Practice Tips on File Retention and Destruction

Introduction 

Although there is no rule that specifically lays out the requirements for client file retention and destruction, the Texas Disciplinary Rules of Professional Conduct and a few ethics opinions provide practice tips, as does common sense.

Applicable Rules and Ethics Opinions 

When establishing a file retention and destruction policy, ensure that the retention and destruction of client files do not violate the following rules or stray from the guidance in the following ethics opinions:

1. Texas Disciplinary Rules of Professional Conduct 
   
   1. Rule 1.05: Prohibits disclosure of confidential information of current or former clients except in certain circumstances set forth in the rule.
   2. Rules 1.09 and 1.10: Prohibit a lawyer from taking adverse action against a former client related to the matter in which the lawyer represented the client.
   3. Rule 1.14: States client funds and property must be kept separate from lawyer’s own property in a trust account and records of the account shall be maintained for 5 years after termination of the representation.
   4. Rule 1.15(d): A lawyer must take reasonable steps to protect a client’s interest when representation ends, including giving reasonable notice to the client, allowing time for the client to hire another attorney, returning documents or property to the client, and refunding any unearned fees. A lawyer may retain documents related to the client if permitted by law provided it does not prejudice the client in the subject matter of the representation. 
   5. Note regarding rules 1.14 and 1.15: Rule 1.14 relates to how a lawyer should handle funds or other property that belongs to a client or third party. Ethics Opinion 627 clarifies that “other property” refers to property that is "similar to cash (such as bonds and stock certificates).”
      
      
2. Ethics Opinions
   
   1. Ethics opinion 570: The client is entitled to obtain the contents of the file, including attorney notes and other work product related to the lawyer’s representation of the client, unless the lawyer is permitted or required to retain documents and can do so without prejudicing the interests of the former client in the subject matter of the representation.
   2. Ethics opinion 627: While Texas Disciplinary Rules of Professional Conduct do not provide specific guidance regarding the disposition of client files, they do provide basic principles and values:
      
      1. Confidential information of current and former clients may not be disclosed except in narrow circumstances.
      2. Client has the right to the client’s file subject to limitations protecting the interests of other people, or in some situations, the interests of the client.
      3. If there’s a reasonable likelihood that the client’s interests would be harmed by the destruction of the file documents and information, do not destroy the file. Factors to consider in making this determination include:
         1. Any client instructions regarding the file; 
         2. The amount of time that’s passed since the file was closed and whether all applicable statutes of limitations for claims against the client and the lawyer, including malpractice claims against the attorney, have passed; 
         3. The nature and content of the file, based on the attorney’s memory or case file labeling. A detailed review is not required before closing, but there should be an adequate basis for assuring that items like jewelry or original deeds are not destroyed. If no adequate basis exists, there should be a brief visual review of the file, at minimum; and 
         4. Normal business practices, preferably reduced to writing.
      4. The cost of storing the file until it can be destroyed is borne by the attorney unless otherwise agreed by client. However, if the client asks for the file to be stored longer than required, the cost of storage can be charged to the client.
   3. Ethics opinion 657: A client’s file will usually consist of paper documents, electronically stored documents or information, or some combination of the two. Generally, a lawyer can provide the file to the former client as it’s maintained or, at the lawyer’s expense, convert some or all of it to paper or to an electronic format. The file contents must be reasonably accessible to the ordinary client. If any information is kept in a special format that is not reasonably accessible to the ordinary client, the lawyer must bear the cost of converting the information to a reasonably accessible format or print the information in a format that can be read by the client. If the file contains anything with unique or significant value in its original form, it should be returned to the client in its original form.

Practice Tips

1. Develop or Revisit Your File Maintenance Policies
   
   1. Consider maintaining digital client files and eliminating or minimizing paper files.
   2. Determine procedures for opening and closing a client file, handling documents and correspondence, reviewing file contents, returning the file to the client, and storing and destroying the client file. For more details, see #3 below.
   3. Maintain a separate list of all clients, accessible by staff, with critical information, such as:
      
      1. The file number or identifier with location of file (paper and electronic)
      2. Whether the file is currently open or closed
      3. The client’s name, latest address, phone, and email
      4. A brief description of the matter and relevant court information
      5. The attorney(s) and staff, if any, working on the file
      6. A list of any client property or original documents in the file
      7. A record of funds held in IOLTA Account
   4. Name a Custodian who can assist if you are temporarily or permanently unable to practice law.
   5. Provide the location of passwords for access to client file records, firm financial records, and other practice related databases to your Custodian.
2. Create a File Retention Policy Appropriate for Your Practice
   Ask your malpractice carrier for file retention guidance and, at a minimum, include the following information:
   1. How the client will be notified of your file retention policy. See Practice Tip #4 below. 
   2. How the client can obtain their file once the case is closed.
      
      1. Address the cost of postage if the client cannot pick it up.
      2. Consider a policy of offering to return the client file at the close of representation and retaining an electronic copy.
   3. How and where the file will be stored,
   4. How long the file will be stored before destruction,
   5. Whether the client will be notified prior to destruction or whether the only notice will be provided in the engagement letter/retainer agreement and termination letter,
   6. What, if anything, the client will be charged for storage beyond the destruction date. See Ethics Opinion 657.
   7. What will be done if the client cannot be located to return the file or any client property, or to provide consent to destroy the file. Depending on the situation, consider the following options:
      
      1. Making a report to the Texas Comptroller regarding funds in the lawyer’s trust account when the lawyer has not been able to locate or identify the owner for longer than three years. See Tex. Comm. On Professional Ethics, Op. 602 (2010) (https://www.legalethicstexas.com/resources/opinions/opinion-602/).
      2. Depositing original wills with the applicable county or probate clerk. See Chapter 252 of the Texas Estates Code (https://statutes.capitol.texas.gov/Docs/ES/htm/ES.252.htm).
      3. Petitioning the court for authority to destroy the file.
3. Develop Procedures for Execution of the File Retention Policy Regarding:
   
   1. Opening and closing a client file, including:
      
      1. Assigning a unique file number or identifier for each client matter,
      2. Determining when a file can be closed, and
      3. Developing a file closing checklist.
   2. Handling documents and correspondence during representation, including
      
      1. Indexing physical files that involve a lot of physical documents and records,
      2. Securing physical files at the close of the business day,
      3. Scanning and filing any physical files or documents received within X business days, and
      4. Preserving email correspondence (incoming and outgoing) related to the case and archiving email accounts for departing employees.
   3. Reviewing and culling file contents, including
      
      1. Reviewing the client file within X days of the conclusion of the client matter,
      2. Recording the date that the file was reviewed and culled,
      3. Culling any protected information from the client file.
      4. Returning original documents and valuables to client within X days along with a summary of the document retention policy,
      5. Reviewing and culling closed files in storage that have not yet been reviewed.
   4. Client notification to retrieve the file and/or of the file’s destruction,
   5. Determining how long to store the file if the client does not want the file,
   6. Secure storage of the file, and
   7. Destruction of the file in a way that protects all confidential information.
4. Include your File Retention Policy in your retainer agreement and in your termination letter
   
   1. Sample client file retention language to insert in your engagement letter or retainer agreement: 
      

      You agree that it is your responsibility to obtain your file. We will notify you when it is available but will only do so once. If your file is not picked up within sixty days after we notify you that it is available, we can assume that you do not want it. In that case, we will retain the file for [X] years and then destroy it in accordance with our file retention policy and procedures and the Texas rules of professional responsibility for lawyers. If you want us to retain your file beyond [X] years, you agree to pay the reasonable costs of storage. If you do not seek the return of your file when we notify you that it is available, you may request it at any time prior to its destruction. Other than the initial notification that your file is available, we will not send any further notices reminding you that it is available to be picked up or regarding when the file will be destroyed or that destruction has taken place.

      If [I/we] are temporarily or permanently unable to practice law due to unforeseen circumstances, you consent to a named custodian or an attorney licensed in Texas and in good standing with the State Bar of Texas reviewing your client file, including confidential information, and determine what steps, if any, are needed to preserve any rights you may have in your case or to notify you and return your file to you or another attorney at your direction.

   2. Sample client file retention language to insert in your termination letter:
      

      Your file is ready to be picked up. If it is not picked up within sixty days, we will assume you do not want it. We will keep your file for [X] years, after which we will destroy it. If you want us to keep your file longer than [X] years, we are happy to do so but we will need to charge you the reasonable cost for storage.  If you don’t want your file at this time but later decide you want it, you can request it at any time before it is destroyed.

      If you choose for us to store your file and [I/we] become temporarily or permanently unable to practice law due to unforeseen circumstances at this time, you consent to a named custodian or an attorney licensed in Texas and in good standing with the State Bar of Texas reviewing your client file, including confidential information, to determine what steps, if any, are needed to preserve any rights you may have in your case or to notify you and return your file to you or another attorney at your direction.

5. When a client relationship terminates, follow the File Retention Policy you established and:
   
   1. Review the file
      
      1. Cull any protected information from the client file. Specific content in the file may be reviewable by the attorney but restricted from disclosure to the client. Be watchful for protective orders, markings that limit disclosure to “Attorney’s Eyes Only,” or other restrictions that may apply by statute, rule, or standing orders, such as:
         
         1. Criminal case discovery obtained from the prosecution may be restricted from the client. Tex. Code Crim. Proc. art. 39.14(f), (g) and ethics opinion 657.
         2. Trade secret and proprietary information discovery may be restricted from the client. Misc. Order 62, ¶22 and Ex. A (N.D. Tex. Nov. 17, 2009) (standing protective order applicable to patent cases in the Northern District of Texas); Local Rules for the United States Court for the Eastern District of Texas, app. B, P. R. 2-2 (local rule applicable to patent cases in the Eastern District of Texas).
         3. National security information discovery may be restricted from the client. Classified Information Procedures Act (“CIPA”), 18 U.S.C. app. 3; see U.S. v. Bin Laden, 2001 WL 66393 *2 (S.D. New York 2001) (“defense counsel have been cleared to review a category of classified documents that they may not share with their clients”).
      2. Return original documents/ valuables with a summary of the document retention policy. Files may contain original wills, signed contracts, stock certificates, promissory notes, property deeds, trust instruments, or other original documents like birth and marriage certificates and passports. Such items must be safeguarded, returned to the client, or disposed of, if at all, by court order.
      3. Send the client a closing letter.
   2. Return the file to the client when the representation ends or after an agreed time
      
      1. If the file is completely electronic, returning it will be relatively easy. If paper, encourage client to come get it or mail/ship it at the client’s expense. You may want to make a copy at your own expense.
      2. If you keep the original file, ensure all valuables are returned to the client without delay, tell the client when the file will be destroyed, and what amount, if any, will be billed to them for storage. 
   3. Storage
      
      1. Store in a location that would prevent an unauthorized person from having access to the contents of the file.
      2. Store in a fireproof, waterproof location.
      3. Per Ethics Opinion 627, the cost of storing the file until it can be destroyed is borne by the attorney unless otherwise agreed by client. However, if the client asks for the file to be stored longer than required, the cost of storage may be charged to the client.
   4. Destroy file only after:
      
      1. You remove all valuable property and original documents and return them to the client (including excess IOLTA funds). 
      2. You confirm that the destruction of the file will not prejudice the client. If destruction will do so, preserve the file, or return it to the client (subject to limitations protecting the interests of other people, or in some situations, the interests of the client). 
      3. The expiration of: 
         1. All applicable statutes of limitations for claims against the client and the lawyer, including malpractice claims. Do not ask a client permission to destroy the file before they do.
         2. All rules, regulations, court orders, laws requiring a retention period longer than the applicable statutes of limitations.
         3. In criminal matters, in addition to statute of limitation issues, a convicted client’s sentence and all appeals.
   5. Consider maintaining electronic files
      They minimize the need for a paper file, reduce storage costs, and can be easily transferred to the client at the close of the case.

File Retention Policy Practice Tips Checklist: 
See the Checklist when developing your own file retention policy.

Sample File Retention Policies

1. Consult your malpractice carrier for appropriate file retention policy contents.
2. See the Sample File Retention Policy 
3. See the following links from other jurisdictions suggesting sample language for file retention policies which are not necessarily compliant with the Texas Disciplinary Rules of Professional Conduct.
   
   1. Sample File Retention Policies:
      
      1. Lawyers Mutual Liability Insurance Company of North Carolina
      2. California Lawyers Association sample policy.
   2. Best practices
      
      1. Washington Bar Association – best practices and WBSA checklist.
      2. State Bar of Michigan File Retention Toolkit guidance.