There are a number of reasons why lawyers retain client files for a period of time or sometimes indefinitely after completion of the client matter. Some of these reasons are for the benefit of the client, while others are for the benefit of the lawyer.

Defend Against Allegations of Malpractice

One of the key reasons lawyers retain files is to respond to negligence or other claims made against them. A well-documented file may contain the evidence necessary to successfully defend such claims. This is particularly important in situations where the evidence necessary to successfully defend a claim cannot be obtained from any other source.

Claims founded in negligence and/or breach of contract against a lawyer can be made well after the alleged negligence or breach of contract has occurred. New Brunswick's Limitation of Actions Act, SNB 2009, c. L-8.5 establishes some deadlines for commencing such proceedings. The Act contains a basic limitation period of two years running from the day that the claim is discovered and an ultimate limitation period of fifteen years running from the date that the act or omission on which the claim is based took place.  It is important, however, to remember that in New Brunswick, some public Acts have their own unique limitation provisions (e.g. the Fatal Accidents Act), which should be taken into account in determining the appropriate period for file retention.

The basic and ultimate limitation periods in the Limitation of Actions Act are subject to other provisions in the Act that may operate to extend the limitation periods. For example, section 17 provides that the operation of any limitation period “established by this Act” is suspended during any time that a person with a claim is a minor. Persons “under incapacity” are dealt with differently: see Section 18.  Section 16 creates saving provisions which come into play where the person against whom the claim is made has willfully concealed the existence of a claim. Section 4 deals with conflicts between the Limitation of Actions Act and other public Acts or private Acts.  It is important to remember that where there is a conflict with any other public Act, that “other Act” prevails: sub-section 4(1).

The Law Society’s professional liability insurance program, administered by the Professional Liability Reserve, encourages lawyers to ensure that files are well documented and handled in accordance with appropriate file closure, retention and destruction procedures. The consequences of having no file available in the event of a claim are as follows:

• a reduced ability to defend the claim as there is no evidence to establish what work was done on the matter;
• a reputational risk to the lawyer who may have to appear in open court to defend the claim without a file; and
• a greater risk of exposure to payment of the deductible and claim history levy surcharge, depending on the outcome of the claim.

Of course, in reporting a claim matter under the program, the lawyer is obliged to cooperate with the Professional Liability Reserve in the investigation and defence of the matter, including production of the client file, to the extent that it then exists. Lawyers with excess insurance are encouraged to check with their excess insurers to determine their requirements and/or applicable policy terms.

Legal Requirements

A lawyer may choose to retain client documents in a file to assist the client to meet statutory obligations. For example, The Income Tax Act, R.S.C. 1985, c.1 (5th Supp.), sets out certain minimum time periods in which accounting records, including supporting vouchers and cheques, must be kept.

When a matter is completed the lawyer should return to the client all original documents belonging to the client unless previously provided to the client or otherwise agreed with the client. It is not recommended that the lawyer retain original client documents or property after the matter has been completed.

Comply With Regulatory Requirements

The Uniform Trust Account Rules require lawyers to maintain specific books or records as part of their law office accounting system. Lawyers are required to maintain trust accounting records or documents for seven years immediately preceding the lawyer’s most recent fiscal year end.

Future Use

Finally, the lawyer may retain the file for future use by the lawyer or may agree with the client to retain the file so that it is available for future use by the client.  Nevertheless, where the lawyer and client agree that the lawyer retain the file, unless there is some special circumstance, it will normally be preferable that the lawyer retain paper or electronic copies of original client’s documents, and that the originals be returned, as mentioned above, so that the maintenance of the originals will remain the responsibility of the client who owns them.