In general insurers do not dictate any specific requirements for file retention. They do, however, require firms to ensure they comply with the Law Society/ Solicitors Regulation Authority (SRA) or statutory requirements governing retention of certain documents. For example Regulation 40 of the Money Laundering Regulations 2017 requires due diligence records on clients to be retained for five years from the date on which the retainer is concluded. Beyond that, insurers expect firms will take a considered and careful approach to file retention. It is very difficult to defend a claim where a file has been destroyed, so it is important that this issue is addressed and for firms to be clear what their policy is.
Many consider that the minimum period any file should be archived for is six years from the completion of the work, which under the Limitation Act 1980 is the primary limitation period for claims in contract and tort. However, there is a good argument to say that seven years should be the starting point to take into account the four month period during which a claim form issued on the last day of the limitation period would remain valid for service. Seven years would also allow for any extensions of time in relation to service. Having said that, consideration also needs to be given to section 14B of the Limitation Act 1980 which sets out the circumstances in which limitation can be extended up to a maximum longstop date of 15 years. If a potential claimant is a person under a “disability”, as defined by the Limitation Act, then the commencement of the limitation period could be delayed even longer than this. It is therefore apparent that a “one size fits all” approach to file retention is not the way forward.
Firms should consider an appropriate policy with these limitation issues in mind. With the increasing trend towards electronic filing there is at least less cost sensitivity when determining the best practice your firm should adopt with reference to time frames. Based on our knowledge and experience of claims against solicitors, below we offer suggestions as a starting point for discussions within your firm.
• County Court Litigation
• Debt collection
• Personal injury (from the date of final judgement/settlement or from the date a minor attains the age of 18).
• Crime (or the term of any sentence of imprisonment if
longer than seven years)
• Commercial and residential property transactions and sales
• Financial services
• Matrimonial (ancillary relief, financial orders, maintenance etc)
• Secured lending (unless the mortgage is subsequently discharged)
• Personal injury involving lifetime awards or personal injury trusts
• Company formation
• Court of Protection (review at death)
• Declarations of Trust
• Patents and intellectual property rights
• Pension schemes
• Personal investments (review on death)
• Power of attorney (review on death)
• Probate involving life interest/tenant
• Tax (statutory rules may apply)
• Wills/ codicils (review after distribution of estate
When reviewing your file retention policy, ensure that you also consider and comply with the requirements of the GDPR in relation to the processing and retention of all personal information. You also need to be aware that under GDPR clients do have a right of erasure in respect of personal information; however there is an exception to the extent that the processing of personal data is required to ensure compliance with a legal obligation or for the establishment, exercise or defence of legal claims.
Once the firm’s position is finalised and documented you then need to consider the information that should be given to clients. In guidance published in July 2017 the Law Society noted the following: “In your client care letter, you should advise the client how long you will retain the file and outline what will happen to the file after that time."
Prior to archiving files or placing them into storage it is also important to review each file and remove deeds or other documents that should be sent to the client or held in fireproof storage. This will safeguard against the accidental loss of these important items when the file is pulled for destruction.
For firms that are closing down, the retention of files remains an important issue. The circumstances of the closure will dictate the arrangements that should be made. Always refer to the Law Society and SRA websites for the most up to date advice, but a broad summary is as follows:
1) If a firm is ceasing and being succeeded to by a practice that will take over that firms liability for claims (a successor practice), arrangements should be made to transfer all of the firm’s files to the successor
practice. This could be done by way of a list of all archived files, with details of where they are located.
2) If a firm is ceasing and not being succeeded, appropriate arrangements for file storage must be made and your professional obligations in this regard continue. Options include using a secure facility, asking another firm to take over storage of files, or storing documents electronically. It is important your run off insurers know what the arrangements are and who to contact should access to a file be required. This information should also be provided to the SRA.
3) If a firm is ceasing with a successor practice, but election is made under Clause 5.6 of the Minimum Terms and Conditions with the ceasing firm taking run-off cover in advance of the succession, then the position would be much the same as 2) above. Even if you come to an arrangement for the acquiring practice to store the files, you retain the ultimate responsibility.