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    Wisconsin Lawyer
    November 12, 2021

    Managing Risk: Client Files: What Should I Do With Them?

    Feeling the urge to clean up your shelves or your computer? Make sure to keep file-retention guidelines in mind when doing so.

    Thomas J. Watson

    man crushed by paperwork

    During the past year and a half, during the COVID-19 pandemic, one issue that lawyers have brought up frequently with Wisconsin Lawyers Mutual Insurance Co. (WILMIC) is file storage and retention. Unlike some risk management topics, this is not new or pandemic driven; file management has been a challenge for lawyers for a long time. Among the issues, two are increasingly prevalent these days: what to do with electronic files and how best to manage them.

    I recently was a presenter at a continuing legal education program, at the State Bar of Wisconsin’s Solo & Small Firm Conference, on the topic of file retention. At WILMIC presentations, lawyers often have risk management questions unique to their circumstances or specific clients. When it comes to the issue of file storage, the questions generally go like 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 an easy answer that would put an end to all the hand-wringing that lawyers go through while deciding what to do about this. Unfortunately, as with most things in the law, there’s no magic answer. But there are some things to consider.

    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.

    Most Important Rule: Clients Own Their Files

    First, remember that the client, not the lawyer, owns the client’s 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, Aviva Kaiser, ethics counsel at the State Bar of Wisconsin, suggests looking at EF-16-03, the ethics opinion that makes it very clear that the client’s file is the client’s property.

    Thomas J. WatsonThomas 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 those documents in the electronic format. A lawyer may 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.

    According to Kaiser, whether a lawyer or law firm stores files electronically or on paper, “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 several reasons to keep files. One reason, of course, is to help defend against an allegation of malpractice. Brian Anderson, a senior claims attorney at WILMIC, says that having written documentation of the 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 and can be invaluable when having to defend against a claim or an OLR [Office of Lawyer Regulation] grievance.”

    It’s possible that you have handled hundreds or even thousands of cases during your career, 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.”

    How Long Should You Keep Those Files?

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

    A firm-wide file-retention policy can provide some direction regarding the firm’s standard file-retention period and help lawyers identify the files that should be kept longer than others. Kaiser says that according to EF-17-01, the ethics opinion adopted in 2017, and the most recent on retention and destruction of closed client files, 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. If 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 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 later claim can’t happen. WILMIC has had claims that have come in five years, 10 years, even more than 20 years after the alleged error. But those are very uncommon.

    A general rule of thumb for file retention is to keep files for 7-10 years.

    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 to keep files for 7-10 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 and there is no statute of repose to fall back on. 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.”

    Some lawyers I have talked to over the years say they keep paper files for a minimum of 10 years. After that, they look at each file on a case-by-case basis. Others have told me they keep their paper files for seven years. Many lawyers say that they have a form to use when a case is concluded, which they ask clients to sign indicating whether they want copies of their files and records.

    Guidelines for Keeping Client Files in Electronic Format

    • A lawyer must protect important original documents from destruction or loss.

    • Lawyers must retain any original documents that have economic, legal, evidentiary, personal, or other value in their original form. Retaining an electronic or other nonoriginal copy of such documents is not sufficient. Examples include originals of wills, documents of title, birth records, some contracts, and personal photographs.

    • As for nonoriginal documents or original documents having no value as originals, a lawyer who maintains such documents electronically may destroy those documents after making a stored electronic copy.

    • In many circumstances, an entire client file (pleadings, correspondence, the lawyer’s notes, emails, and so on) can exist solely in electronic form.

    • Lawyers who maintain electronic client files must be able to provide the file to the client in a format usable by the client.

    • A lawyer must take reasonable steps to protect the confidentiality of electronically stored client files. SCR 20:1.1, SCR 20:1.6.

    Electronic Client Files

    Many lawyers are storing documents electronically. Some firms store open and closed files in electronic format. The Wisconsin Supreme Court Rules require lawyers 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.

    EF-15-01, an ethics opinion revised in September 2017, provides guidelines for storing files electronically. Kaiser says a lawyer can use cloud computing as long as the lawyer uses reasonable efforts to adequately address the risks associated with it. She suggests consulting the ethics opinion to help determine which efforts are reasonable.

    “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.”

    How customary is it to store files electronically? The answer is hard to determine in Wisconsin, because neither the State Bar of Wisconsin nor other organizations have solid statistics regarding the practice. Some lawyers I have spoken with say that about 80 percent of their firms’ files are in electronic form. Others are closer to 50 percent, and some lawyers say most of their files are still in paper form.

    The Wisconsin Supreme Court Rules require that lawyers retain any original documents that have an economic, legal, evidentiary, personal, or other value in their original form.

    A recent ABA report states the following about national practices: “Despite some reservations, lawyers continue to use popular consumer cloud services like Dropbox, Google Apps, and iCloud, 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 percent of lawyers rate the reputation of the vendor as important in their decision-making process.”

    In addition, the Wisconsin Supreme Court Rules require that lawyers retain any original documents that have an economic, legal, evidentiary, personal, or other value in their original form. SCR 20:1.1, SCR 20:1.15, SCR 20:1.16. This includes documents such as wills, documents of title, birth records, some contracts, and personal photographs.

    While electronic files are permissible under the rules, it is important to keep in mind the following principle: The file is the property of the client, and the lawyer is obligated to safeguard and provide client property to the client on request.

    Keeping in mind this principle, the accompanying sidebar suggests guidelines for lawyers who wish to keep client files in electronic format.

    Conclusion

    Storing files and for how long is an age-old question that depends on each individual lawyer’s comfort level, the type of documents, and the areas of practice in question. There are several considerations when determining how long to store files:

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

    • Maintain the confidentiality and security of those files.

    • Comply with the Wisconsin Supreme Court Rules.

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

    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 (cloud service), ensure the internet service provider provides a level of security with which the lawyer is comfortable.

    Although file storage and retention are sometimes burdensome and can 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 a lawyer’s practice and the overall service provided to your clients.”

    Ask Us!

    Questions about ethics or practice management? Confidential assistance is a phone call or click away:

    Ethics Hotline: (800) 254-9154, or (608) 229-2017
    9 a.m. to 4 p.m., Monday through Friday.

    Practice411: (800) 957-4670, or practicehelp@wisbar.org

    » Cite this article: 94 Wis. Law. 49-52 (November 2021).




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