Wisconsin Lawyer: Managing RiskStorage: What to do With All Those Closed Files:

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    Managing Risk
    Storage: What to do With All Those Closed Files

    Marie Kondo's command to get rid of what doesn't give you joy won't work for lawyers struggling with closed-case files. Here are some practical tips that also comply with the ethics rules.

    Thomas J. Watson

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    In the past several months, I have spoken to groups of lawyers at many CLE programs. As often happens, lawyers came up to me afterwards and had risk management questions unique to their circumstances. Those questions frequently are about issues with clients, collecting fees, or technology for their office.

    But recently, one topic came up multiple times – file storage. More specifically, the questions were this: “What should I do with all those old files in my office, and how long should I keep them before it’s safe to toss them out?”

    I wish I had a nice, easy response that would put an end to all the hand-wringing that lawyers go through while deciding what to do about file retention. Unfortunately, like most things in the law, there’s no magic answer. The solution certainly is not as simple as a one-size-fits-all rule for when to destroy closed files. File retention and destruction are more complex than that.

    Files Belong to Clients

    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). When it comes to turning over files to former clients, State Bar of Wisconsin ethics counsel Aviva Kaiser says look to EF-16-03, the ethics opinion that makes it very clear that the client’s file is the client’s property.

    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.

    In addition, when a client requests that documents be provided in an electronic format and the lawyer has maintained those documents electronically, the lawyer should provide the documents in the electronic format. A lawyer might have to convert electronic files to paper format if the client lacks the technological expertise or financial means to access digitized images, but a lawyer normally is not required to provide both a hard copy and an electronic copy of the former client’s documents.

    Kaiser says that however a lawyer or law firm stores files (that is, whether electronically or hard copy), “a lawyer must take reasonable measures to ensure that the method by which closed client files are stored, whether in physical or electronic format, protects the confidentiality of those files.”

    Keeping Closed Files

    There are a number of reasons to keep files. One reason, of course, is to help defend against an allegation of malpractice. Brian Anderson, Wisconsin Lawyers Mutual Insurance Co. (WILMIC) senior claims attorney, says having written documentation of your representation can make defending a claim much easier. “That is especially true if it contains evidence of the work done on a particular matter and communication with the client regarding the scope of the representation to include the client’s consent on how to proceed. Sometimes written documentation is the best source for that information.”

    You may have handled hundreds or even thousands of cases, making it more difficult to remember the specifics of each case. Anderson says, “This is why the information in a file becomes so important and why a lawyer should never underestimate the importance of a well-documented file. Credibility is a critical factor for defending a malpractice claim. Written communication is the best way to establish that the communication took place.”

    Key Considerations for File Storage

    The method for and duration of file storage are age-old issues that 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, choose a system that does the following:

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

    • Maintains confidentiality and security of those files;

    • Ensures compliance with the Supreme Court Rules; and

    • Is appropriate for the area of practice (some types of cases might require longer-than-average retention).

    How Long to Keep Files

    There is no single answer to the question of how long to keep files. It makes sense to keep some types of files indefinitely. 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 firmwide file-retention policy can provide some direction to lawyers and staff members on what the firm’s standard retention period is and help lawyers identify the files that should be kept longer than others. Kaiser suggests the following, based on EF-17-01, the ethics opinion adopted about two years ago, and on other recent resources.

    A lawyer “should review the firm’s policies and ensure that the firm’s engagement letters and closing letters contain a statement informing the client of the right to the file and the firm’s file retention and destruction policy, if there is one. This is an important and relatively easy way to protect the client’s interests upon termination of the representation.”

    Remind clients in your closing letter how long your firm will retain the files. For example, you could write, “Consistent with our firm’s standard practice, we will be destroying your file in 10 years. Should you wish to review your file and copy any additional information, please let me know as soon as possible.”

    The lawyer should, at a minimum, retain the closed files until six years have passed after the last act that could result in a claim being asserted against the lawyer. While six years is a floor, it is not a ceiling.

    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 it usually takes for claims to surface. “Statistically, most claims come in 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 a claim never will be filed longer than three years out. WILMIC has received claims five years, 10 years, even more than 20 years after the alleged error. But those are very uncommon.

    Kaiser says, “The lawyer should, at a minimum, retain the closed files until six years have passed after the last act that could result in a claim being asserted against the lawyer. While six years is a floor, it is not a ceiling. The interests of the client may require that the lawyer retain a closed client file for longer than six years. For example, some files must usually be retained longer than six years, such as files involving claims of minor children, estate planning, and certain tax matters. I usually advise lawyers to check with their malpractice carrier to see if the malpractice carrier has a requirement.”

    Anderson says WILMIC does not have a “requirement” for its insured lawyers, but a general rule of thumb for file retention is anywhere between seven and 10 years. “That’s a reasonable choice, given the statistics,” he says. “Kaiser is absolutely right. Pay attention to what kind of file it is: estate planning files should be kept at least until the death of the testator, plus six years; files regarding minors must be kept at least six years after the period during which the minor could make a claim; litigation files could probably be destroyed sooner; family law and real estate matters, as well as original wills, should probably be kept longer.”

    And there is a reason for that, says Anderson. “In Wisconsin, the tort of legal malpractice has a three-year statute of limitation; however, the discovery rule has been adopted. The reason cases involving estate matters or real estate should be kept longer is to account for the fact that a client might not reasonably discover an error for years after the attorney prepared the document or concluded work on the matter.”

    Family law attorney Gregg Herman of Loeb & Herman, Milwaukee, says, “We keep all paper files for a minimum of 10 years. After that, it’s on a case-by-case basis. In any event, we keep a copy of the divorce judgement both on paper and electronically forever, as it costs little to do so.”

    Personal injury attorney Kelly Centofanti, who practices in Mequon, says, “I keep all files for seven years. When a case is settled or otherwise concluded, we have a form that clients sign wherein they indicate ‘I want my medical records’ or ‘I don’t want my medical records, please shred them.’ So, we do not store medical records. Either the client takes them or we shred them.”

    Electronic Client Files

    Many lawyers are storing documents electronically these days, including open and closed files. The Wisconsin Supreme Court Rules require a lawyer to protect and preserve open and closed client files, and they permit lawyers to keep clients’ files, to the extent possible, in an electronic format by scanning paper documents and retaining them in the firm’s computer system.

    Kaiser says that under EF-15-01, an ethics opinion revised in September 2017, a lawyer may use cloud computing as long as the lawyer uses reasonable efforts to adequately address the associated risks. To determine which efforts are reasonable, she again points to the ethics opinion.

    “Lawyers should understand the importance of computer security, such as the use of firewalls, virus and spyware programs, operating systems updates, strong passwords and multifactor authentication, and encryption for information stored both in the cloud and on the ground. Lawyers should also understand the dangers of using public Wi-Fi and file-sharing sites. Lawyers who outsource cloud computing services should understand the importance of selecting a provider that uses appropriate security protocols. Lawyers should also understand the importance of regularly backing up data and storing data in more than one place. A lawyer may consult with someone who has the necessary knowledge to help determine what efforts are reasonable.”

    The Rules of Professional Conduct require that lawyers retain any original documents that have an economic, legal, evidentiary, personal, or other value in their original form

    How many lawyers store files electronically? It’s hard to tell in Wisconsin. For example, the State Bar of Wisconsin does not collect solid statistics regarding the practice. Herman says, “We are about 80 percent electronic. I’d like to go 100 percent electronic, but we’re not there yet.”

    According to an American Bar Association report released in January, “Despite some reservations, lawyers continue to use popular consumer cloud services like Dropbox, Google Apps, iCloud, and Evernote at higher rates than dedicated legal cloud services. Clio and NetDocuments rank the highest among the legal cloud services. Lawyers are becoming more familiar with cloud technologies and are attracted by anytime, anywhere access, low cost of entry, predictable monthly expenses, and robust data backup. Notably, almost 31% indicate that cloud services provide the benefit of giving greater security than they can provide on their own. Concerns about confidentiality, security and lack of control lead the worry list by a wide margin. Almost 95% of lawyers rate the reputation of the vendor as important in their decision-making process.”

    In addition, the Rules of Professional Conduct (specifically, SCR 20:1.1, 20:1.15, and 20:1.16) require that lawyers retain any original documents that have an economic, legal, evidentiary, personal, or other value in their original form. This would include documents such as wills, documents of title, birth records, some contracts, and personal photographs.

    Conclusion

    As we move deeper into the electronic age, it appears 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.

    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 (a cloud service), make sure to get an appropriate level of security from that provider.

    Although file storage and retention are sometimes burdensome tasks that take up space and a lawyer’s time, Anderson notes that “it also serves as your best resource to defend against a legal malpractice claim or OLR grievance. Remember, file management is an important part of lawyer’s practice and the overall service provided to your clients.”




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