Amended Rule 1.15 RPC, and the Need for S.C. Law Firms to Implement File Retention Policies
On March 1, 2012, the South Carolina Supreme Court issued an Order amending Rule 1.15, "Safekeeping Property," of the South Carolina Rules of Professional Conduct.
Minimum File Retention Requirement and Adoption of a File Retention Policy
Rule 1.15(i) establishes for the first time in South Carolina the requirement for an attorney or law firm to maintain client files after they are closed for a minimum of 6 years (unless the file is delivered to the client or the client has authorized destruction of the file and no pending or threatened legal proceedings are known to the lawyer). If the client does not request the file within 6 years following the end of the representation, the lawyer may destroy the file unless pending or threatened legal proceedings are known to the lawyer.
The last sentence of Comment 13 to Rule 1.15(i) will be of particular interest to the Bar: "Attorneys and firms should create file retention policies and clearly communicate these policies to clients."
Benefits of a File Retention Policy for Law Firms
The development of a file retention and destruction policy, while daunting, is also a real opportunity for a firm.
First, a properly implemented policy will be more efficient, as fewer resources need be devoted to storage of closed files. (Other efficiencies may result from choosing electronic storage over paper storage for closed files. As the amended rule recognizes, electronic storage of documents is also an option, subject to the requirement that the client's file be "securely" stored and capable of being retrieved-- more on that in a future post).
Second, implementing a file retention policy allows an attorney or firm to "harvest" precedent, briefs and forms, to make those resources available for future use. (Thanks to Jim Calloway for this observation). A consistent set of Knowledge Management principles is crucial for a law firm, and should be woven into a firm's file retention policy.
Some Basic Elements of a File Retention Policy
Consistent with Rule 1.15(i) and the clear mandate in Rule 1.4 regarding communication with clients, the firm's written retention/destruction policy should be communicated and followed from the outset of the representation, considered continuously throughout that representation, and implemented upon file closing and after:
The Policy Should be Included in the Client Engagement Letter. Communicate with the client and obtain agreement at the outset regarding what will happen to the file upon the close of the matter.
The Policy Should Be Implemented Throughout the Representation. Make sure that to the extent possible, no original documents provided by the client are contained in the file. If maintenance of original documents is necessary, label and segregate them accordingly.
The Policy Should Be Implemented at File Closing. All originals should be returned to the client. An attorney should determine whether an exception (e.g. pending or threatened legal proceedings) might prevent some or all of the file from being destroyed pursuant to the policy. As mentioned above, valuable drafts or cases that may have utility in other matters should be removed (and appropriately named for easy retrieval. (As a substantive matter, attorneys should consider a File Autopsy at the time the file is closed to figure out how to get better on the next one). Strip out unnecessary materials and duplicates. The client should be contacted with a closing letter containing a reminder of the file retention and destruction policy and asking the client to determine what should be done with the file. Once a thorough review and culling takes place, the file can closed and its future destruction date logged. The idea is to have the file closing process be the last time the file needs review.
The Policy Should be Followed. Once the firm has established a policy, it should follow it, by communicating with clients over the life of a file, and undertaking to "destroy files in a way that protects client confidentiality" (that means shredding, not tossing).
As with many processes, there will be some time and effort on the front end, but law firms will experience long-term benefits, financial and otherwise, from effective use of a file retention and destruction policy.
Minimum File Retention Requirement and Adoption of a File Retention Policy
Rule 1.15(i) establishes for the first time in South Carolina the requirement for an attorney or law firm to maintain client files after they are closed for a minimum of 6 years (unless the file is delivered to the client or the client has authorized destruction of the file and no pending or threatened legal proceedings are known to the lawyer). If the client does not request the file within 6 years following the end of the representation, the lawyer may destroy the file unless pending or threatened legal proceedings are known to the lawyer.
The last sentence of Comment 13 to Rule 1.15(i) will be of particular interest to the Bar: "Attorneys and firms should create file retention policies and clearly communicate these policies to clients."
Benefits of a File Retention Policy for Law Firms
The development of a file retention and destruction policy, while daunting, is also a real opportunity for a firm.
First, a properly implemented policy will be more efficient, as fewer resources need be devoted to storage of closed files. (Other efficiencies may result from choosing electronic storage over paper storage for closed files. As the amended rule recognizes, electronic storage of documents is also an option, subject to the requirement that the client's file be "securely" stored and capable of being retrieved-- more on that in a future post).
Second, implementing a file retention policy allows an attorney or firm to "harvest" precedent, briefs and forms, to make those resources available for future use. (Thanks to Jim Calloway for this observation). A consistent set of Knowledge Management principles is crucial for a law firm, and should be woven into a firm's file retention policy.
Some Basic Elements of a File Retention Policy
Consistent with Rule 1.15(i) and the clear mandate in Rule 1.4 regarding communication with clients, the firm's written retention/destruction policy should be communicated and followed from the outset of the representation, considered continuously throughout that representation, and implemented upon file closing and after:
The Policy Should be Included in the Client Engagement Letter. Communicate with the client and obtain agreement at the outset regarding what will happen to the file upon the close of the matter.
The Policy Should Be Implemented Throughout the Representation. Make sure that to the extent possible, no original documents provided by the client are contained in the file. If maintenance of original documents is necessary, label and segregate them accordingly.
The Policy Should Be Implemented at File Closing. All originals should be returned to the client. An attorney should determine whether an exception (e.g. pending or threatened legal proceedings) might prevent some or all of the file from being destroyed pursuant to the policy. As mentioned above, valuable drafts or cases that may have utility in other matters should be removed (and appropriately named for easy retrieval. (As a substantive matter, attorneys should consider a File Autopsy at the time the file is closed to figure out how to get better on the next one). Strip out unnecessary materials and duplicates. The client should be contacted with a closing letter containing a reminder of the file retention and destruction policy and asking the client to determine what should be done with the file. Once a thorough review and culling takes place, the file can closed and its future destruction date logged. The idea is to have the file closing process be the last time the file needs review.
The Policy Should be Followed. Once the firm has established a policy, it should follow it, by communicating with clients over the life of a file, and undertaking to "destroy files in a way that protects client confidentiality" (that means shredding, not tossing).
As with many processes, there will be some time and effort on the front end, but law firms will experience long-term benefits, financial and otherwise, from effective use of a file retention and destruction policy.
