Focus on Professional Responsibility

Focus on Professional Responsibility--Ownership of Lawyer’s Files About Client Representations Who Gets the "Original"? Who Pays for the Copies?


by John W. Allen*

*The author acknowledges and appreciates all of the outstanding work and research by the Ethics Committee on this issue, especially by United States Magistrate Judge Virginia M. Morgan and Terry R. Bacon.

Who owns the file? Some well-intentioned, but incorrect, Michigan Informal Ethics Opinions previously told Michigan lawyers that the client (not the lawyer or law firm) owned all of the file, and, in most circumstances, was entitled to the original upon demand, with the copy and delivery costs paid by the lawyer. This not only failed to acknowledge the lack of any definitive Michigan law on the topic, but also was directly contrary to the analogous law applicable to the files and records of other Michigan professionals. In addition, it defied a certain practical consideration: In the modern cyber office, if the file is maintained only on a hard disk, is the client entitled to physical custody of the hard disk? In the year 2000, some parts of these earlier Informal Ethics Opinions no longer made sense.

In its newly issued Formal Ethics Opinion R-19 (8/4/2000) the State Bar of Michigan Board of Commissioners issued its first formal opinion of the new millennium, attempting to square up some past inaccuracies and encourage an interpretation of Michigan law and the Michigan Rules of Professional Conduct consistent with the practical considerations of managing a law office in the new millennium. R-19 concludes that, generally, the file belongs to the lawyer, the client is entitled only to access to the information in the file, and the expense of that access (including copies) should be paid by the client.

None of this changes any decided law or Formal Ethics Opinions approved by the State Bar of Michigan Board of Bar Commissioners. The Ethics Committee does not have the power to do that. R-19 does give guidance as to how to answer these difficult questions until a more definitive answer is given by the Michigan Supreme Court.

The Ownership of Lawyer or Law Firm File Materials Is a Question of Law, Not Ethics

Unfortunately, several informal opinions by ethics committees of this and other jurisdictions repeat the erroneous legal proposition that the lawyer’s or law firm’s file "belongs to" and is "the property of" the client.1 In reality, there is no law in the state of Michigan to support that premise, nor any Michigan law directly on point.

Michigan case law regarding records and other professional relationships (e.g., doctor-patient, accountant-client) distinguishes between the "ownership" of physical materials composing the actual records, and the "right of access to information" contained in those records. For instance, as to a patient’s Michigan medical records, it is invariably concluded that the physical record itself belongs to the health care provider and the patient is entitled to have only the information in those records made available for copying or inspection.2 The same is true as to the client records of a Michigan accountant.3

Formal Ethics Opinion R-19 is in accord with the majority of U.S. jurisdictions, and the proposed Restatement of the Law Governing Lawyers,4 in recognizing the client’s right as one of access to information, not one of custodial ownership. Even the client’s right of access is further limited by the lawyer’s right to assert a valid lien,5 or by the duty to withhold information imposed by a countervailing legal obligation.6

Moreover, Michigan Formal Ethics Opinions R-5 and R-12 are consistent in their view that the ownership of the representation file is a matter of law, not ethics; neither of those formal opinions conclude that the file "belongs to" or is "the property of" the client. To the extent that the informal opinions of the Ethics Committee have previously been based upon an erroneous legal proposition concluding global proprietary file ownership by the client, those informal opinions should be ignored.7

A Lawyer’s Files Are Owned by the Lawyer or by the Law Firm Maintaining Them

The ownership of the physical materials composing the file is to be distinguished from access to the information contained in them. While the physical record itself belongs to the lawyer or the law firm, the client is entitled to have access to that information made available for copying or inspection.

This distinction between ownership and access is consistent with the prevailing law of agency and fiduciary duty.8

It Is the Lawyer or Law Firm Which is Entitled to the Original, Physical Material in the File, Unless the Client Has a Special Need or a Pre-existing Proprietary Right in the Original

A file record maintained electronically on computer hard disk or tape, or upon magnetic tape, microfiche, or microfilm need not be delivered to the client; the client is entitled only to access to the information contained on the physical media, NOT the "original" (which belongs to the lawyer). See Formal Opinions R-5 and R-12.

File materials maintained on paper may be delivered to the client by means of photocopy or electronic format, so long as the information is legible and usable to the client.

Those parts of files assembled by the lawyer for the representation of a client "belong" to the lawyer or law firm; this includes attorney work product. The client may be entitled to the information contained in the attorney work product document if a reasonable need is shown.

No Michigan law exists regarding the client’s right to work product, such as the contents of research or other internal memoranda, which, in the majority of jurisdictions,9 may be withheld from the client if it concerns "internal" issues (such as staff assignments, client misconduct, possible malpractice). A minority give the client access only to the end product.10

On the other hand, the client is entitled to the original if the client has a pre-existing proprietary right in the record, or the document has intrinsic value. For instance, if the client provided a business record, ledger, tape, computer media, or other such document to the lawyer, then this actual, physical property (the original) should be returned to the client; the lawyer may retain a copy, whether or not the client consents. This same exception would also include documents that have intrinsic value, such as the original of a will, promissory note, bond, stock, certificate of title, evidence of ownership, or other operative documents. In these instances, the intended purpose of the document requires the original; the document has intrinsic value, over and above the information contained within it.

Sometimes the original of the document may also be necessary in order for full use to be made of it. Examples would include a questioned document, when the authenticity of its content or signature cannot be accurately determined without examination of the original. In those instances, access might include at least temporary custody or nondestructive use of the original document, film, tape, or media.

Unless Specifically Agreed or Required by Law, MRPC Does Not Require That the Client Be Provided with the "Internal Records" of the Lawyer or Law Firm

Internal records would include accounting ledgers, checking account records, and "draft" statements or bills, as well as time records for lawyer’s work.

A client may be entitled to copies of or access to such internal records, if the entitlement arose by contract, through the terms of engagement or fee agreement, through discovery in litigation, or volunteered by the lawyer or firm, but MRPC does not require this. Generally, ownership and access to these internal records is exclusively in the lawyer or firm.11

Notwithstanding the above general principle, as to trust funds or property belonging to another, MRPC 1.15(a) requires that the lawyer maintain "complete records," and MRPC 1.15(c) does require that the client be given an "accounting" of the receipt and disbursement;12 nevertheless, this does not require providing the client with the original, internal record of the trust account. Rather, the client is entitled to the information on those records, as it pertains to an accounting of trust funds or property related to that client.

Since the Client’s Right Is One of "Access" (Not Custody or Possession), It Is the Client Who Should Bear the Cost of Copying and Delivering Copies of the File Records

The proposition that the lawyer should bear the cost of copying is merely a misguided consequence of the erroneous conclusion that the file is the property of the client; there is no independent basis for this proposition anywhere in MRPC or other law. Previous informal opinions [RI-203 (3/29/94); CI-845, (11/1/82) and CI-926, (5/12/83)] (which shifted the copying charges to the lawyer) are incorrect.

The client may be given access for inspection and copying, but that does not include also being given a physical or electronic copy of the material. The cost of making that physical or electronic copy, and the delivery of it, could be substantial, and should be born by the client.

However, when the client does maintain a proprietary interest in specific file material, then it is the lawyer who should bear the cost of copying, if the lawyer wishes to retain a physical or electronic copy of the record.

Required Document Retention/Destruction Practices Pertain Only to Client Property, or to Documents for which a Client Would Likely Demonstrate a Need

Formal Opinion R-12 supports an interpretation of Formal Opinion R-5 as having established the lawyer’s duty to have in place a "plan or procedure" governing safekeeping and disposition of "client property," including those parts of the representation file that belong to the client or for which the client has a need.13 Such items include those furnished to the lawyer by or on behalf of the client, the return of which could reasonably be expected by the client, and original operative documents or those having intrinsic value (e.g., contract, promissory note, will), especially when not filed or recorded in public records.

As stated by Formal Opinion R-12, if the "original file" does not include documents owned by the client, or if the file contains only documents that are available from the public record, then the client’s interests are reasonably protected by a microfilm, or other electronic copy; the lawyer need not obtain client consent or input before destroying a paper file that is subsequently maintained on microfilm or electronic media.

There is the risk that the client may have a "need" for the original document, tape, or other media. Thus, the destruction of the original file without the client’s consent does present some risk to the lawyer or law firm. For this reason, some lawyers and law firms make a judgment about the reasonable time period in which such a need might materialize, and designate that time period as the reasonable time that the paper file will be maintained, after which it may be destroyed. For records of funds or property held in trust, the minimum record retention period is five years after the termination of the representation. MRPC 1.15(a). For other records, it is discretionary and should be part of the "plan or procedure" required by Formal Opinion R-5.

It Is Recommended (But Not Required) That Issues Relatingto File Ownership and Access, Copy Charges for Information Requests, and File Destruction Practices, Be Described by the Lawyer to the Client in the Terms of Engagement or Some Other Appropriate Disclosure

Until the Michigan Supreme Court does something different, most of these issues can be resolved by an agreement between the lawyer and client contained in the terms of engagement. A sample engagement provision in a client retainer agreement is as follows:

Sample Engagement Provision Re: Representation Files

Once our engagement in this matter ends, we will return the file materials provided by you upon your request. You agree that we may retain, at your expense, copies of the file materials. You also agree that any materials left with us after the engagement ends may be retained or destroyed, at our discretion. We reserve the right to make, at our expense, certain copies of all documents generated or received by us in the course of our representation. When you request documents from us, copies that we generate will also be made at your expense.

Our own files pertaining to the matter will be retained by the firm (as opposed to being sent to you) or destroyed. These firm files include, for example, firm administrative records, time and expense reports, personnel and staffing materials, credit and account records, and internal lawyers’ work product (such as drafts, notes, internal memoranda, legal research, and factual research, including investigative reports prepared by or for the internal use of lawyers). Any documents that are retained by the firm will be transferred to the person responsible for administering our records retention program. For various reasons, including the minimization of unnecessary storage expenses, we reserve the right to destroy or otherwise dispose of any documents or other materials retained by us within a reasonable time after the termination of the engagement.

Footnotes

1 Examples include Michigan Informal Ethics Opinions (under the Michigan Rules of Professional Conduct) RI-62 (10/10/90); RI-86 (5/22/91); and RI-100 (9/30/91). Similarly confusing statements were made in Michigan Informal Ethics Opinions under the former Michigan Code of Professional Responsibility CI-845; and CI-926.

2 McGarry v J A Mercier Co, 272 Mich 501, 503; 262 NW 296.297 (1935). Also Michigan Opinion of the Attorney General (OAG) 1978, No. 5125, p 454 (5/30/78), which says: "The ownership of the physical materials composing the actual records is to be distinguished from the information contained therein. While the physical record itself belongs to the health care provider, the patient is entitled to have that information made available to him for copying or inspection..." (Emphasis added.)

3 Pursuant to MCL 339.714, working papers, memoranda, and similar documents made by a CPA or employee of a CPA "remain the property of the certified public accountant unless there is an agreement to the contrary."

4 See Restatement, § 58 (Proposed Final Draft No. 1, March 29, 1996).

5 A good summary of attorneys’ liens can be found in Clarifying Liens, 73 MBJ 690 (July, 1994); nevertheless, a client’s good faith need for the information could trump the lawyer’s right to a lien.

6 As summarized in the Restatement of the Law Governing Lawyers (Proposed Final Draft No. 1, March 29, 1996), § 58, Comment C:

A lawyer may deny a client’s request to retrieve, inspect, or copy documents when compliance would violate the lawyer’s duty to another (see Restatement, Second, Agency § 381). That would occur, for example, if a court’s protective order had forbidden copying of a document obtained during discovery from another party, or if the lawyer reasonably believed that the client would use the document to commit a crime (see § 32). Justification would also exist if the document contained confidences of another client that the lawyer was required to protect.

Under conditions of extreme necessity, a lawyer may properly refuse for a client’s own benefit to disclose documents to the client unless a tribunal has required disclosure. Thus, a lawyer who reasonably concludes that showing a psychiatric report to a mentally ill client is likely to cause serious harm may deny the client access to the report (see § 31, Comments c & d; § 35, Comment c). Ordinarily, however, what will be useful to the client is for the client to decide.

7 Michigan Informal Ethics Opinions are prepared and issued by a subcommittee after being circulated to subcommittee members and the chairperson has resolved any conflicting views. Informal opinions generally deal with situations of limited and individual interest or application. Informal opinions bear the designation "RI" for "informal" and the opinion number. Formal Ethics Opinions are those adopted by the Board of Commissioners, and reflect the policy of the State Bar. They bear an "R" designation. Neither Formal nor Informal Ethics Opinions have the force and effect of law, and neither may be used as an absolute defense to a charge of ethical misconduct. Rules of the Ethics Committee, R-7-B and 8.

8 See Restatement (Proposed Draft No. 1, March 29, 1996), § 58, Comment c, citing Restatement, Second Trusts, § 173 and Restatement, Second, Agency, § 381.

9 See, e.g., Sage Realty Corp v Proskauer, 91 NY2d 30, 689 NE2d 879 (1997); Resolution Trust Corp v H, PC, 128 FRD 647 (ND Tex 1989); Maleski v Corporate Life Ins Co, 163 Pa Commw 36, 641 A2d 1 (1994); Matter of Kaleidoscope, Inc, 15 Bankr 232 (Bankr ND Ga 1981), rev’d on other grounds, 25 Bankr 729 (ND Ga 1982); Colo Bar Ass’n Ethics Comm Op 104 (April 17, 1999); Connecticut Bar Ass’n Comm on Professional Ethics, Op 94-1 (1994); Ohio Sup Cr Bd of Commr’s on Grievances and Discipline, Op 92-8 (April 10, 1992); State Bd of Cal Standing Comm on Professional Responsibility and Conduct, Formal Op 1992-127 (1992); Oregon State Bar Ass’n, Formal Op 1991-125 (1991); and State Bar of Ga Formal Advisory Op 87-5.

10 Under the so-called "end product" theory, the end product of the lawyer’s work (the pleading, contract, etc.) belongs to the client, but the lawyer owns the work product containing his mental impressions, research, analysis, etc. (i.e., his notes, research memoranda, etc.) See Federal Land Bank v Federal Intermediate Credit Bank, 127 FRD 473, modified, 128 FRD 182 (SD Miss 1989); Corrigan v Armstrong, Teasdale, Schlafly, Davis & Dicus, 824 SW2d 92 (Mo App 1992); Alabama State Bar, Formal Op RO-86-02 (Dec 23, 1987); Arizona State Bar Comm on Rules of Professional Conduct, Op 92-1 (March 12, 1992); Illinois State Bar Ass’n, Op 94-13 (Jan 1994); North Carolina State Bar Ethics Com RPC 178 (April 14, 1994); Rhode Is Sup Ct Ethics Advisory Panel, Op 92-88 (1993); Iowa Supreme Ct Board of Prof’l Ethics and Conduct Op 82-23 (Dec 6, 1982).

11 See Restatement (Proposed Final Draft No. 1, March 29, 1996), § 58, Comment c:

A lawyer may refuse to disclose to the client certain law firm documents reasonably intended only for internal review, such as a memorandum discussing which lawyers in the firm should be assigned to a case, whether a lawyer must withdraw because of the client’s misconduct, or the firm’s possible malpractice liability to the client. 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. Even in such circumstances, however, a tribunal may properly order discovery or the document when discovery rules so provide.

12 The requirements for Michigan lawyer trust accounts are summarized in Formal Ethics Opinion R-7 (April 27, 1990).

13 See Record Retention Overview, 74 MBJ 1196 (November, 1995); and Kerr, Creating a Record Retention Policy, 69 MBJ 684 (July, 1990), (which includes a sample policy).



John W. Allen*
John W. Allen is a partner with Varnum, Riddering, Schmidt & Howlett, LLP, in Kalamazoo. He is currently chairperson of the Standing Committee on Professional and Judicial Ethics (the Ethics Committee) of the State Bar of Michigan.


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