Legal & Regulatory Updates
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Document Retention and Destruction Practices
BY SVIATLANA LIASHCHYNA
Firms handle an overwhelming number of documents daily, most of which fall into one of these four categories: client legal files; firm financial records; firm business records (ex. internal policies, procedures, compliance programs, quality control reviews, etc.); and firm HR records.
In accordance with the Model Rules of Professional Conduct, “upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as …
surrendering papers and property to which the client is entitled... The lawyer may retain papers relating to the client to the extent permitted by other law." Following the Model rules, many states adopted rules suggesting specific client document retention time periods for lawyers that range from 6 to 7 years. Some states provide flexible retention periods or require lawyers to incorporate their retention and destruction policies into the client engagement documents.
Due to the nature of default legal services, many of a firm’s clients include specific document retention and destruction requirements into their retention agreement. These requirements should always be carefully examined by the firm.
It is also important to consider any client document destruction holds and any foreseeable litigation. Ensure that any litigation holds provided by clients are saved and accessible to all appropriate employees.
In In re Lewy v. Remington Arms Co., Inc., 836 F2d 1104 (8th Cir. 1988) a defendant appropriately destroyed documents after their retention period expired. The court looked at whether the defendant’s retention policy was reasonable under the facts, whether the retention policy was reasonable for the specific document type, and whether the policy was instituted in bad faith. The court held that if the defendant knew or should have known that the document would become material, the documents should have been retained. The court further stated that the defendant could not “blindly destroy documents and expect to be shielded by a seemingly innocuous document retention policy.”
As technology continues to develop, the retention requirements for electronic file storage are essential for any firm’s document retention and destruction policy. Electronic storage provides many advantages to the firms; however, it also requires the implementation of a consistent and reasonable document retention policy.
Sharing trends and best practices to help you improve your processes and maximize your profitability.