There has always been a balance to achieve between file retention and the associated costs incurred by the firm.  With tumbling digital storage costs, accelerated computerisation of working practices prompted by a Covid-19 impacted workplace and increasingly sophisticated file management systems, you might be forgiven for believing that file retention and destruction is becoming a moot point.

One of the most frequently asked questions we receive relates to the complex issue of how long files should be kept.  On the face of it, the shift towards electronic files might be perceived as a panacea for all file retention related issues, but it's not that straightforward.  Unless you recently established your firm, you are likely to have physical legacy files to deal with, digital records you do maintain are subject to a strict regulatory framework imposed by data protection regulations , and there are statutory requirements such as money laundering regulations to consider.

  • File retention baseline: The primary limitation period under the Limitation Act 1980 is six years, during which a client can bring a tortious action. Our partner insurers' experience is that most claims are made within this timeframe. Courts might, however, grant an extension for service, so it's worth extending the minimum period you retain files to seven years. For matters relating to minors, files should be retained for seven years after the individual reaches the age of majority.

You are required to inform your client about your file retention policy and, more specifically, how long you intend to store their personal data.  You should also provide a simple way to contact you in relation to, for example, requesting correction or erasure of personal data. This can be contained in your terms of business and/or your privacy notice.

  • Statutory Regulations:  There are regulations dictating the length of time particular documents should be retained.  For example, five years is mandated under the Money Laundering Regulations for information such as client due diligence.

Factors such as the type and complexity of legal work performed will, ultimately, influence your decision regarding your adopted file retention policy.

Neither the profession's regulators nor representative bodies provide comprehensive guidance on how long files should be kept.  Insurers, however, have identified and published a broad consensus of proposed file retention times beyond the file retention baseline for certain types of work. For example:

  • Fifteen years
    • Business (or longer for complex matters)
    • Crime (depending on seriousness e.g., indeterminate or life sentence)
    • Family (21 years if children are involved)
    • Medical negligence (can be longer e.g., involving children)
    • Complex Personal Injury (can be longer e.g., involving children)
    • Property purchase & mortgage
    • Tenancy and leasehold (can be longer if 3 years after the term)
  • Longer
    • Company formation / partnership agreements
    • Lease documents
    • Mortgage/title/unregistered property deeds
    • Power of attorney
    • Tenancy agreements
    • Trusts (6 years after the termination of the trust)
    • Wills and probate (21 years or, if keeping with the will, open-ended)

Before destruction, it's essential to understand who owns the content of the file.  The Law Society has produced a helpful practice note called "Who owns the file?" which is well worth reading.  The practice note categorises documents as:

  • original documents sent to the firm by the client will continue to belong to the client, except where title was intended to pass to the firm
  • documents sent or received by the firm as the agent of the client belong to the client. For example: communications sent to the firm by third parties and the firm's communications with third parties as agent for the client. This would include correspondence with a counterparty or the giving or receiving of instructions to/from the client's other advisers
  • final versions of documents, the production of which was the object of the retainer, belong to the client. For example: agreements or written representations
  • final versions of documents prepared by a third party, including the client's other advisers, during the course of the retainer and paid for by the client belong to the client. For example, opinions of counsel and experts' reports
  • documents prepared for the firm's own benefit or protection, or documents prepared as the means by which the firm discharges its function, belong to the firm. For example: file copies of letters written to the client, notes as to time taken or made for protective purposes as to advice to the client, drafts and working papers generally
  • copies of internal emails and correspondence created during the course of the retainer, and all emails and correspondence written by the client to the firm belong to the firm
  • accounting records, including vouchers and instructions, belong to the firm

We strongly recommend that you read the full guidance note which can be accessed through this link (login required) – Law Society – Who owns the file?

If your firm ceases to trade, your file retention and storage strategy will be dictated by whether your firm is being placed into run-off or succeeded.

  • Successor practice:  You should make arrangements to transfer all files into the custody and control of the successor practice; support the file transfer with a comprehensive catalogue of all files.
  • Run-off:  Appropriate arrangements must be made to store files in accordance with your trading file retention policy.

You must inform the SRA of the location files are stored and appropriate contact details in both scenarios. Insurers will also need this information to retrieve files in the event of a claim.

It’s difficult to compile a generic, one size fits all guide for file retention.  Each firm should adopt a risk-based approach that is specific to the types of work they perform.  As I’ve already mentioned, there is a broad consensus among insurers regarding file retention periods, but there are differences.  If you are proposing to review your file retention policy and procedures, please feel free to contact us so that we can direct you to our Quality Assurance support resources.

If you are a Paragon client and proposing to review your file retention policy and procedures, please feel free to contact us.  One of the benefits enjoyed by our clients is access to Weightmans’ Compli risk management and compliance support service.

CONTACT US

For more information on the changing market, your firms’ PII renewal or to organise a meeting, please contact:

Ryan Senior

E rsenior@paragonbrokers.com

T +44 (0)20 7280 8254

M +44 (0)7827 575 652

Piers Winton

E pwinton@paragonbrokers.com

T +44 (0)20 7280 8224

M +44 (0)7787 375378

This article is published without responsibility on the part of the author or publishers for any loss occasioned by any person acting or refraining from action as a result of any views expressed in the article. Specific risk management advice requires detailed knowledge and analysis of each firm and practice area facts relating to the risk. The information included in this article cannot and does not attempt to satisfy this requirement for any of its readers