Are You Really in Control of Your Client Files?

Rule of Professional Conduct 1.15 states that lawyers have a professional duty to protect all documents relating to clients by requiring that client property and files be "appropriately safeguarded."

Failure to keep files safe and free from outside perusal is a failure in the duty to act competently in the best interests of a client. The rules and specific time periods for storing or destroying client files vary by jurisdiction. Some states, for example, require a lawyer to securely store a client's file for 10 years after completion or termination of the representation unless lawyer and client make other arrangements.

Lawyers are expected to take precautions against the likelihood of harm to client documents. But what should that entail? Take, for example, the risk of fire. If you are in leased office space, are you or your landlord responsible for buying fire insurance?

If there is specialized coverage for earthquakes, floods and hurricanes, is client property covered? Have you made a complete inventory of the client property you maintain and assigned a value in order to effectively insure it? If client property and files are not stored offsite in a secure location, are they in a locked, watertight and fireproof safe on the premises?

Every potential physical risk – from a natural disaster or terrorist attack to a burst water pipe or an improperly wired electrical outlet – emphasizes the importance of file management and record security. Without fail, back up all computer data and store important records and documents off-site at a secure and specially designed location. Everything you save on the computer should be backed-up on a regular basis. That also applies to crucial paper records such as master files, time and billing records, court dates and appointments, wills, powers of attorney and corporate records.

The frequency of computer back-ups depends on how much work you produce between back-ups and how much you can afford to lose.

Set a policy

To help guide file and document preservation, every firm should have a records management and retention policy that addresses the responsibility for creating and distributing documents, provides for the assessment of documents based on significance and value, and establishes a plan for document preservation to facilitate search and retrieval.

Elements of an effective policy might include:

• Properly defining "document" to include information of all types – electronic or paper, historical record or temporary file.

• Clearly stating who (whether by individual name or function) has retention authority for documents by category type.

• Indicating the length of time for which different kinds of documents should be retained, and identifying the people who should have access to them.

• Clearly stating why retention is necessary (such as to comply with legal or tax obligations).

The process of establishing a policy can also help firms create knowledge management (KM) systems that combine work product documents into a unified system available to all firm lawyers. The KM process only works when the information is classified and categorized consistently and frequently, so all lawyers can access it. A records management policy is the key to doing so.

A first-level records management strategy is to scan everything but important originals like contracts, keep the scanned electronic files in multiple locations for security, then shred everything else – all in compliance with the rules and specific time periods in your jurisdiction for storing or destroying client files.

Some firms are turning to cloud computing for electronic files. In this system, software and servers are owned by service providers and reside in a remote "cloud" location. The law firm that uses cloud computing purchases Internet-based document management or other programs, but does not control storage or reliability.

That can be a problem because cloud computing services have already suffered major service breakdowns that can make documents and programs unavailable – particularly if specialized files or software are not backed up on different servers.

Although no major cloud computing data breaches have been publicized, the possibility of that happening also exists. A firm that uses cloud computing does so knowing it may have connection, security or reliability problems. It's a risk that requires careful evaluation.

Give it back

Instead of simply retaining documents, any lawyer can return notes or securities, as well as original wills and settlement agreements to the client at the conclusion of a matter or by a date certain (for example, once the will is probated in estate planning matters), whichever happens first.

Contacting clients to do this is a great marketing opportunity. It allows you to update your contact list, send letters to former clients offering them the option of picking up their file or have it shredded – and to mention, "Oh by the way, if we can help you in your current challenges, call us."

It's often surprising how many calls will come in, proving a new variation on an old adage: "Out of mind, out of sight." When you as a lawyer get back into clients' sight with such a letter/note, they will remember the things they intended to do with a lawyer and then call you.

Sophistication required

The issues discussed here are vital to any small law firm. Even a sole practitioner can accumulate a dozen bankers' boxes of case files a year, and larger firms can literally fill thousands annually. But until the past decade, firms either allowed these boxes to clutter their office space or relied on outside document management and storage companies to handle archiving and security.

Today's firm must deal with many more physical and electronic files, and manage them in more sophisticated ways. The principles of electronic file and record management are the same as those that have governed paper documents. But the management process itself has changed, and in almost every instance it is for the better by reducing records management time and cost, facilitating records searching, and making information more readily available.

These efficiencies are tangible, and they can be reflected in improved service to the client.