Question of Ethics
Storage of old client files
Q. I am the COLP in a small firm. I recently read of the SRA's problem with regard to the storage of files obtained through interventions and I raised the issue with the managers in my firm, since we still have paper files and we store a large number of old files. I think we should be considering what to do now, but the managers are reluctant to do anything about it until they have to. Should I be pushing this?
Yes, you should. We expect firms to have in place a system which effectively and systematically addresses these issues.
There are clear risks if firms do not have in place systems which properly address the storage and management of old client files. The recent recession, which led to the insolvency or closure of many firms, highlighted this issue. We have seen several cases where firms were no longer able to continue to pay storage warehouses for the storage of their files; where solicitors stored old files in unsuitable places following the closure of their firms; or where solicitors, having failed to deal with the files properly, left their families to sort it out after they died. Clearly, such cases put client confidentiality at risk, as well as raising data protection issues.
SRA Principles 8 (running your business in accordance with sound risk management principles) and 10 (protecting client money and assets) are both relevant in this respect. In order to achieve outcomes (7.2) and (7.4) of the SRA Code of Conduct, you should be taking steps to put in place a policy which addresses these issues.
There are various options you could consider in relation to such a system.
With regard to on-going or new matters, for example, you could include in your retainer letters a provision that where you store files at the end of a matter, you reserve the right to destroy the file after a specified period (it is advisable to always send a reminder of this to the client at the end of the retainer, before placing the file in storage). Alternatively, you could secure your client’s agreement to this when sending the bill at the end of the retainer.
It is also advisable for your retainer letter to address the issue of charging your client a reasonable sum should your client subsequently request the file, particularly if you have to pay a retrieval fee to a storage company. Without such a clause, there is no basis on which such a charge can be made.
With regard to old client files which you are already storing, you could consider:
- handing the file back to former clients where possible
- destroying old files
- scanning and storing the documents in electronic form
Whatever you decide, you need to bear in mind the following:
- As a matter of law, many of the papers on the file will belong to your client(s) and you will therefore need to assess the risk involved if you destroy files without your clients’ consent, both in terms of a possible claim on your indemnity policy and a complaint to the Legal Ombudsman on the grounds that you have provided an inadequate professional service. It may therefore be advisable to seek the views of your insurers.
- Original documents such as title deeds, Wills etc should not be destroyed.
- You should ensure there is no outstanding balance left on your client account before disposing of an old file. If there is, the file should not be destroyed until you have dealt with the outstanding balance. For guidance in this respect, see 'Withdrawal of residual client balances'.
- In deciding what to do with old files, you will want to take into account the likely statutory limitation period for any action which may arise out of the file. In addition, you have obligations to retain certain documents for specified periods, both at law (e.g. for VAT purposes or under the Money Laundering Regulations) and in conduct (e.g. under the Solicitors' Financial Services (Conduct of Business) Rules 2001 and under rules 29.17 – 29.25 and rule 30 of the SRA Accounts Rules 2011).
- If you electronically store the data, you will need to satisfy yourself with regard to any legal issues, such as the evidential value of scanned documents.
- Bearing in mind your continuing duty of confidentiality to former clients, if you are destroying files, you should ensure that it is done in a manner which will not breach that confidentiality.
It is the responsibility of both the managers and you, as the COLP, to ensure that an appropriate procedure is in place and is implemented, and that fee earners are aware of what is required.