserve the confidentiality of files.

    The best way to learn what a third-party vendor does with your data is to ask the third party how it protects the data.

    How should you do these things? The first and best way to learn what a third-party vendor does with your data is to ask the third party how it protects the data. You might find that your ISP splits up the data, encrypts it, and keeps it in separate servers, adding a couple layers of security. If your vendor isn’t responsive, you might consider switching to another vendor. Another way to learn the third party’s data-protection policies is to look at your contract with that vendor. What kind of security does it promise? [Editor’s Note: Please also see “Owning Your Data in the Cloud” in this issue.]

    Pierce adds, “A lawyer who maintains client files in electronic format must be able to provide the file to the client in a form usable by the client. Many clients today may wish, or even demand, to receive documents on disk or as e-mail attachments, but some clients may not have a computer or may prefer hard copies. Thus a lawyer must have the necessary software and hardware to retrieve both open and closed files at the client’s request.”

    How Long to Keep Files

    There is no easy answer to this question. In some cases, it makes sense to keep files permanently. The trick is figuring out which files you can destroy after a reasonable and appropriate period of time and which files should be kept.

    A file-retention policy can provide some direction on what the firm’s standard retention period is and help lawyers identify the files that should be kept longer than others. Johanna Kirk, a solo practitioner in Superior, has a detailed written retention policy that is shared with clients in every representation agreement. “We send them our written policy, and it explains that file materials will be scanned and saved electronically and once that happens, the paper version is destroyed. We also tell them they will be notified prior to paper destruction and will be given the opportunity to pick up any documents from their file.”

    Kirk says it is her policy to destroy digital files seven years after the conclusion of a particular matter, except for files containing wills, financial powers of attorney, health care powers of attorney, or recorded land documents. “I do keep paper while files are still ‘open.’ For some clients, such as ongoing business clients, that may be forever; I then try once per year to sift through stuff that can be sent on to the client, with me keeping only digital records. For the files that have clear ‘finished’ dates, I turn over to clients all paper that they might want (except for my personal notes which don’t belong to them), and everything gets sorted and scanned.”

    Kirk says documenting correspondence is a little different now than it was in the days when there were only client letters. “My challenge right now is with emails. I log all emails sent and received. They do not get printed and do not go into my Windows directory, but I do have them all logged and searchable in the PracticeMaster software.”

    You must use reasonable care to ensure the confidentiality of electronically stored client files and ensure that any security measures are reviewed periodically so that such measures stay current.

    Anderson says spelling out in detail in your retainer letter how long you keep files is an excellent idea. “In addition, remind clients in your closing letter how long your firm will retain the files. For example, you may write, ‘Consistent with our firm’s standard practice, we will be destroying your file in seven years. Should you wish to review your file and copy any additional information, please let me know as soon as possible.’”

    From a malpractice perspective, Anderson says a good starting point for answering the question of how long to keep files is to consider how long claims take to surface. “Statistically, most claims arise within three years of the time the work was done. After three years, the chances of a claim are dramatically reduced.”

    Of course, that doesn’t mean it can’t happen. Claims may come in five years, 10 years, even more than 20 years after the alleged error. But those are very uncommon, if not rare.

    Anderson says a general rule of thumb for file retention is between seven and 10 years. “That’s a reasonable choice, given the statistics,” she says.

    Pierce says, “Wisconsin Ethics Opinion E-98-01 takes the position that six years is the minimum for file retention, so I always advise lawyers that their file retention policies should never be less than six years.”

    Madison attorney Megan Phillips, like Kirk, has file-retention language in her firm’s representation agreements, although unlike Kirk, her firm does not go solely digital after that. “We do a combination of paper and electronic storage, although we really aspire to convert to much more electronic format for files in the future. To a large extent, I think the paper file is a creature of habit for many attorneys and helps us feel secure. But in reality, I find myself using the paper file very seldom and instead rely on my computer to access file materials. My paralegal has a similar practice.”

    Attorney Tom Schumacher of the Bakke Norman firm, New Richmond, says, “We have both paper and electronic files. I would say we are probably 60-40 electronic/paper.”

    He adds that his law firm’s procedure calls for a periodic review of closed files to determine whether some or all of the contents in a file may be destroyed. “Our current procedure for open files is to have everything in the file stored electronically. Items from third parties are scanned to the software we use for practice management. Internally generated documents are saved as well. Handwritten notes are scanned to the matter. All electronic files are backed up on servers that the firm controls.”

    Schumacher says original documents are sent to the client when the file is closed. “And we provide multiple notifications to the client prior to destruction of their file. If the client requests that we keep originals, they are stored in fire-proof file cabinets.”

    Conclusion

    How to best store and manage client files and for how long are questions lawyers have been dealing with for decades and will continue to, as we move deeper into the electronic age.

    The best procedures depend on each individual lawyer’s comfort level, the type of documents, and the areas of practice in question. When determining how long to store files, the most significant considerations are the following:

    • Protecting yourself with a written record of each case in the event a defense is needed in a malpractice claim;

    • Maintaining confidentiality and security of those files (both paper and electronic);

    • Staying in compliance with the Supreme Court Rules; and

    • Considering the area of practice and whether the type of case in question could require holding onto files longer.

    More lawyers are scanning files and saving them electronically. Nothing in the Wisconsin Supreme Court Rules prohibits lawyers from maintaining client files in electronic format. They do require lawyers to adequately protect and preserve those files, maintaining confidentiality and security, on whatever server is being used.

    As Pierce reminds us, “When storing files electronically, a lawyer should retain important documents such as wills and birth records in their original format, be able to provide the file to the client in a usable format, ensure confidentiality and security, and, if using a third-party Internet service provider, or cloud service, make sure you are getting the security from that provider with which you are comfortable.”