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File retention practices are changing due to the cost of storing files and the attractive alternatives offered by technology.
When addressing your firm’s file retention and document strategy, you should consider the following questions:
- What am I required to keep, and for how long?
- What should I keep, and for how long?
- What are best practices in file management, storage and destruction?
What are you required to keep?
Rule 119.37 of the Rules of the Law Society of Alberta requires law firms to keep financial records for ten years, following the fiscal year in which the file was closed.
Only those parts of client files which are required to support the prescribed financial records must be retained.
Client identification rules also require information related to the identification and verification of clients to be stored for six years (see Rule 118.7(1)).
What should you keep?
While the rules do not require you to keep a complete copy of the client file, it is recommended in the event you face a subsequent claim or complaint. Most firms store client files for ten years following the end of the fiscal year in which the file was closed, in consideration of sections 3 and 11 of the Limitations Act.
Limitation periods may be extended in cases involving fraudulent concealment by a defendant, or when a claimant has a disability or is a minor. Any file that may give rise to a potential claim that is not statute-barred should be retained indefinitely, until the lawyer is able to make an assessment of potential liability.
Also consider the “working life” of the file documents. Examples of documents with an extended “working life” include mortgages, long term leases, and matrimonial agreements.
Do not destroy original wills, and keep the will preparation file for at least ten years past the date on which you know probate has been completed.
Lawyers should return original wills to clients, to avoid indefinite storage obligations. If you decide to store wills, use a vault or fireproof cabinet.
Best Practices in File Management, Storage and Destruction
Lawyers at all stages of practice need to be thinking about file storage issues. What happens when a firm dissolves, or a lawyer dies or quits practice? Who will agree to take responsibility for your files when you retire?
From the day you start practice, you should try to reduce the number of documents you store and set destruction dates for closed files. It is of upmost important to exercise due diligence in choosing a service provider for storage and destruction of your files.
Original documents should be provided to clients when a file is closed. All other unnecessary documents should be removed. You should advise clients that their files will be stored off-site and destroyed on a future date. This is also an opportunity to let your clients know upfront that if they request their closed files in the future, a file retrieval fee will be charged.
Digital File Storage
If you are considering digital file storage, keep the following in mind:
- You may store client file materials in a digital format. Take steps to ensure that you will be able to access and read those materials in the future;
- You must protect client confidentiality, whether files are open or closed, whether they are stored in paper or digital format, and whether they are stored locally or in the cloud. Exercise due diligence when choosing any IT service provider;
- Get consent from clients before storing their data in the cloud.
File Retention and Document Management Guidelines
Written by: Nancy Carruthers, Practice Advisors