November 4, 1993
A lawyer employed by or operating a not-for-profit legal referral service must comply with ethics rules concerning the maintenance and disposition of client intake file materials.
A lawyer employed by a referral service is not ethically required to give notice to a client regarding disposition of intake files of the referral service that do not contain property of the client or potentially valuable or useful materials that the client would reasonably expect to be maintained.
A lawyer employed by or operating a not-for-profit referral service must maintain and dispose of client intake files in such a manner as to preserve client confidences and secrets.
References: MRPC 1.0, 1.6, 1.15, 5.3; R-5, R-6, R-12.
A not-for-profit legal referral service [LRS] is dissolving three and one-half years of operation, and inquires concerning its responsibilities regarding the disposition of client intake files.
The LRS was managed by a nine member Board of Directors, five of whom were lawyers. The LRS office was staffed by one non-lawyer employee, who reported to the President of the Board of Directors, a lawyer. The employee's responsibilities included initial interviews with potential clients seeking referrals to lawyers, and completion of a one page "client intake form." The form included information about the potential client and a space for a "description of case." The employee would then contact one or more lawyers in an effort to complete the referral. The Client Intake Form included blanks in which to track the progress of the referral, and concluded with a blank space in which to provide a narrative "disposition of case."
If a successful referral was made, the participating lawyer maintained a client representation file. The LRS, however, has also maintained files for each potential client which, in almost every case, consists solely of the one page Client Intake Form. In a few cases, there is also a completed questionnaire which the LRS used to track its service. During its operation the LRS made over 800 referrals to about 90 different lawyers. It appears that in some instances the LRS may have files in which no client-lawyer relationship was established with a participating lawyer.
The issue of maintenance and retention of client files has been the subject of this Committee's attention on a number of occasions. It is important to note that this is not the usual client representation file, but a separate independently maintained file of a LRS. Ordinarily, no client-lawyer relationship could be said to exist between the potential client and the LRS. The potential client has no contact with a lawyer at the Lawyer Referral Service, and it is clear that the purpose of the LRS is to link potential clients with lawyers with whom such a relationship may be formed. As stated in the Comment to MRPC 1.0:
"Most of the duties flowing from the client-lawyer relationship attach only after the client has requested the lawyer to render legal services and the lawyer has agreed to do so.
". . . But there are some duties, such as that of confidentiality under Rule 1.6, that may attach when the lawyer agrees to consider whether a client-lawyer relationship shall be established. Whether a client-lawyer relationship exists for any specific purpose can depend on the circumstances and may be a question of fact."
Under the circumstances presented here, ethics rules regarding preservation of client confidences [MRPC 1.6] and maintenance of a client's property [MRPC 1.15] are applicable. The Committee opined in R-6 that the relationship between the staff of a LRS and lawyers involved in its operation invoke the provisions of MRPC 5.3, concerning a lawyer's supervision of nonlawyer assistants. MRPC 5.3 states:
"With respect to a nonlawyer employed by, retained by, or associated with a lawyer:
"(a) a partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer;
"(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and
"(c) a lawyer shall be responsible for conduct of such a person that would be a violation of the rules of professional conduct if engaged in by a lawyer if:
"(1) the lawyer orders or with knowledge of the relevant facts and the specific conduct, ratifies the conduct involved; or
"(2) the lawyer is a partner in the law firm in which the person is employed or has direct supervisory authority over the person and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action."
On this basis, R-6 specifically provided that:
"There is a duty of confidentiality governing the substance of any communication between nonlawyer LRS employees and what prospective clients have communicated about their legal problems."
A lawyer's ethical responsibilities with respect to the maintenance and retention of client files was extensively discussed in R-5. The Committee opined that:
"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."
MRPC 1.6(b) and (d) state:
"(b) Except when permitted under paragraph (c), a lawyer shall not knowingly:
"(1) reveal a confidence or secret of a client;
"(2) use a confidence or secret of a client to the disadvantage of the client; or
"(3) use a confidence or secret of a client for the advantage of the lawyer or of a third person, unless the client consents after full disclosure.
"(d) A lawyer shall exercise reasonable care to prevent employees, associates, and others whose services are utilized by the lawyer from disclosing or using confidences or secrets of a client, except that a lawyer may reveal the information allowed by paragraph (c) through an employee."
MRPC 1.15(a) and (b) state:
"(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. All funds of the client paid to a lawyer or law firm, other than advances for costs and expenses, shall be deposited in an interest bearing account in one or more identifiable banks, savings and loan associations, or credit unions maintained in the state in which the law office is situated, and no funds belonging to the lawyer or the law firm shall be deposited therein except as provided in this rule. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.
"(b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property."
Following the analysis of R-5, the first question is whether the files in question contain property belonging to the clients. In that opinion the Committee opined that a lawyer's representation file may consist of property belonging to a client, such as a real estate title abstract provided by the client as well as property belonging to the lawyer such as lawyer work product. As to property belonging to the client, MRPC 1.15 must be followed and as it relates to file retention, the client must be notified and a return of the property offered before it can be destroyed. Property belonging to the lawyer may be destroyed without consulting the client.
What is the client's "property" is generally considered a question of law. See R-12, citing CI-758 and ABA i1376. Nevertheless, some guidance can be gained from a review of this Committee's opinions. R-5 used the specific example of a real estate title abstract directly given by the client to the lawyer to assist the lawyer in the representation. Clearly, such an item is the "property" of the client. R-5 also noted that clients may reasonably expect that valuable and useful information in the lawyer's representation file will not be prematurely destroyed. On this basis, R-5 recommended adoption of record retention policies that provided for client input on the eventual disposition of files and which would offer files to the client before they were destroyed. Subsequent opinions of the Committee have focused on these recommendations from R-5 and as a result appear to have expanded the concept of what should be considered the client's "property" to include documents created by the lawyer in the course of the representation or other materials that the client may potentially need and where the client can reasonably expect that they will be retained by the lawyer. See R-12; RI-100, RI-109.
Regardless of how expansively we choose to view the idea of what constitutes the client's "property," the LRS intake files in question do not appear to rise to that status. Clearly the intake files are not the property of the client in the sense of the title abstract noted in R-5. Moreover, since the intake files contain only identifying information and a brief recitation of the legal problem in question, its referral to a lawyer and the ultimate disposition of the matter, the files do not contain the sort of valuable or useful information that the potential clients contacting the LRS would reasonably anticipate would be preserved and not "prematurely" destroyed. The same can be said of the questionnaires in those files which mainly recite demographic data and record the potential client's perceptions of the services of the LRS. The files in question do not constitute the "property" of the client. The LRS is not required to give notice to a client regarding the disposition of these materials.
In determining the proper disposition of these files the LRS must take into consideration the requirements of MRPC 1.6. The Client Intake Forms and questionnaires do include information which may be deemed client confidences or secret which must be protected from unauthorized disclosure even in the event where no client-lawyer relationship was ultimately formed. As a result, the LRS would appear to have several options with respect to these files each of which would be permissible under the Michigan Rules of Professional Conduct: (1) The potential clients may be contacted and offered a return of the materials, in accordance with the guidance provided by R-5 and R-12; (2) The LRS may maintain the files in a manner which ensures no unauthorized disclosure. MRPC 1.6. (3) The LRS files may be forwarded to the lawyer who represented the potential client in those cases where this occurred for retention along with the representation file. (4) The LRS may destroy the files in an appropriate manner. The preferred manner is shredding or incineration rather than merely depositing the items in a trash can. See R-5.
The intake files do not contain client property or other items subject to the requirements of MRPC 1.15. The files may be destroyed, retained or forwarded to the client or the lawyer who represented the client so long as client confidences and secrets are maintained in accordance with MRPC 1.6.