In order to simplify the task of closing files, a lawyer should establish a file closure policy addressing when and how files should be closed.

Establishing When to Close a File

A file should be closed only after all matters relating to the file have been completed and, in particular, after all undertakings have been satisfied.

Prior to closing a file, the lawyer should ensure that:

• all of the work that the lawyer was retained to complete has been completed;
• the lawyer has reported to the client;
• the client has paid the final account or the firm has written off any balance owing on the final account;
• all undertakings have been satisfied and all trust conditions have been honoured; and
• the lawyer has dealt with any balances to the credit of the client in the lawyer’s trust account.

Preparing the File to be closed

The following steps should be taken before closing a file.

1. Dealing with Client Property

A lawyer has an ethical obligation to care for a client’s property as a careful and prudent owner would when dealing with like property and must observe all relevant rules and law about the preservation of a client’s property entrusted to the lawyer. (See section 3.5 of the Code of Professional Conduct.)

The question of what documents must or should be handed over to a client upon the termination of a retainer is a matter of law. The following cases and materials have dealt with the issue of document ownership and may be of assistance to lawyers in determining issues relating to document ownership:

Aggio v. Rosenberg, 24 C.P.C. 7, 1981

Alexandra Marks, ed., Cordery on Solicitors, 9th ed. (London: Lexis Nexis Butterworths, 1995) at 4/661.

McInerney v. Macdonald, [1992] 2 S.C.R. 138

Unless previously provided to the client or otherwise agreed with the client, prior to closing the file, lawyers should return to the client all property that the client provided to the law firm during the course of the matter together with all documents or other property that the lawyer was retained to produce in connection with the matter. In the event that the lawyer and client agree that the lawyer will retain such documents, it would be prudent for the lawyer to clarify in writing with the client the nature and duration of the lawyer’s responsibilities and who is to be responsible for storage and retrieval costs.

Before returning client documents to the client, the lawyer should determine whether to retain copies of any or all of these documents. In making this determination, the lawyer might consider such factors as any legal requirement to preserve the document, the likelihood of the lawyer requiring the document in the future, the provisions of the retainer agreement, whether the client has its own records retention policy, (and if so, the length of time that a document is preserved under that policy), and the client’s wishes.

When a lawyer transfers a file upon discharge or withdrawal from representation additional considerations apply. In this regard, subject to the lawyer’s right to a lien, the lawyer must deliver to or to the order of the client all papers and property to which the client is entitled and, subject to any applicable trust conditions, must give the client all information that may be required in connection with the case or matter. In addition, the lawyer must cooperate with the successor lawyer or paralegal so as to minimize expense and avoid prejudice to the client. Section 3.7 of the Code of Professional Conduct sets out the lawyer’s obligations in this regard.

Appendix 2 of this Guide contains a summary of general principles of document ownership and the issues which typically arise on discharge of the lawyer or withdrawal services.

2. Purging the File

Prior to closing a file, a lawyer should ensure that the file is organized, and has been purged. A lawyer may wish to remove from the file any unnecessary materials. While staff may assist the lawyer in this task, the lawyer primarily responsible for the file should approve the removal, deletion and destruction of materials from the file. If files are maintained electronically, lawyers should use care not to purge electronic information contained in the file that may be required in the future such as information required for conflicts checking.
Copies of documents that can be used as precedents or in handling other matters, such as copies of legal memoranda, may be removed from the file or copied and stored in a central repository for future use. Prior to subsequent utilization of such documents, the lawyer or other lawyers in the firm using such documents as precedents should ensure that such copies are stripped of all personal information within the meaning of The Personal Information Protection and Electronic Documents Act (PIPEDA) and any similar binding legislation, and that client confidentiality, in accordance with the Code of Professional Conduct, is maintained with respect to any other information that identifies the client. Privacy laws are evolving rapidly and, as such, the lawyer should remain vigilant to future legal requirements for the handling of personal information; in particular, it is imperative to respond to enquiries from the owner of personal information held by the lawyer.

Copies of documents (electronic and paper) or documents that are available from another source such as documents that are permanent records of the court, registry office or government office may be removed from the file and destroyed when the file is closed unless there is any legal or other reason for retaining the document. In determining whether to remove and destroy such documents, lawyers may wish to consider the likelihood of the document being required in the future and the expense of retrieving it and whether the entity retaining the document has a document destruction policy in place which may result in the document not being available at a future date.

Draft documents of the lawyer’s work product are frequently discarded while the document is in the process of revision, and there will not normally be any reason for retaining unfinalized drafts.  However, a lawyer should retain draft copies of documents where the draft copies document the history of the matter or confirm client instructions and where the lawyer reasonably believes that these factors might become an issue in the future.  A lawyer should normally retain solicitor-client correspondence when a file is purged, including any billing records, retainer or engagement letter, and any Contingent Fee Agreement.

Appendix 3 contains suggestions and recommendations for dealing with the contents of a file when preparing to close the file.

Depending upon the complexity or nature of the matter, the lawyer may wish to maintain a list of the documents removed from the file together with the date of their removal and the method of disposal (e.g. destruction, return to the client).

3. Communicating with the Client

A lawyer should consider advising the client of the file closure, retention and destruction policy at the outset of the retainer. The lawyer should consider advising the client how documents will be handled and maintained during the course of the retainer and after completion of the matter. A summary of the file retention and destruction policy may be included in the written retainer agreement or in the final report to the client.

Appendix 4 contains a sample clause that may be included in the retainer agreement and a sample letter to the client upon termination of the retainer.

4. Determining the File Destruction Date

A lawyer is not required to retain all client files permanently.

When a file is closed, the lawyer primarily responsible for the file should review the file, purge it or supervise the purging of it (see above), and establish a file destruction date.

Circumstances may arise during the file retention period that would postpone the destruction of the file. The lawyer or law firm should implement a system to ensure that such circumstances are identified, and the destruction date is changed if necessary.

Lawyers may consider establishing a file review date preceding the destruction date. The lawyer or law firm could then check to determine whether circumstances have changed, and the file destruction date should be changed.

Both the file destruction date and the file review date should be entered into the firm’s tickler or file tracking system.

A lawyer should be guided by ethical, legal and professional considerations as well as economic and practical factors when determining how long to retain a file. It is not recommended that a lawyer adopt a single retention period for all files. Rather, the lawyer should consider each file individually and determine the file destruction date in light of the nature and circumstances of the matter, the client’s needs, the applicable limitation periods pertaining to the client’s original cause of action and the potential limitation period against the lawyer for malpractice, the lawyer’s file retention policy and any other issue that might be relevant.

Generally, based on the provisions of the N.B. Limitation of Actions Act, an appropriate retention period for client files is 16 years after the file is closed. This is based upon the general 15-year ultimate limitation period, plus one year to allow for personal service. This guideline is not a rule, and this suggested time period may not be appropriate for all client files.

Lawyers should use their own judgment when establishing destruction dates for client files based on the circumstances of the individual client matter and their own needs and the needs of their firm and clients. For example, factors such as the nature and complexity of the matter may require a longer retention period than the suggested 16 years.

The following are some of the factors that a lawyer must or should consider when determining the length of time to retain a file.

i. Legal and Regulatory Requirements
In establishing a destruction date, the lawyer must comply with any legal or regulatory requirements.
ii. Client’s Need
In certain areas of practice, the lawyer should consider whether the file might support future representation of the client or other clients.
iii. Defend against Allegations of Professional Negligence or Misconduct
The lawyer should also consider the likelihood of the file being needed to defend against allegations of malpractice, misconduct or for an assessment of an account and the applicable limitation periods for such claims or complaints. Complaints to the Law Society against the lawyer may be made after the matter has been completed or when a file has been transferred to another lawyer. Each file should be considered independently in order to assess the risk of future complaints.
iv. Nature of the Matter
Depending upon the nature of the matter, different considerations might apply when establishing a destruction date.
v. Clients under a Disability: Minors and Persons under Incapacity
The client’s age and capacity might be relevant factors in determining the length of time that a file is retained. (See above discussion in “Reasons for File Retention”.)