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Ethics Opinion

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R-5

December 15, 1989

SYLLABUS

    A law firm, including a solo practice, is obligated to have a record retention policy or plan in order to meet ethical obligations. Components of a retention policy should include at a minimum: (1) instructions to lawyer and nonlawyer personnel concerning their obligations under the policy; (2) information concerning the location of storage facilities; (3) methods for the eventual disposition of records and files; (4) information concerning retention periods and the establishment of retention periods; and (5) a system for monitoring lawyer and nonlawyer employee compliance with the plan.

    Because of ethical considerations lawyers should encourage clients to participate in the decision-making process involving the ultimate disposition of files assembled for the representation of the client. Client participation may involve offering the file to the client, or reaching an agreement with the client about the disposition of the file after an appropriate retention period. If the client does not want the file, or is unavailable to give directions concerning the file, after reasonable notice the lawyer may determine the disposition of the file in a manner that preserves the confidential and secret nature of the details of the lawyer's representation of the client.

    A lawyer who fails to obtain client input prior to destruction of a representation file is not absolved of legal liability for negligent or improper destruction of property.

    References: MRPC 1.6, 1.15, 5.1, 5.3; CI-743, CI-758, CI-845, CI-922, CI-926.

TEXT

The Committee has been asked to provide advice concerning ethical requirements applicable to the establishment of a law firm's record retention policy. This opinion is meant to provide such advice and serve as general guidelines for the establishment and operation of a record retention policy. These obligations of a law firm to establish a record retention policy and communicate the terms of that policy to lawyer and nonlawyer personnel arise under the provisions of MRPC 5.1.

MRPC 5.1 requires law firm partners to make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurances that all lawyers in the firm conform to the Michigan Rules of Professional Conduct. Because the duties to the client of loyalty and preserving confidences have such paramount importance in the administration of justice and for the attorney-client relationship, any business decisions that affect those duties must not violate applicable ethical provisions. Disclosure of a confidence or secret because of a nonexistent, inadequate, or unobserved retention policy would be a violation of MRPC 1.6. In the absence of specific guidance, lawyers have tended to accumulate files over a number of years, increasing overhead expenses for storage and security to protect the records from unauthorized disclosure. Any policy or procedure which affects who may see protected information about a client or former client, where the information is stored, or how the information is destroyed should be selected with the lawyer's duty of confidentiality in mind.

Not only should retention plans or policies, where they already exist, comply with the Rules, but because of the requirements of MRPC 5.1 and 5.3, each firm is obligated to establish and administer a record retention policy or plan, to educate all lawyers and nonlawyers in the firm as to its operation, and to monitor compliance.

"Law firm" under the Rules denotes a lawyer or lawyers in a private firm, lawyers employed in the legal department of a corporation or other organization, and lawyers employed in a legal services organization. Definitions, MRPC 1.0; comment, MRPC 1.10. A sole practitioner has the same concerns and obligations to protect client information and, under MRPC 5.3, to ensure that the conduct of nonlawyer employees and agents comport with the lawyer's ethical duties. Persons who have control over or access to documents and files of the practitioner should have the same understanding of record maintenance and retention as the sole practitioner, and be monitored for compliance.

A number of factors must be considered in the establishment of a law firm's record retention policy or plan beyond legal ethics, such as tax recordkeeping requirements, compliance with malpractice insurer standards, and specific requirements necessary for particular fields of law practice. It is, of course, not within the jurisdiction of the Committee to provide guidance in those areas. An awareness of those factors, however, is important when a policy is established. See, for example, MCL 600.2137, retention of certain court records; MCL 18.1285, et seq., retention of state agency records; MCL 399.5, authority of State Historical Commission; MCL 600.8344, court retention of civil litigation records.

The management of records and files has become a significant issue to all types of business organizations and a law firm shares this management issue with other types of business organizations. The retention of records may require costly storage and handling. Therefore a policy that permits the disposition of old files and records is desirable in any type of business organization. Federal government agencies frequently issue and update recordkeeping guidelines, and a lawyer with a practice that involves one or more of those agencies would obviously be well advised to consult those guidelines, which are available through the Code of Federal Regulations. See also, Guide to Record Retention Requirements, Third Edition, Commerce Clearing House, August, 1989, and Developing and Operating a Records Retention Program, The Association of Records Managers and Administrators, Prairie Village, Kansas.

A lawyer should also consult the law relating to the destruction of evidence. For a discussion of that body of law and its relation to record retention programs, see, Gorelick, Marzen and Solum, ed., Destruction of Evidence, John Wiley & Sons, New York, 1989.

Nothing in the Michigan Rules of Professional Conduct prohibits a lawyer from removing material from old files and placing that material in the firm's library to assist in future work by the firm, if confidential or privileged data has been concealed through "sanitizing" or the library is otherwise accessible only to authorized persons. Previous memoranda or orders so removed from old files or records can obviously save lawyers significant time in future, similar matters.

Several opinions adopted under the prior Michigan Code of Professional Responsibility remain worthy of consideration on this issue. CI-743 (6/30/82) states that an attorney in possession of a file concerning a former client has an ethical duty, upon request from the former client, to deliver the file, including but not limited to, all "write-ups," "work-up or intake sheets," and "file interview notes," to the former client or newly retained counsel, with the possible exception of the lawyer's personal observation notes or memos with respect to the client's character or competency traits and, particularly, if and when negative.

CI-758 (5/13/82) requires that a lawyer promptly pay or deliver to the client, as requested by a client, the funds, securities, or other properties in the possession of the lawyer, which the client is entitled to receive. The obligation survives the termination of the attorney-client relationship.

CI-845 (11/1/82) states that where a former client requests a legal file, the attorney has an ethical duty to deliver the original file to the former client, or the former client's newly retained counsel. The first attorney may retain a photocopy of the file, but it would be inappropriate to charge the client or newly retained counsel photocopy charges, unless the client consents.

CI-922 (6/12/83) prohibits the indiscriminate destruction of closed client files after the expiration of a retention period.

CI-926 (5/12/83) presented five related holdings:

    (1) When a client demands that an attorney turn over a client's file, open or closed, the attorney is ethically obligated to surrender the original file to the client.

    (2) The attorney may retain a copy of the file even under circumstances where the client insists that the attorney not do so.

    (3) The attorney may not charge the client reasonable copy costs without the client's consent.

    (4) The question of the attorney's right to assert a lien against the file for unpaid fees is a question of law.

    (5) Assuming the law permits a lawyer to assert a lien for fees due, care should be taken to assure that imposition of the lien will not prejudice important rights or interests of the client or other parties.

These opinions do not address, and we do not decide here, whether a client is entitled to multiple copies of file material at no expense. We now turn our attention to the ethical considerations of this inquiry.

The ethical considerations relating to the retention and disposition of client files are found in MRPC 1.6 concerning the protection of the confidentiality of information provided by a client, and MRPC 1.15, relating to the safekeeping of client property. Any record retention policy must consider the provisions and purposes of these two rules.

Lawyers and law firms are obligated to protect the confidentiality of material stored in files. That obligation is codified in MRPC 1.6(a). "Confidence" refers to information protected by the client-lawyer privilege under applicable law, and "secret" refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client. Confidentiality can be protected in the context of the eventual disposition of a file by either the delivery of the file to the client who made the revelation, or the careful destruction of the file with the consent of the client to protect it from falling into the hands of third parties. That either alternative involves some sort of participation by the client seems entirely consistent with the philosophy of the Rules, which focuses on protection of the client's cause.

MRPC 1.15 relates to the safekeeping of "funds and other property in which a client . . . has an interest." In considering this inquiry the Committee gave much consideration to the question of what information "belongs to" or is the "property" of the client, and what "belongs to" or is the "property" of the law firm or lawyer. Some documents in the possession of a lawyer or law firm may have the status of client "property" e.g., a real estate title abstract provided by the client for use in a transaction. If documents do fall into this "property" category, they must be treated in accordance with the segregation and recordkeeping provisions of MRPC 1.15 and they must be offered to the client before they can be destroyed.

Some documents in files assembled for the representation of clients "belong" to the law firm or lawyer, e.g., attorney work product. The law firm and lawyer may properly maintain and destroy the documents which "belong" to the lawyer or law firm without consultation with the client. The important ethical consideration is that the lawyer examine the issue of whether the client must be consulted and whether the provisions of MRPC 1.15 are triggered.

Based on the ethical considerations provided by MRPC 1.6 and 1.15, the Committee recommends that a lawyer first offer the representation file to the client for whom it was assembled before destroying it. The Committee recommends that such an offer be a part of a law firm's record retention policy. The offer could be made in any one of several ways. First, the offer could be made by obtaining instructions from the client with respect to the eventual disposition of the files at the time the attorney-client relationship is established, perhaps as a part of a standard retention agreement that gives due weight to the ethical considerations mentioned. Second, the firm and the client might agree to the course to be followed in connection with the disposition of the files at the time the particular transaction is concluded. Third, the offer may be made by locating the client when the retention period expires and making the offer then. If a former client cannot be located after a reasonable attempt is made to locate the client and after a reasonable waiting period, the lawyer in possession of the file may determine the disposition of the file. A reasonable effort to locate the client would require notice to the client by mail, addressed to the client's last known address.

The Committee strongly believes that such an approach of involving clients in the decision-making process concerning the eventual disposition of files best carries out the ethical views reflected in MRPC 1.6 and 1.15, and therefore urges lawyers to consider including some version of this approach in record retention policies. Clients may reasonably expect valuable and useful information in the representation file that is not otherwise readily available to the client will not be prematurely destroyed. A lawyer who fails to obtain client input prior to destruction of a representation file is not absolved of legal liability for negligent or improper destruction of property.

If a storage facility away from the site of the law firm's offices is used, the firm's retention policy should require that any contract involving that facility should clearly specify the persons permitted access to the facility, the circumstances concerning such access and the system for granting authorization for access to persons other than firm members. Access to information stored in an off-site facility should be treated at least as carefully as a business firm treats access to its trade secrets or other proprietary information. The lawyer should have comparable controls in place for access to records maintained on tape or computer disk.

In CI-922 this Committee stated that a lawyer may not destroy closed files indiscriminately by only checking the closing date on the file and then disposing of all files closed in excess of a particular number of years. Factors to be considered in addition to the closing date include: whether there are requirements in law affecting the retention period or the identification of records that must be retained, such as tax laws, malpractice carrier requirements, or the substantive law to which the file relates (e.g., wills or orders for child support), and whether the firm continues to represent the client on a current basis.

The retention period for a record depends on the content of the record, not on whether the record is maintained on paper, tape or computer disk; the same requirements apply regardless of the storage format.

Finally, a law firm retention policy or plan should include information relating to the proper method of disposing of records when their record retention period has expired. To the extent that the record includes material disclosing confidential, secret or privileged information, the record must be disposed of safely by shredding or incineration, and certainly not by the mere deposit in a waste receptacle. In identifying information that should be destroyed, the retention policy should specify whether the information is to be deleted from tapes and computer disks in addition to disposal of paper copies.

 
     

 

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