What is the file? Helpful guidance from Arizona.

Questions related to file delivery & retention are among the most common that I receive via ethics inquiry.  It’s odd, if only because so few of the complaints that are filed allege that a file wasn’t delivered or was incomplete.  Of course, I understand that with respect to the latter, a client likely wouldn’t know to complain about missing items.  Still, my general sense is that Vermont lawyers are on top of the duty to deliver the file.

But therein lies the rub: the duty is not to deliver the file.  Rather, upon the termination of the representation, V.R.Pr.C. 1.16(d) requires a lawyer “to take steps reasonably practicable to protect a client’s interests.”  Among other things, the duty includes “surrendering papers and property to which the client is entitled.”

Aside, and no offense to readers who are fans of Cheap Trick, but once I get around to proposing a rule change, I doubt I’ll recommend continued use of any form of the word “surrender.”**  I much prefer “deliver” or “provide.”  Alas, I digress.

Anyhow, the question: to what papers and property is the client entitled?  Or, what is “the file?”

In 2015, the ABA’ Standing Committee on Ethics & Professional Responsibility provided guidance in Formal Advisory Opinion 471.  I blogged about it here.  Both the opinion and my post list the items that must be delivered, as well as items that need not be provided. In other words, the opinion helps lawyers to determine what constitutes the file.  Frankly, while the opinion and my blog post are helpful, neither fully answers “what is the file?”

Fortunately, and thanks to a tip from Professor Bernabe’s Professional Responsibility Blog, I came across an advisory opinion that clarifies and simplifies the duty and analysis.

Last month, the Arizona Supreme Court’s Attorney Ethics Advisory Committee issued Ethics Opinion EO-19-0009.   Professor Bernabe blogged about it here. 

To me, the Arizona opinion does a terrific job answering “what is the file?” plain language. Here’s the committee’s summary of its opinion:

• “Lawyers must retain sufficient information regarding the work they have done on a matter to permit the client to understand what was done for them and to permit a subsequent lawyer to take up the matter if the lawyer is discharged, withdraws, or is unable to continue the representation for other reasons such as death, disability, or discipline. This obligation informs the lawyers’ obligations concerning what materials they keep, how they store and organize those materials, and what they do with records at the end of a representation.”

Isn’t that exactly it? In other words, let’s fight the urge to be lawyers and debate every possible item – “what about this, what about that.”  Instead, let’s use common sense: “would this help the client or the client’s next lawyer figure out what I did for the client?” Or, as the committee notes later in the opinion:

• “Lawyers do not maintain files for the sake of preserving files, but rather because keeping records of what they have done or plan to do in the course of representation is part of diligent, competent representation.”

Indeed!

That’s all I have for now.  However, I’m already planning a future post on other aspects of the Arizona opinion, including a paragraph that I expect will resonate with many lawyers who’ve contacted me.  By way of preview, here’s the pargraph from our friends in the southwest:

• “The client is entitled to a single copy for free, and the lawyer may charge for additional copies or special copying requests that have associated costs, such as, scanning a file maintained in paper form. Lawyers may satisfy their obligations by providing copies throughout the representation, and do not need to provide additional free copies of those documents previously provided at the end of the representation. Of course, the lawyer may choose to provide more documents or copies than are required.”

Stay tuned!

** “Surrender, surrender, but don’t give yourself away.” Is this another way of stating that a lawyer need not include work product in the file?

Twofer

Two days late, but a two-fer nonetheless.

1. Beware Changes to Wiring Instructions!

Here’s a post in today’s ABA Journal: BigLaw firm sued over $3M wire transfer to fraudster’s account.  But for involving $3 million and a so-called “Big Law” firm, the scam was garden variety.  No different than one that often targets Vermont lawyers, especially real estate practitioners, it was predicated on a change in wiring instructions.

As I’ve blogged here, here, here, here, and here, a change in wiring instructions should set off alarm bells.  Further, if the change in wiring instructions comes by email, I suggest confirming the change by some other method than responding to the email.

Andy Mikell is State Manager & Title Counsel at Vermont Attorneys Title Corporation.  In a prior blog, I used this quote from Andy to highlight the importance of using two-factor authentication to confirm changes to wiring instructions:

• • “We are telling folks that the ONLY appropriate 2^nd factor authentication method is for the ‘Wiring Firm’: (a) to initiate the verification call; (b) to a phone number that they independently obtained/verified. In other words, it is NOT acceptable: (a) to receive a confirmatory phone call or (b) to call a phone number in the email which contains the requested wire change.”

Big Law should follow this blog.

2. File Retention & Delivery

Over the past few weeks, I’ve heard from a few lawyers on the issue of file retention.  Each started by saying “I have to keep the file for 6 years, right?”

Wrong.

The Vermont Rules of Professional Conduct do not specify a file retention period and never have.  Rather, V.R.Pr.C. 1.16(d) states that “upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client’s interests, such as . . . surrendering papers and property to which the client is entitled.”  In my opinion, the file is among “the papers and property to which the client is entitled.”  So, as I’ve stated at CLEs and in this space, Deliver The File.

Nothing in Vermont’s rules affords a lawyer a 6-year window to deliver the file.  Nothing in Vermont’s rules conditions file delivery upon the client’s request.  Nothing in Vermont’s rules authorizes a lawyer to destroy an undelivered file 6 years after the representation ends.

Indeed, in 1997, the VBA’s Professional Responsibility Committee issued Advisory Ethics Opinion 97-08.  While issued under the old Code of Professional Responsibility, the opinion remains helpful.  The Committee’s conclusion is almost exactly what I might say at a seminar:

• “We cannot state that there is a specific time during which a lawyer must preserve files and, beyond which, he or she is free to destroy them. The sound exercise of good professional and business judgment should provide answers to most storage and/or retention questions that may arise.”

From there, the Committee listed factors a lawyer should consider prior to destroying a file.  Again, many remain relevant today.  In no particular order, here are thoughts & tips I’ve shared with lawyers:

• it’s okay to go paperless.  But don’t destroy any important originals.
• once delivered, there’s no requirement to keep a copy of the file.  But your liability policy might require you to, and it might be helpful to have a copy if a disciplinary complaint or malpractice claim is ever filed.  Also, title insurers sometimes require agents to maintain copies of files.
• cull files for important originals before destroying.  Especially if even one file might contain a will.
• Absent a client’s consent, anything that the client gives to the lawyer must be returned.
• give notice before destroying files.  If not in the representation agreement itself, then again – even by publication – years later.
• Different types of cases require different retention periods.  For more, see this opinion from the Kentucky Bar Association.
• A lawyer MUST keep records of client funds & property for 6 years after the termination of the representation. So, keeping a log of client files is a good idea.

For more, in 2018, I posted File Retention: How Long?  Let’s see if anyone is still reading.  In the 2018 blog, I wrote:

• “To paraphrase another Irish guy, it’s not uncommon for me to hear a frustrated lawyer say something like:
  • ‘I can’t believe the files in here.  I can’t close my eyes and make them disappear!  How long? How long must I sing this song?’”

Who is the “Irish guy” to whom I referred in the 2018 post?

And with that, I’m calling it a Thursday.  Have a great night!

 

File Retention: How long?

Yesterday, I urged lawyers to resolve to deliver the file.  The post links to ABA Formal Opinion 471, an opinion that addresses the question “what is the file?”

A Twitter follower noted that natural follow-up to yesterday’s blog is one that addresses file retention.  How long must a lawyer keep a closed file?

It’s a common question.  To paraphrase another Irish guy, it’s not uncommon for me to hear a frustrated lawyer say something like:

• I can’t believe the files in here.  I can’t close my eyes and make them disappear!  How long? How long must I sing this song? How long? How lonnnnnnnggggg……?

I’ll cut to the chase: I don’t have a good answer for you.  I’ll do my best.  But, I won’t be offended if you finish this post frustrated that you still haven’t found what you’re looking for.

Again, as I stressed yesterday, Rule 1.16(d) makes it clear that the duty to deliver the file kicks in upon the termination of the representation.  Delivering it moots the question of how long to keep it.  Of course, you’d be well-served to keep a copy for yourself, if only to defend against a potential disciplinary complaint or malpractice claim.

Once delivered, the only retention requirement in the rules appears in Rule 1.15(a)(1): records of funds & property must be maintained for 6 years from the termination of a representation.  The file is client property.  Thus, some jurisdictions have interpreted the rule to require lawyers to maintain a record of what happened to client files.  Even if not affirmatively required by the rule, keeping a disposition log is a good idea.

Now the hard part: what about the file that, for whatever reason, isn’t delivered upon the termination of the representation?

That’s a question that we haven’t answered.

Twenty years ago, the VBA’s Professional Responsibility Committee issued advisory opinion 97-08.  Here’s the synopsis:

• “A lawyer must exercise discretion in determining the necessary length of time for the subsequent retention or disposition of a client’s file. The contents of certain files may indicate the need for a longer retention period than do the contents of files of similar age based on their relevance and materiality to situations which may foreseeably arise. Moreover, in disposing of a client’s files, a lawyer should protect the confidentiality of its contents. If possible, notice may be given the client as to the date of disposition, affording the client the opportunity to take possession of all
  or part of the material in the file.”

The VBA Opinion is consistent with the general consensus that “it depends.”  Three years ago, the Kentucky Bar Association’s Legal Ethics Opinion 15-01,  noted that the prevailing view is that a reasonable period to retain a file is between 5 and 10 years.

I understand that one-size doesn’t fit all and that, with closed client files, “it depends.”  Still, I’d like to provide relief to lawyers who’ve run out of physical & electronic storage space, or who simply can’t afford to maintain it any longer.

As I mentioned yesterday, I’ve asked the Professional Responsibility Board to consider a rule that would define “the file.”  The same rule would authorize lawyers to destroy files after 6 years, subject to certain exceptions.  The rule that the Board is considering is quite similar to this rule that was proposed last year in Massachusetts.

Until then, here are two things that I think are critical:

1. If you haven’t already done so, build a retention policy into your standard representation agreement; and,
2. Check with your carrier before destroying or disposing of a closed file.

Aside: real estate lawyers, #2 includes checking with your title insurer.

Finally, and as critical as the two thoughts expressed above, whether you pick a 6, 7, or 10-year retention policy, remember that there are some things that should never be destroyed, or that should be retained beyond your standard retention period.  Some (non-exhaustive) examples:

• documents provided by the client;
• anything that it’s reasonable to conclude the client might need;
• files with original wills, deeds, trust documents, and estate planning documents;
• criminal files;
• files with pre-nups,
• files for clients who had young children when support & custody were finalized;
• files for which the statute of limitations on malpractice has yet to run;
• files in which the client was a minor, and will remain a minor beyond the expiration of your file retention period;
• adoption files;
• Corporate books & records.

This list goes on.

I don’t want to make this blog too long.  If you have questions about file retention, call me.  If you want me to come meet with you and others at your firm, I will.  Until then, a few closing thoughts:

• generally, it’s okay to store closed files electronically;
• when disposing of or destroying files, do so in a manner that competently maintains the confidentiality of the client’s information.

Some other resources:

• The ABA Center for Professional Responsibility: Materials on File Retention
• ALPS: How long do we need to keep our closed files?
• Minnesota Lawyers Mutual:  File Retention: A Malpractice Insurance Company’s Perspective
• The Virginia State Bar: The Monster Called File Retention