Ethics Corner Article
The ethical underpinnings of client file retention are outlined in Ethics Opinion 2015-16/05 – Client File Retention. Federal and State statutory provisions may also bear on this issue depending upon the nature of the work. For example, RSA 293-A:16.01, et seq. (Business Corporation Act) and 17 C.F.R. Part 210 (SEC Regulation regarding Retention of Records Relevant to Audits and Reviews). Lawyers should also remember that financial records relating to client representation must be retained for a minimum of six years. Supreme Court Rule 50(2)(B).
In the absence of a controlling statute, rule, or regulation, there is no uniform minimum retention period for client files. While we suggest as a guideline retaining documents for at least 6 years, the retention period for client files always lies within the lawyer’s professional judgment influenced by the factors described in Ethics Opinion 2015-16/05.
Nevertheless, the retention of client files remains a persistent concern for the New Hampshire Bar. In current practice most documents are created, transmitted, and stored electronically. This may partially alleviate storage costs but does not impact legacy documents maintained in hard copy. Many attorneys and law firms retain client files indefinitely and incur storage costs accordingly. Indefinite file retention is especially challenging for retiring attorneys who have no successor to their practice and cannot locate clients whose matters may have been closed for years.
In light of these concerns, general guidelines and sample client communications may help New Hampshire attorneys develop document retention policies. These Guidelines do not substitute for the lawyer’s independent judgment, risk management practices, and insurance requirements. Compliance will not necessarily guarantee freedom from complaints or liability.
Guideline 1. Notwithstanding any other guidelines described below, the retention or destruction of client files may be determined by agreement between the lawyer and the client.
The attorney and client may agree to retention periods in the engagement letter. Attorneys should consider including language in their engagement letters describing how documents will be retained and for what period of time after the matter is concluded. Including such language in an engagement letter is considered a best practice. The term “document” encompasses all materials created by the attorney in connection with the client’s matter, regardless of whether in hard copy or electronic form.
Attorneys should be cautious when using an agreement to determine file retention in an engagement letter, as such an agreement is made prior to start of representation. The retention period for client files always lies within the lawyer’s professional judgement of each individual case. Attorneys should utilize their independent judgment of the matter when determining if a particular case is likely to require a longer period of file retention beyond what was stated in the agreement when the case first began. Each lawyer should consider the factors outlined in Opinion 2015-16/05, the potential significance of each document, and the attorney’s risk management practices and liability insurance requirements, regardless of an agreement made with the client. It may be prudent for an attorney to include language in the agreement that notifies the client that although a time period is specified, the attorney retains the right to extend that time period if necessary.
Guideline 2. The attorney need not retain copies of documents if the original has been returned to the client.
Attorneys may wish to retain a complete copy of the client’s file for risk management purposes and should check with their liability insurance carrier.
Guideline 3. As a general guideline, all documents should be kept for six (6) years, or a date as provided in Appendix 1, from the date the attorney last renders services on the matter.
This is consistent with Supreme Court Rule 50(2)(B) and the retention periods suggested by many other jurisdictions. This general guideline is neither a safe harbor nor intended to supplant the lawyer’s professional judgment. Each lawyer should consider the factors outlined in Opinion 2015-16/05, the potential significance of each document, and the attorney’s risk management practices and liability insurance requirements.
Guideline 4. All original documents signed by the client, and documents conferring or imposing legal rights or obligations, such as wills, trusts, unrecorded deeds, should be kept for at least six (6) years, or a date as provided in Appendix 1, from the cessation of such rights or obligations. No such documents should be destroyed until the client or owner is mailed written notice at least 60 days before the document is destroyed.
Guideline 5. Other than the documents described in Guideline 4, Documents may be copied and retained in any medium which accurately depicts the original document and from which accurate copies can be made. The originals of any documents so copied need not be retained after copying.
This Guideline reflects the reality that documents are created, transmitted, maintained and stored in electronic form, which is generally more cost effective than storage of paper files.
Guideline 6. Any document which is kept as a permanent public record need not be kept after it is recorded. No such document shall be destroyed until the client or owner of the document is mailed written notice at least 60 days before destruction of the document.
The attorney should confirm that the public record is indeed permanent. For example, court files and UCC-1 financing statements are not. Recording, in and of itself, does not entitle the attorney to destroy the original.
Guideline 7. Subject to the above guidelines, and any applicable statute or regulations, upon termination of practice, any documents still retained by the attorney should be returned to the client or the client should be notified of any successor attorney who agrees to retain the documents.
The attorney should take care to segregate any active files and retain any files that may be required for the attorney’s risk management purposes.
Proposed Additional Guidelines:
- Regardless of an agreement between the attorney and client regarding the length of file retention, the attorney should make a good faith effort to contact the client prior to the destruction of any documents in the client’s file to give the client an opportunity to receive copies of the documents. The client should be given at least 30 days from the date of notice to provide a response.
- Attorneys should maintain a destruction log of any client files destroyed as a permanent record of the firm. The log should include the client’s name, a description of files destroyed, the person who authorized destruction, the date of destruction, whether an outside vendor was used for destruction, and the name of that vendor.
New Hampshire Supreme Court Rule 50(2)(B) requires lawyers to retain specified financial records for a period of six (6) years from the time of final distribution. All other documents can be returned to the client at any time after the matter is concluded.
The following are general guidelines for a lawyer’s retention of other types of client records.
As described in the Guidelines, the general proposed retention period is six (6) years after conclusion of the matter subject to any applicable law, and the attorney’s exercise of professional judgment and risk management practices. As a guideline, certain types of documents should be retained longer:
|TYPE OF RECORD
|6 years after payments end per the final decree
|More than 6 years if renewal, payments, or collections apply
|Organization Charter, Stock/Unit Certificates, Minutes, and Bylaws/Operating Agreements
|Consult RSA 293-A:16.01, et seq. and any applicable Federal law
|6 years after youngest child reaches age of majority
|Documents Under Seal
|Estate Probate Matters
|Tax basis information should be retained indefinitely; all other documents retained at least 6 years after estate is settled
|Real Estate Transactions
|Abstracts, surveys, legal descriptions not of record, and chain of title information indefinitely. All other documents 10 years.
|Real Estate Purchases
|Indefinitely (to the extent the lawyer is maintaining documents for the client)
|Consult applicable state and Federal law
|Life of client
|Consult IRS and DRA requirements
SAMPLE FILE DESTRUCTION LETTER TO FORMER CLIENT
Dear Former Client:
As you may recall, we represented you in a legal matter several years ago. Your matter concluded several years ago, and we closed your file. Under our firm’s office procedures, We would customarily destroy the file at this point in time. If you want us to return the file to you, please let us know by _________ [at least thirty (60) days is suggested]. Unless we hear from you by that date, we will assume you do not want the file and it will be destroyed.
Dear Former Client:
As you may recall, I represented you in a legal matter several years ago. Your matter concluded, and we closed your file. Under our firm’s office procedures, we retain electronic copies of the pleadings, correspondence, emails, and billing records, but destroy all hard copies at this point in time. If you want me to return the file to you, please let me know by _________ [at least thirty (30) days is suggested]. Unless we hear from you by that date, we will destroy all hard copy materials in the file and retain only the electronic documents described above.
Dear Former Client:
As you may recall, I represented you in a legal matter several years ago. Your matter concluded several years ago, and we closed your file. Pursuant to our (attorney-client agreement/engagement letter) we agreed that I would maintain possession of your file for seven (7) years. As that time period is nearing an end, it is our intention to destroy your file. If you want me to return the file to you, please let me know by _________ [at least thirty (60) days is suggested]. Unless we hear from you by that date, we will assume you do not want the file and it will be destroyed.
Not all materials are free and publicly available.
New Hampshire Materials
New Hampshire Public Defender’s Office Document Retention Policy
Ethics Materials from Other States
58 Ala. Lawyer 368 (Nov. 1997)
D.C. Bar Op. 206 (1989)
Survey of Ethics Opinions in 27 States
Insurance Company Materials
Restatement (Third) of the Law Governing Lawyers, § 46