Files: What To Do With Them So They Don't Do You In

by Barrie Althoff, WSBA Chief Disciplinary Counsel

Lawyers create mountains of files. During our client representation, questions seldom arise about file ownership, possession, or disposition, or about the costs of copying or delivering files. These questions arise regularly, however, when we conclude a representation, are in a dispute with our client (often due to the client's failure to pay our fees), or when we move to a different firm, dissolve a firm, or leave the practice of law. This article reviews some applicable rules and suggests some ways to manage your files.

The Rules

Washington's Rules of Professional Conduct ("RPCs") provide little direct or practical guidance on file possession, disposition or costs of copying and delivery. RPC 1.1 requires you to be competent, which includes being able to manage files. RPC 1.5 requires your fees to be reasonable, which includes a reasonable and fair disclosure to your client of the material elements of the fee agreement and your billing practices. RPC 1.6 requires you to preserve your client's confidences and secrets. Since file disputes often arise when you are being substituted out without being paid for your services and with the possibility of claims against you by your client, the conflict of interest provisions of RPCs 1.7, 1.8 and 1.9 may apply. These generally prohibit you from putting your own interests before your client's or, in certain cases, former clients. It is unclear whether Washington's RPC 1.14(b), requiring you to maintain client funds and property, is intended to apply to case files. Alaska Bar Association Ethics Opinion 95-6 suggests it may be, while In re Becker, 504 N.W. 2d 303 (N.D. 1993) suggests it should not be.

RPC 1.15(d) defines your responsibilities when your representation is completed. It requires you to "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." It also allows you to "retain papers relating to the client to the extent permitted by other law." WSBA Formal Opinion 181 (1987), discussed below, interprets RPC 1.15(d) where your former client requests files or you assert your possessory lien on the files. 

The Basics

Absent an express agreement with the client to the contrary, the file belongs to the client and the client is entitled to possession of the file when the representation is over, regardless of whether it is over because you finished the project, withdrew, or were replaced by substitute counsel. Similarly, absent such an express agreement, you must bear the costs of copying the file for, and delivering it to, your client. Since the file belongs to the client, when the client decides to go to a different lawyer, the client is entitled to take the file with him or her. Similarly, if the lawyer moves from one firm to another and the client decides to follow the lawyer, the client is entitled to the file on demand. While you may have a possessory lien on the file, as discussed below, that lien is subject to your overriding ethical obligation to protect your client's interests.

Put It in Your Retainer or Fee Agreement

The best time to address issues of file ownership, possession, disposition, and copying and delivery costs, is before you even create a file, at the very outset of your lawyer-client relationship. Find out what your client's expectations are, explain your own record-retention policies, and, when you have come to an agreement, memorialize it as part of your written retainer or fee agreement. Since your client's consent must be an informed consent, discuss the issue completely with the client, and do not gloss over difficult issues. In class-action litigation, probably only the class-representatives need be considered clients for purposes of such agreements. Chicago Bar Association, Docket No. 97-1.

Your client agreement should, at the very least, clearly state who owns the file, who is responsible for costs of copying and delivering it, and what your file-retention policies are. You may, for example, want your agreement to state that you, not the client, own the file as well as all documents generated or accumulated in the representation (excluding intrinsically valuable documents which should obviously belong to the client), and that the client will bear all costs of making and delivering any copies of file documents, including the cost of creating an "archival copy" for your personal use if you deliver the original file to the client. WSBA Formal Opinion 181 (1987) authorizes such an agreement. While such an agreement is not very "client friendly," your client is more likely to agree to it at the start of your representation, when eager to have you represent him or her, than at the end of the representation, when perhaps dissatisfied with you or your fees. While such an agreement gives you leverage in a file dispute, it may in some cases still be overridden by your RPC 1.15(d) duty to deliver the file to your client if the client would possibly be prejudiced by nondelivery.

If you do not have such an express agreement, the file belongs to your client, and you must provide it at your own expense to the client on demand. You must also bear the costs of copying if you want an archival copy for your own protection.

Setting Up Case Files

Many lawyers set up their client file and hold it after the representation is over without asking the client whether the client wants it. If a client asks for the file, disputes often arise as to whether the client is entitled to the file (especially if the client hasn't paid you), and, if the lawyer copies it for his or her own protection, as to who should pay for the copying and delivery costs.

A good practice is to give your client a duplicate file folder at the beginning of your representation and regularly send copies of all correspondence and other documents pre-punched so the client can easily place them in the file. This directly assists the client and is a good marketing tool (especially if you put your name, address and telephone number prominently on the file!) This also helps you meet your RPC 1.4 obligation to keep your client informed about the status of the matter. While some clients will not maintain these files, and this procedure will not eliminate file disputes for all clients, it will likely significantly lessen them. Regardless of how many times you have provided copies of documents to your client, however, and even if your client agreement provides to the contrary, the client may still be entitled to your file if withholding it would prejudice the client. Although Oregon Formal Ethics Opinions 1991-125 and 1991-90 suggest that if you have provided the client copies of everything in the file during the course of your representation, you have in effect already provided the client with a file and you can thereafter dispose of your own file without client permission, a cautious lawyer would not do so without first ascertaining the client's needs. Doing so may also well give you an opportunity to market your services again to the client.

Your files should be readily accessible to you. If you have a large number of files, index and keep them numerically, since keeping them alphabetically usually entails frequent file shifts. Whether you keep your files on-site or off-site, make sure you meet your RPC 1.6 obligation to protect your client's confidences and secrets. Although many larger commercial off-site file-storage facilities are experienced in handling confidential files, assure yourself of their capabilities so as to meet your RPC 1.6 ethical obligations. RPC 5.3 requires you to train and supervise your staff, and make sure they preserve client confidences and secrets in their file access and maintenance.

When you set up or add anything to a file, you will be warehousing it for a very long time unless your client otherwise agrees. Don't become your client's warehouse. As a general practice, do not keep any original or client documents that are intrinsically valuable, such as original wills, trust agreements, deeds, promissory notes, contracts, leases, stock or bond certificates, money or postal orders, checks, insurance policies, evidences of intellectual property rights (patent, trademark, or copyright applications or registrations), corporate records (articles of incorporation, bylaws, minutes, merger agreements, signed registration statements, etc.), or other documents that may of themselves have value or create or extinguish rights. Instead, copy them for the file and return the originals to your client. If you need the originals for litigation, return them to the client when you are done. Don't keep an original will with the hope that it will increase your chance of being asked to probate the estate. Instead, give your client the original and attach to it your professional card or a letter stating that you will be pleased at a later date to help probate the estate.

Closing Case Files

A first step in any disposition of a file is to "close" the file. Closing usually involves various steps, including (1) assessing whether the objectives of the representation have been met; (2) sending the client a disengagement letter which clearly terminates the representation; (3) verifying that amounts owed the lawyer by the client have been paid, or that appropriate collection efforts have been undertaken, or that the amounts have been written off as uncollectible; (4) confirming that any trust funds related to the file are properly disbursed and accounted for; (5) stripping the file of duplicate or worthless materials; (6) disposing of the file by returning it to the client, retaining it according to your retention schedule, archiving it, or, ultimately, destroying it; and (7) memorializing the disposition of the file in a permanent office file.

When a representation's objectives have been met, or found to be impossible to be met, and it is thus appropriate to close the file, the time for closing the file will obviously vary with the subject matter of the representation. J.R. Phelps and Terri Olson, "When May I Destroy My Old Files?" The Florida Bar Journal, 59, 61 (1994), suggest the following list as a starting point in the analysis of when a file is ready for closing:

• contract actions – satisfaction of judgment or dismissal of action.

• bankruptcy claims and filings – discharge of debtor, payment of claim, or discharge of trustee or receiver.

• dissolution of marriage – final judgment or dismissal of action, or date upon which marital settlement agreement is no longer effective, except when child custody is involved, in which event the date of the last minor child's reaching majority.

• probate claims and estate administration – acceptance of final account.

• tort claims – final judgment or dismissal of action, except when a minor is involved, in which event the date of the minor's majority controls.

• real estate transactions – settlement date, judgment, foreclosure, or other completion of matter.

• leases – termination of the lease.

• criminal cases – date of acquittal or length of the period of control.

When you send your disengagement letter to your client, also send any original or intrinsically valuable documents remaining in the file, or, if you do not want the file itself, send the entire file (after making a copy for yourself if you want an archival copy). Take appropriate precautions to safeguard the documents in transmission and get appropriate delivery receipts. If you merely offer to return the file on the client's request, advise the client that, if he or she does not want the file, or does not respond within, say, six months, you will dispose of the file in accordance with your standard record-retention policy. State a specific date for disposition of the specific files involved. If the client does not want the file, you may dispose of the file. If the client does not respond to you within the allotted time, you generally may dispose of the file in accordance with your record-retention policy, although even then you should extract any intrinsically valuable documents and retain them.

When you close a file, it is often a good idea to assign a new closed-file number, enter it on your permanent file index, and then store the file numerically, not alphabetically, with your other closed files. Doing so will eliminate the periodic relocation of files inherent in alphabetical file storage. Do not store closed files interleaved with your active open files.

If your initial attempt to contact a client or former client is not successful, diligently take additional steps, such as seeking postal forwarding addresses, checking public telephone directories or organizations' membership directories, seeking assistance from military authorities if the person is in the military, contacting persons known to you (such as relatives of the client) who may know the client's current address, examining the files themselves for information, contacting former neighbors of the client and so on. Locating missing clients and former clients is time-consuming and expensive. Thus, whenever possible, immediately return to clients everything of value in a file and do not wait until a file is finally closed. If none of these attempts is successful, you should be able to dispose of the file, other than any documents of intrinsic value, in accordance with your record-retention schedule.

The actual disposition of a file is usually accomplished either by returning the file to the client, archiving it, or physically destroying it. Under RPC 1.6 and 1.9(b), you must maintain your client's confidences and secrets. Thus, care should be taken in storage, delivery, and actual physical destruction of the file, to assure that confidentiality is maintained. If destruction of the file is the appropriate disposition of the file, merely dumping it into your trash may be insufficient protection. For an unusual example of the consequences of doing so, see In re Allotta, 109 Wn.2d 787, 790-791 (1988). If you have any doubt as to the confidentiality of your normal trash/recycling removal, or if the files are especially sensitive, then either shred or incinerate them yourself. If they are especially voluminous, you can have a bonded document-disposal company dispose of them and provide you a certification of confidential destruction.

How Long Should You Keep Files after Closing?

If you are new to the practice of law, keeping files is not a big burden. As your practice grows, however, if you do not adopt and implement a file retention/disposition policy, your files will become an expensive burden. Even if you keep all files in condensed electronic format (and not all documents can legally be so kept), eventually their sheer number and bulk will become unmanageable.

How long you keep closed files before disposing of them depends on a number of factors, including the actual contents of the file, how many files you have, how much storage space you have or can afford, whether you routinely return original files to clients, whether you keep archival files, who your client is, whether the files relate to civil or criminal matters, the nature of your practice, the format of your files, and whether or not there is any realistic possibility of malpractice or disciplinary claims being made against you. While there is a relatively short statute of limitations for malpractice claims, there is no statute of limitations for disciplinary claims. Keep any disciplinary files permanently.

If you do not have a file retention policy, adopt and consistently maintain one. There is no required or bright-line schedule because ultimately the retention period must be file specific. Although no Washington rule specifies how long you must keep client files, the author believes you should keep original client files (absent client consent to destroy them earlier), or your own archival copies of such files, at least 10 years after close of the representation for civil matters, and indefinitely for criminal matters. This is the same period recommended by Carol Wilson, et al., in A Guide to Setting Up and Running Your Law Office (Oregon State Bar Professional Liability Fund, 1994). This is, however, twice as long as the minimum period for which a Washington lawyer must keep trust records related to the representation, and twice as long as suggested in Los Angeles County Bar Association Formal Opinion No. 475 (1994).

In any case, if the matter relates to a minor, the author recommends that you keep the file the longer of the recommended period or several years after the minor reaches majority, and that files relating to estate planning and probates, adoptions, tax basis of assets, unrecorded real estate legal descriptions or surveys, corporate or bank reorganizations, Chapter 11 bankruptcies, and so on, be kept indefinitely. For a schedule with somewhat shorter (usually three or six years) and more staggered suggested retention periods, see "Destroying Old Files," Washington State Bar News, February 1985, page 26, outlining suggestions of the WSBA Law Office Economics and Management Committee. See Los Angeles County Bar Association Formal Opinion No. 420 for a rationale and recommendation for retaining criminal files indefinitely. For a brief discussion of general factors to be considered when determining how long to keep files, see ABA Informal Opinion 1384 (1977). For a thoughtful discussion of retaining files, see J.R. Phelps and Terri Olson, "When May I Destroy My Old Files?" The Florida Bar Journal, 59 (1994).

You should also arrange for client files to be maintained after your death, including designating another lawyer to determine which files need immediate attention and to notify your clients of your death. ABA Formal Opinion 92-369. Such an arrangement is especially important for sole practitioners since, unlike lawyers in partnerships (where these arrangements are structurally already in existence), sole practitioners usually have only their immediate office staff and family/estate to make these arrangements. In certain cases, Rule 8.6 of the Rules for Lawyer Discipline provides that a custodian may be appointed to look after client interests where there is no other person to do so. For a discussion of some ethical considerations related to files in winding down your practice, see Barrie Althoff, "Sailing to Byzantium, Tahiti or Beyond: Leaving the Practice of Law," Washington State Bar News, August 1997, pages 43-47.

If you are or were partners in a law firm which has dissolved, or have moved from one firm to another, or have taken over another lawyer's practice, or have become a partner in a new firm, you and the former partners may have continuing responsibilities with regard to whatever files those firms or lawyers have in their possession, whether or not you know anything about the files. See Nassau County Bar Association Opinion 89-43 (1989) and Opinion 93-23 (1993). 

File Disposition, Delivery and Receipt

Unless you want to engage in a file dispute, you should promptly deliver files on your client's request. If the client is in active litigation, this may mean immediate delivery, but if the client matter is dormant or without pending deadlines, ordinary mail may be sufficiently timely. Whether you or your client bears the costs of copying and delivery will depend on the terms of your client agreement. In any case, your file transmittal letter should advise your client or ex-client to safeguard the file for possible future needs. You should keep such letters, and receipts for files delivered to your client, as permanent files.

Delivery of the file usually means the entire file regardless of whether you have provided copies of parts or all of it during the course of your representation. WSBA Formal Opinion 181 (1987) categorizes a normal case file's contents as: (1) client papers, consisting of documents provided by the client or at the client's expense, such as medical records; (2) documents the disposition of which is controlled by protective order or other obligation of confidentiality; (3) miscellaneous material that would be of no value to the client; and (4) the balance of the file, including any documents stored electronically. The opinion concludes that client papers must be returned to the client on request (subject to lien rights), that protected documents may not be returned, and that "if the lawyer can reasonably conclude that withholding certain papers will not prejudice the client," such papers may be withheld. Within this last category it includes, as examples, "drafts of papers, duplicate copies, photocopies of research material, and lawyers' personal notes containing subjective impressions such as comments about identifiable persons." A recent New York case, however, found that many of the documents in this category also belonged to the client. Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn LP, NY Court of Appeals, No, 211 (December 2, 1997). It may also be argued that since substantially everything in a file is likely to have been created or copied at the client's expense or while you were performing services for the client, substantially everything in the file is the property of the client and belongs to the client. Thus, absent an express agreement with the client to the contrary, even items we think of as "attorney work product" may belong to the client, whether or not you have actually been paid for your work.

The opinion's second category recognizes that, regardless of any agreement you may have with your client, there may be some file contents that you may not deliver to the client, even where the client may have paid you to obtain them. For example, Superior Court Criminal Rule 4.7(h)(3) requires that criminal case discovery information (such as police reports) provided to a defense counsel must "remain in the exclusive custody of the attorney." Similarly, court or other protective orders or confidentiality agreements may limit the distribution or disposition of certain documents. Thus, you must remove such documents before providing the file to your client.

When you deliver the file to the client, get a signed and itemized receipt for the delivery. Most lawyers require the client to pick up the file at the lawyer's office. If the client refuses to sign a receipt, have one or more of your staff witness and document the delivery of the file. If you mail the file to the client, use registered or certified mail, return receipt requested. Do not deliver the file to anyone other than the client, the client's new lawyer, or to a person whom the client has notified you in writing is authorized to receive the file. Keep the receipt permanently.

Making Archival Copies for Your Own Protection

Before you deliver a file to the client, consider whether or not you want to make an "archival" copy for your own records. There is seldom any explicit malpractice insurance policy requirement to do so, although conceivably policy requirements to conduct your practice in a prudent or reasonable fashion, or to maintain customary files and records, could be so interpreted. Nevertheless, most experienced lawyers keep archival copies when delivering original files to clients. If there is any realistic possibility of a malpractice or disciplinary claim against you, or the client is in any way dissatisfied with your service (dissatisfaction may be assumed if you are being substituted out), or if you sense any uncertainty in your good relations with your client, you should make a copy of the complete file (regardless of its size) for your own records.

Unless the client has agreed to pay for this copying, the copying is for your own protection and will be at your own expense. If you have a dissatisfied client who demands his or her file, but refuses to pay for the copying even if your client agreement provides the client will pay the cost, it would be better to "eat" the copying cost, deliver the file, and get on with your practice. 

File Liens — Are They Worth Much?

RCW 60.40.010 grants you a retaining or possessory lien against papers in your possession. It gives you minimal protection for your right to be paid for your legal services and advanced costs. RPC 1.15(d) recognizes this lien by permitting you to retain papers relating to the client "to the extent permitted by other law." RPC 1.15(d) also requires you, however, to take steps to the extent reasonably practicable to protect the client's interests.

 WSBA Formal Opinion 181 (1987), while recognizing that you may assert your file possessory lien when terminating your attorney-client relationship, notes that your right to assert the lien may be limited by several factors: (1) possible prejudice to your client, (2) whether or not there is an outstanding fee dispute with the client, and (3) whether or not the client has the financial ability to pay amounts owed.

The opinion states that

if assertion of the lien would prejudice the former client, the duty to protect the former client's interests supersedes the right to assert the lien.

The opinion is careful to note that while a

client's need for the files will almost always be presumed from the request of the files . . . this need does not mean that in every case the assertion of the lien will prejudice the client.

The opinion goes on to state that

if there is no dispute about fees and the client has the ability to pay the outstanding charges, it is proper for the lawyer to assert the lien. In this situation, it is the former client's refusal to pay that will cause any injury. When, however, there is a dispute about the amount owed, or the client does not have the ability to pay, the lawyer cannot assert lien rights if there is any possibility of interference with the former client's effective self-representation or representation by a new lawyer (emphasis added).

Realistically, when you are being substituted out, there usually is, or very soon will be, a dispute about the fees, since fees are often the very basis for the client's desire to change lawyers. Similarly, it is rarely worth the effort to try to prove that the client has the ability to pay your unpaid fees.

If you find yourself in a file dispute, it is rarely wise or worth the aggravation to assert your lien right. If a court finds you breached your ethical duties, you may be denied, or be required to disgorge, your fees. See Gustafson v. City of Seattle, 87 Wn. App. 298, 304 (Div. I), and cases there cited. If the dispute over files is brought before a court, the court usually orders the files to be delivered to the former client or the new lawyer. Even if it does not go to court, withholding the file encourages the client to file a malpractice suit and disciplinary grievance. Consequently, most lawyers simply deliver the file and get on with their practices even when they are entitled to withhold the file.

If you become the new lawyer for a client whose former lawyer refuses to release the client's file, you may consider asking the WSBA for assistance in getting the file, or bringing a motion before the appropriate court (for which no pending litigation is required) pursuant to RCW 60.40.020. The court should issue an immediate ruling rather than awaiting the outcome of related litigation. State Ex Rel Robinson Co. v. Gilliam, 94 Wash. 243, 161 P. 1194 (1917); Krein v. Nordstrom, 80 Wn.App. 306, 908 P.2d 889 (1995).

Regardless of whether you deliver the file or assert your lien rights, ask yourself if you could have better served the client and protected your fees, for example, by requiring greater advance fee payments or by communicating and billing more frequently. If you are in frequent file disputes, your practice may need improvement, including your policies on accepting new clients, your fee agreements and billing practices, and, perhaps, how you treat your clients. Since your goal as a lawyer is to help your clients get access to justice, sometimes you will pay a personal price for that by freely surrendering files where the client cannot pay, or by being taken advantage of by unscrupulous clients, both of which happens to even the best of lawyers. 

WSBA Informal Mediation of File Disputes

In the past, the WSBA Office of Disciplinary Counsel ("ODC") generally handled file disputes between lawyers and clients as part of the lawyer disciplinary process. Because of many more urgent disciplinary cases, file disputes often were not handled timely, with the result that the client, the lawyer complained about, and the client's new lawyer were all dissatisfied.

To respond more quickly and effectively to file disputes, the ODC began, in 1995, informally mediating many of these disputes and resolving them without formal discipline. The ODC promptly contacts, by fax and/or telephone, the client and lawyer(s), makes available to them the relevant ethical rules and suggests solutions. In many cases, the lawyer withholding the file is unaware of his or her ethical duty to promptly deliver the file, and, upon being informed of that duty, promptly delivers the file. During 1996, 309 file disputes were resolved informally, usually within a matter of days, while another 10 were resolved through disciplinary procedures. During 1997, 428 file disputes were informally resolved with the former lawyer releasing the file. In eight additional cases, the former lawyer declined to do so, but in each case, the client sought and obtained a court order ordering the former lawyer to deliver the files.

Conclusion

Carefully review and amend, as needed, your standard retainer and fee agreements and file retention policies to assure they meet your clients' and your own needs and your ethical duties. Keep and consistently implement a file retention policy. If you get into a file dispute, if withholding the file will prejudice the client or result in "any possibility of interference" with the client's effective representation, deliver the file. Even if you do not have to do so, consider whether the perceived benefit of withholding a file outweighs the aggravation involved, the disruption of your practice and the increased likelihood of a malpractice and disciplinary claim against you. It seldom does.

This article originally appeared in the March & April 1998 issues of the Washington State Bar News.