Issue: February, 2005
Author: John M. Burman
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Ethically Speaking - Ownership, Access, and Retention of Client Files: An Update
Several years ago, an article entitled “Ownership, Access, and Retention of Client Files” appeared in this column. Since then, the issues raised and discussed in that article have not gone away, nor are they going to, and requests for reprints of the article are common. While the gist of that article remains correct, and a lawyer who follows its recommendations should not run afoul of legal or ethical duties, an update seems worthwhile. Accordingly, this article is an updated version of that one.
Lawyers acquire and create mountains of information about clients, usually stored in client files. At one time, such files were filled with paper. Now, more and more client information is stored electronically. Whatever its form, the existence of that information raises vital questions. First, who owns it? Second, who has access to it and under what conditions? And third, what should be done with the information after the attorney-client relationship ends? That is, how and how long must it be retained? The Wyoming Rules of Professional Conduct do not, unfortunately, provide clear answers to any of those questions, nor do Wyoming statutes or case-law.
Before addressing specific issues of ownership, access, and preservation of client information, it is useful to consider an attorney’s general obligations regarding client information. From those duties the answers to the questions flow fairly logically.
Legal and Ethical Background
An attorney is an agent for each client that the attorney represents. As an agent, the attorney is a fiduciary for the client, the principal. The lawyer must, therefore, work “primarily for the benefit” of the client; in doing so, the lawyer owes the client a variety of legal duties, including duties to treat the client fairly, account for financial matters, not compete with the principal, communicate with the principal, and maintain confidentiality of information regarding the agency. These duties are very similar to the lawyer’s ethical duties, and they relate directly to the issues of ownership, access to, and preservation of client information.
A “fundamental principle” of the attorney-client relationship is that an attorney must preserve a client’s reasonable expectation of privacy. That obligation has roots both in the law of agency and the rules of professional conduct. It encompasses all information “relating to” representation of a client, regardless of its source or when it is learned. With limited exceptions, therefore, a lawyer “shall not” disclose information which relates to the representation without the client’s informed consent. That obligation never ends; after the termination of the attorney-client relationship, the duty of confidentiality continues indefinitely. In addition to preserving the confidentiality of information regarding former clients, a lawyer may not use information “to the disadvantage” of a former client unless such information “has become generally known.” Finally, when the relationship ends, a lawyer must “take steps” to protect the client’s interests and “surrender papers and property to which the client is entitled . . . .”
Another fundamental principle is that a lawyer must communicate with his or her clients. A lawyer must “keep a client reasonably informed about the status of a case and promptly comply with reasonable requests for information.” The only time a lawyer may ethically withhold relevant information from a client is “when the client would be likely to reach imprudently” to immediate disclosure, as in the case of a psychiatric diagnosis. In such a case, although the lawyer “may be justified in delaying transmission of information,” the information, ultimately, must be furnished. The only exception is that a lawyer appointed as a guardian ad litem for an individual “may withhold information when the attorney reasonably believes that communication of the information to the individual would not be in the individual’s best interests.” While the rules thus address delaying transmission of or withholding information from a current client, they do not address a lawyer’s obligation of providing information to a former client.
As a fiduciary, a lawyer who possesses a client’s property must keep it separate and safe. Client funds must be kept in a trust account. Other types of property must be “appropriately safeguarded.” Further, when a lawyer comes into possession of property or funds which belong to a client, the lawyer must “promptly notify” the client and “promptly deliver” the property to the client or a person designated by the client. In addition, lawyers must keep records of all activities involving client property. A complete accounting of client funds and/or property must be maintained by the lawyer “for a period of five years after termination of the representation.”
Finally, at the termination of the relationship, a lawyer is to “surrender papers and property to which the client is entitled . . . . [but] the lawyer may retain papers relating to the client to the extend permitted by law.” The question becomes, therefore, what is the extent permitted by law?
In Wyoming, the law is largely silent on client information. The only directly relevant statute involves attorneys’ liens. To secure payment of professional fees, an attorney in Wyoming has a lien on ”papers or money of his client which have come into his possession.” That lien does not, however, attach to monies received for child support because such funds belong to the minor child, not the custodial parent.
The principles expressed in the Wyoming Rules and statutes do not, ultimately, answer the questions. Who owns client files? Who has access to them, especially who has access after the termination of the attorney-client relationship? And how and how long must attorneys preserve client files?
Ownership of Client Files
Client files belong to the client. That said, however, the question becomes what does that include, everything in the client’s file, or do some things belong to the lawyer? The answer is less clear. It is clear, however, that any exception to the general rule that client files belong to clients will be a narrow one.
The Restatement (Third) of the Law Governing Lawyers carves out a limited exception to the general rule that clients own their files. A client does not own and a lawyer may, therefore, withhold documents which were “reasonably intended only for internal review, such as a memorandum discussing . . . whether a lawyer must withdraw because of the client’s misconduct, or the firm’s possible malpractice liability.”
The Restatement’s rationale for the exception is a practical one. “The need for lawyers to be able to set down their thoughts privately in order to assure effective and appropriate representation warrants keeping such documents secret from the client involved.” Although not explicit in the Restatement, this exception appears to mean that such documents belong to the lawyer, not the client. Even under the Restatement view, however, this exception is limited.
A tribunal “may properly order discovery of documents when the discovery rules so provide.” The applicable discovery rule in Wyoming is Rule 26(b), which establishes limitations on discovery. Subparagraph (b)(3) regulates discovery of an attorney’s trial preparation materials, usually referred to as “work-product.” The rule says that when a court orders production of trial preparation materials, it “shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.” The Federal Rules contain identical language. The question becomes, therefore, whether the material in question is trial preparation material within the definition of the rule. If it is, the rule precludes its discovery. If it is not, the work-product does not apply. There is no easy answer to that question.
Further, even if the work-product doctrine does protect the document in question, the lawyer’s duty to keep the client informed about matters relevant to the representation may require the lawyer to discuss the information contained in the document, even where the document itself may be withheld. Lawyers should be cautious in preparing documents with the expectation that they do not belong to the client and may, therefore, be withheld as some courts have held that a client is entitled to everything in the client’s file, including an attorney’s private thoughts. The much safer view is to expect that a client will ultimately have access to everything in the client’s file, for while few reported opinions address the scope of a client’s ownership of the client’s file, they support the view that the client is entitled to the entire file.
Resolution Trust Corp. v. H_____, P.C., involved a dispute between a law firm and one of its former clients over access to and ownership of the client’s files. The former client requested that the firm deliver the entire contents of the client’s file, including the attorneys’ notes and memoranda; although the parties agreed to the transfer, they asked the court to rule on the issue of ownership of client files. The court concluded that “the entire contents of the files belong” to the client. Its reasoning is both logical and instructive.
When analyzing the ownership of client files, the starting point, said the court, is the laws of the jurisdiction. In Texas, as in Wyoming, the rules of ethics direct a lawyer to “promptly” deliver a client’s property, and this directive “applies to documents in an attorney’s files.” Furthermore, as a fiduciary, a lawyer has a “duty to disclose all information to the client . . . [including] the fruits of the attorney’s labor.” The court rejected the attorneys’ argument that certain documents were exempt from disclosure because of the attorney-client privilege and/or the work product privilege. Both, said the court, belong to the client; it would be inappropriate, therefore, for an attorney to be able to use them against the client. Accordingly, an attorney is not entitled to determine which documents should be disclosed to the client; to so permit would be to “deny the client the full benefit of the services for which he paid, often dearly. Even more important, giving such a power to an attorney would fundamentally undermine the fiduciary nature of the relationship between an attorney and a client.” The only safe course for Wyoming lawyers, therefore, is to assume that if “the files were created in the course of the representation of the client, they belong to the client.”
Access to Client Files
The corollary to ownership is access. Assuming the client owns the entire file, the client has access to virtually everything.
As noted above, a lawyer has an ethical obligation to “keep a client reasonably informed about the status of a case and promptly comply with reasonable requests for information.” It is clear, therefore, that when a client requests information in the attorney’s possession during the course of the representation, the lawyer “must allow a client or former client to inspect and copy any document possessed by the lawyer relating to the representation, unless substantial grounds exist to refuse.”
Substantial grounds exist in limited circumstances. First, a lawyer may refuse to disclose information “when compliance [with the client’s request] would violate the lawyer’s duty to another or if the lawyer “reasonably believes that the client would use the document to commit a crime.” Second, a lawyer may decline to disclose information under conditions of “extreme necessity,” when disclosure would be contrary to the client’s best interests (e.g., a psychiatric diagnosis). Third, as discussed above, a lawyer may refuse to release documents “reasonably intended only for internal review, such as a memorandum discussing . . . whether a lawyer must withdraw because of the client’s misconduct, or the firm’s possible malpractice liability to the lawyer.”
Even after concluding that a client is generally entitled to access to the files, questions remain. First, does the duty apply to all information in the file? Second, what duty is owed to former clients? And third, who is responsible for paying for copying costs?
As discussed above, significant authority exists to support the position that a client owns everything in the file, including documents which contain an attorney’s “private” thoughts, impressions, or opinions. While the Restatement provides authority to the contrary, lawyers should assume that if push comes to shove, the client owns everything.
The Restatement (Third) of the Law Governing Lawyers makes no distinction between current clients and former ones for purposes of a lawyer’s duties regarding client information: the lawyer “must allow a client or former client to inspect and copy any document possessed by the lawyer relating to the representation . . . .” Requiring a lawyer to treat current and former clients the same is consistent with the Wyoming Supreme Court’s holding that a lawyer owes fiduciary duties to both.
Lawyers frequently charge clients or former clients for the cost of copying clients’ files. They should not do so. And the reason is simple. Since client files belong to the client, the client, not the lawyer, is entitled to the originals of documents in the client’s files. If the lawyer wishes to retain copies for the lawyer’s files, the lawyer is free to do so. But since copying client files “is strictly for the lawyer’s benefit . . . copying costs must be shouldered exclusively by the firm.”
The cost to copy the former client’s files in In Resolution Trust Corp. v. H_____, P.C., was estimated to be between sixty and seventy thousand dollars, and the law firm argued that it would be unfair to impose that cost on the firm. The court rejected that argument as a “red herring,” holding that the firm had no obligation to copy the files, only an obligation to deliver them to the client, which had already paid for them. Accordingly, “[a]ny documents [the law firm] wishes to keep may be copied at its own expense.” Demanding that a client or former client pay such costs may lead to sanctions. An Arizona lawyer, for example, was disciplined for, inter alia, refusing to turn over a former client’s file until the lawyer received a thirty-dollar fee for copying.
Preservation of Client Files
Whether and when documents must be preserved or may be destroyed depends on the context. A critical issue is whether litigation involving the documents has commenced or is likely.
Pending or Threatened Litigation
Pending or threatened litigation imposes a common law duty to preserve relevant evidence.” That duty applies both to clients and to their lawyers. After litigation has begun a litigant’s lawyer has an “obligation to ensure that relevant information is preserved by giving clear instructions to the client to preserve such information and, perhaps more importantly, a client [has an] obligation to heed those instructions.” The same duties likely apply when a lawyer knows or reasonably should know about threatened litigation.
Document Retention and Destruction
Although lawyers owe their clients and former clients an unending duty of confidentiality, they need not retain client files forever. It is important, however, that every lawyer or law firm develop a file retention and destruction policy which will both satisfy the lawyers’ obligation of confidentiality and prevent the lawyers, or their survivors, from being buried in client files. Developing and implementing such a policy is not just a good idea, it has been held to be ethically required. According to the State Bar of Michigan, “[a] law firm, including a solo practice, is obligated to have a record retention policy or plan in order to meet ethical obligations.”
The issue of file retention was thoroughly addressed several years ago in Robert Martin’s excellent article on “Practicing Law in the 21st Century: Fundamentals for Avoiding Malpractice Liability.” The article appeared in the Fall 1998 issue of the Land and Water Law Review. (Every lawyer should keep the article close at hand; it contains a wealth of valuable and practical information.) The guidelines contained in the article bear repeating.
Wyoming law does not prescribe file retention periods. In the absence of legislative requirements, Mr. Martin recommends that most files be retained for seven to ten years. The qualification is for matters which will potentially last longer, and the files must, therefore, be kept longer. Domestic cases involving minor children and estate planning matters are the two primary categories of cases which may be or become active for far longer.
Files in domestic relations cases should be retained until all minor children have reached the age of majority, when issues of child support, custody, visitation, etc., will end (unless there are arrearages). Estate planning files need to be retained until the estate plan is fully implemented. Since trusts may last for generations, subject to the rule against perpetuities, such files may have to be kept for decades. If it is not clear how long to retain a file, keep it and review it periodically.
Since a client’s files belongs to the client, a lawyer needs to communicate with the client about what will be done with the client’s property. The opportune time and place is in the closing letter. In addition to terminating the attorney-client relationship, the closing letter should advise the client, now a former client, how long the lawyer will keep the file, that it will be destroyed at the end of that time, and that if the client would prefer to have the file returned, the client should promptly notify the lawyer. Exhibit A to this article is a sample closing letter which contains the above information.
When the time comes to destroy client files, lawyers need to do so in a manner which preserves the confidentiality of the information contained in the files. Files should not, therefore, simply be placed in the garbage. Shredding or burning are appropriate methods of disposing of confidential information, or contracting with a reputable business which has an acceptable method of file destruction. If part of the information is stored electronically, merely deleting the file is inadequate; a “deleted” file may not really be gone.
Alan Pearlman recently described the non-delete problem:
When your operating system deletes a file, it really doesn’t delete or erase it Instead, it just changes the first character of the file name previously there, thus fooling the computer into thinking this space is now available for storage. What the computer doesn’t tell you, however, is that until new files are written or rewritten to this freed-up space . . . that original data is easily recoverable.”
Since the information may still exist despite having been “deleted,” what should one do? Products now exist which will electronically “shred” computer files. For example, a program available from Strategic Forecasting called “The Shredder” will ensure files are truly gone.
Access to and retention of client files are a function of ownership. And ownership of a client’s files is clear. They belong to the client, subject to the lawyers’ statutory right to a lien to secure payment of professional fees and the lawyer’s right to copy and retain any part of the file. While authority does exist to withhold documents which contain an attorney’s thoughts, impressions, and opinions, considerable authority to the contrary exists. Lawyers should assume, therefore, that clients may well obtain access to everything in the file.
Lawyers should review their policies on copying costs and file retention. Providing files to a client should not be conditioned upon the client’s paying copying costs because copies are for the lawyer’s convenience, not the client’s, and such costs are not properly billed to the client. Finally, closing letters should clearly articulate the lawyer’s file retention policy, and provide each client with the opportunity to make different arrangements.
Exhibit A--Closing Letter
Mr. John Smith
123 Easy Street
Re: Jones vs Smith
Our File Number 98-25
Dear Mr. Smith:
As you know, this matter was successfully resolved through a settlement agreement between you and Ms. Jones. All the provisions of the settlement agreement have now been implemented. In particular, the funds to which you were entitled as part of the agreement have already been paid to you, and your bill to us has been paid in full. We are, therefore, closing your file.
Enclosed you will find the original documents which you previously furnished to us for use in the case. We will, of course, retain our file, but we no longer have any original documents.
This office will retain your file for ten years from the date of this letter. At that time, it will be destroyed. If you would like to have the file returned to you at that time, instead of being destroyed, please notify me in writing within the next thirty days.
Since your case is being closed, this office no longer represents you in this or any other matters. If issues relating to this lawsuit or anything else arise and you wish for us to represent you, please feel free to contact us. Until that occurs, we will not undertake any further action on your behalf.
It has been our pleasure to represent you. We wish you well in the future. Please feel free to contact us should you require legal assistance in the future.