Ex-clients' Files Present A Quandary
California Joan looks at how to maintain old files and documents belonging
to former clients
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Peck |
By Ellen R. Peck
© 2003. All rights reserved.
California Joan caught her breath as the thick, dark door of the warehouse
ponderously rolled open. It was worse than she anticipated.
"There they are, Cali," said Dar Tanyon, Esq., ". . . thousands
of our former client files."
Darlene Tanyon was the managing partner of a medium-sized law firm in California's
Central Valley. The firm had been founded in the mid-1960s by three best buddies
in law school, Athos, Porthos & Aramis. Through the ups and downs of law
practice, they had remained not only law partners but also inseparable friends.
Dar, Cali's classmate, had joined the firm 20 years ago to handle family law
and estate planning matters. Now they wanted to retire, leaving the firm in
Dar's capable hands.
Dar and Cali were soon joined by Athos, Porthos and Aramis. After introductions
and handshakes all around, Athos started, "We have always practiced with
the one for all and all for one' philosophy. We don't want to leave Dar
with this file problem."
"We want to do the right thing with all of these old files," chimed
in Aramis. "We all want to know what our options are," Porthos added.
Coincidentally, Cali had received three other engagements regarding files in
the last two weeks: Five lawyers from a firm undergoing a bitter dissolution
after 20 years together, where no one wanted to take charge of the closed client
files or pay to have them stored. The tearful widow of a solo practitioner wanted
to know what to do with former clients' files stacked to the roof of her three-car
garage. A famous entertainment lawyer was being pressured by the heirs of a
recently deceased Hollywood legend who wanted the legend's papers to sell to
the media.
Retention of former clients' files was becoming a major ethics quandary. The
longer lawyers stay in practice, the more clients they represent, the more files
they collect, and with the increasing complexity of litigation and transactional
work, the more documents end up in files.
Proliferating files from long-gone clients create law office space problems,
storage problems, additional financial issues and other unanticipated problems
upon dissolution of a law partnership or corporation, relocation of law offices
or retirement. And sometimes there are competing claims to the documents in
the files. (Los Angeles County Bar Association Formal Op. No. 493)
Even with the technological revolution, it was not cost-effective to scan hundreds
or thousands of old files and store them electronically. Moreover, original
documents of some value had to be maintained.
"Are there any professional standards which direct how long lawyers are
required to maintain client's files?" Dar asked, jolting Cali from her
ruminations.
"No. California's professional standards are generally silent about lawyers'
duties to maintain former clients' files. However, the Restatement requires
that a lawyer take reasonable steps to safeguard documents in the lawyer's
possession relating to the representation of a client or former client' (Rest.3d
Law Governing Lawyers § 46(1)9(1))," Cali answered.
"There must be some reason all of us thought we had to keep all of these
files," Porthos said, rolling his eyes at the thousands of files.
"Ethics opinions talk about the source of our duty to maintain former
client files long after a case or engagement has terminated," Cali continued.
"One ethics committee observed that the papers in a client's file belong
to the client and must be released promptly to the client following termination
of the attorney-client relationship, if requested by the client. (Weiss v. Marcus
(1975) 51 Cal.App.3d 590,599, 124 Cal.Rptr. 297; Rule 3-700(D)(2), Rules of
Professional Conduct of the State Bar of California.) However, if the client
does not request the file, the client's right to the file continues after termination
of the attorney-client relationship." (Los Angeles County Bar Association
Formal Op. No. 475 and No. 330 (Nov. 30, 1972))
"Another ethics committee found that an attorney is a bailee of all papers
which the client has given to the lawyer. This is based upon lawyers' duties
to take reasonable steps to avoid reasonably foreseeable prejudice to the rights
of the client." (Bar As-sociation of San Francisco Formal Opinion 1996-1)
"I heard," said Athos cheerfully, "that lawyers are permitted
to destroy former client files five years after conclusion of the representation."
"Not exactly correct," responded Cali quickly. "The Rules of
Professional Conduct and State Bar Act do not specifically direct how long an
attorney should keep a client's files. But rule 4-100(B)(3) requires records
regarding entrusted client property and funds to be maintained five years after
the last funds and property has been disbursed to the client. One bankruptcy
case has applied this five-year rule' to former client files." (Ramirez
v. Fuselier (9th Cir. BAP 1995) 183 B.R. 583, 587 & fn. 3; Los Angeles Bar
Association Form. Opn. 475 (1994) [recommending five-year retention period for
client files "by analogy" to rule 4-100(B)(3)])
"But," warned Cali, "another ethics committee opined that the
length of time papers must be maintained depends upon the nature of the document,
the nature of the services rendered to the client, and any other factors to
determine whether prejudice to the client would arise by destruction of the
papers." (Bar Association of San Francisco Form. Opn. 1996-1)
"I am trying to divest myself of worldly possessions!" Aramis pleaded
with the warehouse rafters. "Am I stuck with the storage of these files
forever?"
"Not necessarily." Cali tried to sound soothing. "There are
some documents that you cannot destroy without the client's permission or notice
to the affected client, including documents of intrinsic value or significant
pecuniary value or any documents required to be deposited in court pursuant
to Probate Code §§700, et seq. Also, criminal files must be maintained
for the life of the former client." (Los Angeles Bar Association Form.
Opn. 475 (1994), 420)
"What documents must be deposited in court?" asked Dar, with a view
to her estate planning practice.
"An original will, declaration of trust, trust amendment or other original
document modifying a will or trust; a signed original power of attorney; a signed
original nomination of conservator; or any other signed original instrument
that the attorney and depositor agree in writing to place on deposit (Prob.
Code §704)," responded Cali.
Porthos smiled for the first time. "The firm has always had the policy
to return original estate planning documents to the clients. Our files do not
contain any of those!"
"What are intrinsically valuable documents?" asked Aramis warily.
"Documents such as money orders, travelers checks, stocks, bonds, wills,
original deeds, original notes, judgments and the like which have value, or
may have value, in and of themselves or which themselves create or extinguish
legal rights or obligations (Los Angeles Bar Association Form. Opn. 475 (1994);
491, fn. 5)," answered Cali.
"I'm confused," said Athos. "If a document is not intrinsically
valuable and not required to be lodged with a court under the Probate Code,
how could it have significant pecuniary value?"
"You're right, Athos! Documents not subject to the Probate Code or which
do not have intrinsic value will have no pecuniary value to anyone," Cali
responded. "However, if the case is notorious or if the client is a celebrity,
then other documents may have significant pecuniary value because the client
or the client's heirs can sell the documents or use them to create wealth, for
example, by writing a tell-all memoir." (Los Angeles Bar Association Form.
Opn. 491)
"Now we are getting somewhere! The first step is to look through each
file for documents under the Probate Code, intrinsically valuable documents
or for documents in high profile cases or involving celebrity clients. Can we
destroy everything else in files that have been closed for 10 years or more?"
Porthos asked eagerly.
"There is support for that. One ethics committee opined that all documents
not necessary to protect the client from prejudice or intrinsically valuable
could be destroyed. (Bar Association of San Francisco Form. Opn. 1996-1) However,
another ethics committee opined that a law firm had an ethical obligation to
try to return files to former clients or try to obtain client authorization
to destroy closed files (Los Angeles Bar Association Form. Opn. 475),"
answered Cali.
"I can see that trying to contact former clients is good client relations
and good risk management. What kind of effort do we have to make to find our
former clients?" asked Aramis grimly.
"You are required to pursue all reasonably available means' to notify
a former client in writing, preferably by certified mail to the client's last
known address." Cali started to explain the process, when Dar interrupted,
"What does all reasonably available means' require?"
"Reasonably available means' does not require you to hire an investigator,
but you should consult the file, public telephone directories, organizations'
membership directories, third parties who might have information to locate the
former client's last known address or the internet." (Los Angeles Bar Association
Form. Opn. 475)
"So Step Two is trying to locate each former client through reasonably
available means. Once we have an address, what do we say to the client about
the file?" Athos asked.
"Obviously the content of former clients' notices may vary depending upon
the circumstances of the case or the nature of the relationship. Minimally,
your notice should advise (1) that the files are available for release to the
client; (2) that you seek the client's instructions concerning the file's disposition;
(3) that the file will be destroyed if no contrary instruction or response is
received after at least a 90-day period; and (4) when the destruction will occur
(after at least a 90-day notice period) (Los Angeles Bar Association Form. Opn.
475)," Cali answered.
"What if the client can not be located or does not respond?" asked
the practical-minded Porthos.
"If at least five years has passed since the matter was closed, if the
matter was a civil case and if at least a 90-day period has elapsed after the
sending of a notice, then the file may be destroyed. However, make sure to keep
any documents which have value or must be deposited with the probate court,"
answered Cali. "There are some matters which should not be destroyed until
a longer time period has passed. For example, if the former client was a minor,
I recommend that the file be retained until the minor has reached majority plus
four years for the probable time for a legal malpractice action to pass."
"I understand that documents mentioned in the Probate Code can be deposited
with the Probate Court. But what should we do with intrinsically valuable documents
which should not be destroyed without the consent of the client, if the former
client cannot be located or does not respond?" Dar queried.
"If they have been abandoned by the client for a period of three years,
they may escheat to the state (Code Civ. Proc. §§1500 et seq). So
you can deposit those with the California Controller's office," answered
Cali. "In the unlikely event that a former client comes looking for the
documents down the road, the client can still go through a procedure at the
Controller's Office to claim the abandoned property."
"One of my clients would be devastated if she read a psychiatric report
in her file. If she requests it, do I have to give it to her?" asked Dar.
"Yes," responded Cali. (Los Angeles Bar Association Form. Opn. 509)
"What if the client is deceased? We can't notify a dead person,"
said Athos.
"You should make reasonable efforts to notify the deceased client's legal
representatives or legatees of the proposed destruction of the files and give
them an opportunity to inspect or take any documents of significant pecuniary
or intrinsic value, subject to your obligations to protect the deceased client's
secrets and maintain the deceased's confidence. The notice should state that
the files may contain documents of significant pecuniary value (although they
need not be identified) and identify any documents of intrinsic value. You must
preserve any deceased client's confidential information, since the duty of confidentiality
survives the death of the client. Since the holder of lawyer-client privilege
is the client's personal representative on the death of the client, until the
personal representative is discharged, a disclosure of confidential information
or secrets to the personal representative of the deceased client may be appropriate."
(Los Angeles Bar Association Form. Opn. 491 (1998))
"Step Three was sending a notice to clients who will claim their file,
give instructions that we can destroy the file or not respond. Some papers may
have to be retained and/or escheat to the state. What about all the files and
documents that we can dispose of? Can we rent a dumpster and throw them in?"
asked Aramis.
"All documents which can be destroyed must be incinerated, shredded or
some other means used to preserve confidential information pursuant to Business
and Professions Code §6068(e) and Evidence Code §§950 et seq,"
responded Cali firmly.
"Step Four is to destroy the documents by preserving client confidentiality.
I think I will go buy 10 paper shredders," remarked Porthos.
At first Athos, Porthos, Aramis and Dar Tanyon were a bit gloomy about the
effort needed to accomplish the four steps to file destruction. However, their
desire to do right by their former clients prevailed. They decided to have several
staff "file closing" parties with free pizza and overtime pay to motivate
firm members to go through all the old files.
On reflection, they believed that sending notices to former clients and their
heirs would add to their reputation of being good, responsible lawyers in the
community and might even generate some business. They also decided to implement
a file retention policy with their current and future clients, either in a fee
agreement or developed in writing during the relationship. (Los Angeles County
Bar Association Formal Op. Nos. 491, 330 and Bar Association of San Francisco
Formal Op. Nos. 1996-1 and 1990-1. See Form 5:M, Vapnek, Tuft, Peck & Wiener,
California Practice Guide Professional Responsibility (The Rutter Group
2002))
"Our heirs and firm successors will never have to face this again!"
Porthos promised. The four partners cheered: "One for all and all for one!"
Ellen Peck is a former judge of the State Bar Court, a past chair
of the State Bar's Committee on Professional Responsibility and Conduct and
a member of the Commission to Revise the Rules of Professional Conduct. A private
practitioner in Escondido, she is a co-author of The Rutter Group's California
Practice Guide Professional Responsibility.
Certification
- This self-study activity has been approved for Minimum Continuing Legal
Education credit by the State Bar of California in the amount of one hour
of legal ethics.
- The State Bar of California certifies that this activity conforms to the
standards for approved education activities prescribed by the rules and regulations
of the State Bar of California governing minimum continuing legal education.
Self-assessment test
Answer the following questions after reading the MCLE article on commercial
letters of credit. Use the
answer form provided to send the test, along with a $20 processing fee,
to the State Bar. If you do not receive your certificate within four weeks,
call 415-538-2504.
- Barry Barrister handled successful real estate development deals for the
Marx Brothers for 20 years. One night at an opera gala, the brothers developed
irreconcilable differences and have decided to sever all business relations.
Groucho, Harpo and Chico have each requested that Barry give them the original
file and not give it to any other brother. Barry can ethically give the original
files to Groucho, the eldest brother.
- Cathy Crimlawyer decided to scan and store electronically all of her former
clients' criminal files. Since there are no original documents in her file,
electronic storage is ethically appropriate.
- The Rules of Professional Conduct require that a lawyer "take reasonable
steps to safeguard documents in the lawyer's possession relating to the representation
of a client or former client."
- Alice Attorney has no duty to maintain the files of former clients that
have not requested files after Alice completed their engagements and with
whom she no longer has an attorney-client relationship.
- An attorney is a bailee of papers which the client has given the lawyer.
- The ABC Law Firm can destroy former client files five years after conclusion
of the representation.
- Some original documents are required to be deposited in court.
- An original will, declaration of trust, trust amendment, or other original
document modifying a will or trust are examples of the kinds of documents
which must be deposited in court.
- A signed original nomination of conservator may be destroyed five years
after termination of the attorney-client relationship.
- The ABC Law Firm can destroy intrinsically valuable original documents,
as long as the attorney-client relationship has been terminated for five years
or more.
- In going through a file that had been closed for 10 years, Amos Attorney
found Former Client's original deed of trust to the Lost Dutch-man's Mine
dated 1898. Assuming that the deed had been superceded, or was a fake, Amos
shredded the deed appropriately.
- In going through Former Client's closed file, Carla Counsel found an original
stock certificate for 10 shares in Microsoft Corp. Carla located an address
for Former Client, sent her a notice that Carla had the original Microsoft
Corp. stock certificate and requested instructions about what to do with the
stock. Former Client did not respond. After three years, if Former Client
does not respond, the stock will escheat to the state of California.
- David Deal, an entertainment lawyer, had represented now- deceased Carrie
Cute, one of the most popular child movie stars of the last century. In Carrie's
files were a number of drawings Carrie made while sitting in his office with
her parents and correspondence between Carrie and David. David is retiring
and does not want to pay for storage of Carrie's files. Since there are no
estate planning original or intrinsically valuable documents in Carrie's file,
David may destroy the file to preserve Carrie's privacy.
- After looking through each former client's file and finding no documents
under the Probate Code, no intrinsically valuable documents, no documents
in high profile cases or involving celebrity clients and no documents necessary
to protect a client from prejudice, at least one ethics committee maintained
that a lawyer still had an ethical obligation to try to return files to former
clients or try to obtain client authorization to destroy closed files.
- The ABC Law Firm is required to pursue ‘all reasonably available means'
to notify a former client in writing about proposed destruction of its file.
- Kevin Kounsel sent his former clients a notice advising them (1) that their
files concerning completed engagements were available for release to them;
(2) that Kevin sought the client's instructions concerning the file's disposition;
(3) that the file would be destroyed if no contrary instruction or response
was received within two weeks; and (4) that the file destruction would occur
three weeks after the date of the client notice.
- Annie Advocate's former client, Velma Kelley, asked for her file from a
civil matter concluded 10 years ago. Annie believes that Velma's mental health
is hanging by a slender reed and that she would be devastated by reading the
psychiatric reports in her file. Annie may retain the psychiatric reports
from the file she turns over to Velma if Annie reasonably believes that they
may be harmful to Velma's fragile mental health.
- Sammy Soliciter found some original documents in his former client, Tim
Tycoon's, old files relating to transactional matters Sammy handled 10 years
ago. Sammy wants to get rid of Tycoon's documents and files, but discovered
that Tycoon was dead. Sammy can make reasonable efforts to notify Tycoon's
legal representatives or legatees of the proposed destruction of the files
and give them an opportunity to inspect or take any documents of significant
pecuniary or intrinsic value.
- The XYZ Law Firm has instructions from 3,000 former clients authorizing
the destruction of their old files. Managing Partner appropriately instructed
File Clerk to throw 100 files in the building's trash bin every night.
- One of the best ways to lower the cost of former client storage of client
files and to eliminate the requirement of former client notification is to
implement a file retention policy by having the client give instructions,
either in a written fee agreement or other writing during the relationship,
concerning the length of retention of closed files and papers and when you
will destroy closed files.
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