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Each quarter, we feature "Ask the Underwriter." In this edition, Wilma S. Fields, CPCU, CIC, Vice President and Underwriter, answers a new question frequently asked by our insureds and potential insureds.
This quarter, she tackles, "How long should a firm retain client files?"
The Alabama State Bar requires retention for a minimum of 6 years, and the Tennessee Supreme Court Rules require retention for a minimum of 5 years, from termination of the representation or conclusion of the matter. The statute of limitations for a breach of contract action is 6 years in both Alabama and Tennessee, and the period of limitations for filing formal charges in disciplinary matters is 6 years. Thus, as best practice, lawyers should keep client files for a minimum of 6-10 years. Lawyers have an ethical obligation to prevent premature destruction of a client file. Clients expect lawyers to maintain valuable documents in their file for certain periods of time, and in doing so, lawyers may avoid legal liability. Files should be reviewed before setting a destruction date to determine if they should be kept longer than 6-10 years. For example, files regarding the representation of a minor with funds held on deposit should be kept until the minor reaches the age of majority.
The following are examples of some client files that should be kept indefinitely:
Ongoing corporate files and transactional matters;
Wills and estate planning information that would be pertinent to estate litigation and contested wills;
Contracts and mortgage files that may contain information on the parties’ agreement or what their intentions were at the time of drafting and executing the documents. Mistakes may not be discovered until contracts or mortgages are paid off;
Files relating to minors, including adoption files;
Tax files; and
Criminal law files
Closed files should always be kept in a secure manner that is easily retrievable.
When closing a file, consider saving a complete copy of the file in one format, in one location. This may mean copying all electronic documents to save the entire file in paper; conversely, it may mean scanning all paper copies to save the entire file electronically on a server, hard drive, or the cloud.
Most lawyers keep client files in a combination of paper and electronic formats. The easiest and most effective way to destroy paper files is to shred them.
Offices may purchase a shredding machine or subscribe to a mobile shredding service. Electronic format documents may be on a server, on the lawyer’s computer, in the cloud, or all the above. When destroying electronic data, ensure that the destruction is permanent – simply deleting files is not enough.
As a best practice, your firm should develop a document destruction policy that protects you from any claim that you have mishandled client materials.
Make sure an attorney reviews the file to save original documents and ensure that it is safe to destroy the file, obtain a receipt for any files returned to the client, and inventory how and when each file is disposed. Regardless how the firm keeps its files, the destruction method you use should preserve client confidences. A listing as to which files were destroyed and the method of destruction should be kept indefinitely. More specific tips on proper destruction of client files will follow in an upcoming “Ask the Underwriter” column.