Ethics

In the past, law firms chose office locations near the courthouse and remained there for decades. In the modern landscape, with clients spread throughout a city and downtown rents skyrocketing, law firms are no longer staying in one central location.

Moving a law firm once involved little more than packing up boxes of files and transporting them to a new location. Old documents were left in their boxes and sent off to "storage." Files from ongoing matters were unpacked in the new office and re-filed largely in accordance with the firm's traditional system. Because the likelihood of another move was seen as remote, firms had little reason to consider, much less plan, for additional moves.

Then the world changed again. As the real estate market transformed and technology made a firm's physical location less significant, law firms and attorneys began moving with greater frequency. Now, even before expiration of their leases, many law firms carefully consider their options and, in many instances, choose to relocate.

For firms with short histories, these moves resemble the old system of packing up paper files and loading computers for transport to a new location. But for law firms and practices that have lasted for decades, if not centuries, a move from one location to another can produce a host of legal, ethical and professional issues.

When attorneys relocate today, they face many more challenges than in the past. For example, firms on the move must determine where old paper files will be stored and must consider unique cybersecurity risks in transporting confidential e-documents to new computer networks and servers.

Obligations Under California Professional Rules

Attorneys are obligated to maintain information necessary to fulfill professional duties and to protect client confidences. For example, Rule 3-700 of the California Rules of Professional Conduct requires that a lawyer whose employment has been terminated must, "[s]ubject to any protective order or non-disclosure agreement, promptly release to the client, at the request of the client, all the client papers and property." See also Cal. Bus. & Prof. Code § 6068(n). Rule 3-700 clarifies that this obligation includes all "items reasonably necessary to the client's representation, whether the client has paid for them or not.

If documents needed to protect client interests have been destroyed, the law firm not only renders itself unable to defend against any potential legal malpractice claim, but also opens itself to a bar grievance for failing to take the steps necessary to surrender papers and property to which the client is entitled.

Written Document Retention Policy

The first and most important step for every law firm is to adopt a written document retention policy specifying the practices, procedures, and protocols for every employee in the law firm. Ad hoc or informal "understandings" are insufficient and create unacceptable risks.

One risk of an ad hoc policy is that the document retention practices of the attorneys, practice groups and other employees may vary significantly throughout the firm. When that happens, a more conservative standard followed by some can be used as evidence of negligence by others. Furthermore, it is difficult for law firms without a written document retention policy to ensure that reasonable steps have been taken to preserve necessary client files and information.

One of the most important features of any document retention policy is timing. Rule 1.15 of the ABA's Model Rules of Professional Conduct requires that attorneys preserve client documents for five years after termination of the client's representation.

However, in California, "there is no shortcut, 'bright line,' rule for determining how long [client documents] contained in a closed file may be must be maintained or when they may safely be destroyed." Cal. State Bar, Formal Opinion No. 2001-157. Instead, the State Bar's Standing Committee on Professional Responsibility and Conduct has clarified the basic principle of maintaining client files: "[T]he attorney may destroy a particular item from a former client's file if he or she has no reason to believe that the item will be reasonably necessary to the client's representation, i.e., that the item is or will be reasonably necessary to the former client to establish a right or a defense to a claim." Id. The Committee did note, though, that the attorney should evaluate any statutory obligations related to the specific client matter; for example, when dealing with estate planning documents, the California Probate Code allows destruction only under specific circumstances and otherwise gives the attorney no right to destroy client papers—no matter how much time has passed. Id. Therefore, in deciding whether to store or destroy, firms and attorneys in California should be careful to consider the particular circumstances of the client matter and should first review the statutory sections of the particular area of law involved.

Generally, documents from closed files should be divided into three categories. The first category is documents, such as originals, that have special legal significance (e.g., wills, leases, contracts). These documents should be kept, at a minimum, for the number of years required for full operational effect of the document.

The second category encompasses nearly all other documents. These documents should be retained at least until the statute of limitations for any legal malpractice claims has lapsed. Under California law, the limitations period for a legal malpractice claim is generally the earlier of: one year after the client discovers facts constituting the lawyer's wrongful act or omission or four years from the date of the lawyer's wrongful act or omission. Cal. Code of Civ. Proc. § 340.6. Where the client's claim of wrongdoing is based on a criminal matter, the plaintiff has two years following post-conviction exoneration to commence the legal malpractice action. See id.

The third category includes documents subject to a "litigation hold." A litigation hold often exists when a pending litigation or government investigation may implicate the documents. The law firm must retain the documents until the litigation hold is no longer in effect.

If a law firm plans to move but does not have a written document retention policy, it should adopt one. Upon adoption, the law firm should train all staff and inform all clients to ensure compliance. It is best to inform clients of the law firm's document retention policy early, in the engagement letter or fee contract. Every document retention policy should afford clients the opportunity to retrieve their documents before destruction.

The State Bar's Guidance

The California State Bar, in Formal Opinion No. 2001-157, offered some additional guidance for firms deciding whether to store or destroy old client documents:

  1. As to original papers and property received from the former client, including estate planning documents delivered to the attorney pursuant to the Probate Code, the attorney's obligations are determined by the law of deposits (bailments), Civil Code sections 1813 to 1847, and Probate Code sections 700 to 735.
  2. As to other client papers and property to which the former client is entitled under Rule 3-700, before disposing of the items, the attorney first must use all reasonable means to notify the former client of the existence of the file, of the former client's right to examine and retrieve the contents, and of their intended destruction. While there is no specific authority as to what such a notice should contain, the purpose of the notice will be advanced if it states plainly that the files in question will be destroyed unless contrary instructions are received by the attorney by a specific date, and gives a reasonable opportunity to respond.
  3. If the attorney has no reason to believe that the items proposed to be destroyed include things required by law to be maintained or that would be reasonably necessary to the former client to establish a right or a defense to a claim, then if the former client cannot be located by any reasonable means, or fails to respond to the notice after a reasonable time, the attorney may destroy the items.
  4. If the attorney has reason to believe that the file contains items that are required by law to be retained or that the client will reasonably need to establish a right or a defense to a claim, the attorney should inspect the file for such items and should retain such items for the period required by law or according to the reasonably foreseeable needs of the client. The balance of the file may be destroyed.
  5. The attorney at all times must protect the confidentiality of the contents of the files, including the fee agreement. (Bus. & Prof. Code, §§ 6068, subd. (e), 6149.)