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Loss Prevention Tip #28

LOSS PREVENTION TIP #28: How Long Should You Keep Closed Files?

One of the most frequent questions lawyers ask us is “How long do I have to keep my closed files?”

Certainly you don’t have to keep all files permanently – this just doesn’t make practical or economic sense. Nor is the solution as simple as a one-size-fits-all rule for when to destroy closed files.

There are a number of reasons to keep your closed files. Some reasons benefit your client, others benefit you. One key reason is that your file will help you defend yourself against allegations of malpractice. A well-documented file is often the best defence, especially if it contains evidence of the work done on a matter. Sometimes there will be no other source for that information. On many malpractice claims the lawyer and client will disagree or have different recollections about what was said or done – or not said or done.

Consider the consequences of having no file available in the event of an insurance claim:
-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;
-The increased risk of having to pay the deductible depending on the outcome of the claim;
-An increased risk of exposure outside of policy coverage and above policy limits for the lawyer.

Developing a formal File Retention Policy can provide direction to firm members on what the firm’s standard file retention period is and help lawyers identify the files that should be kept for a longer period of time.

Credibility is a critical factor for defending malpractice claims and we find claims are difficult to defend successfully if the lawyer has not made efforts to include written or electronic correspondence, notes on personal or phone conversations and other documentation in the file. When it comes down to credibility, judges often prefer clients with specific memories over lawyers with limited or general memories. This is why the information in a closed file becomes so important and why you should not underestimate the importance of a well-documented file.

For these reasons, we encourage members to ensure that files are well documented and handled in accordance with appropriate file closure, retention and destruction procedures. The Law Society issued a Practice Advisory concerning this topic which can be found on our website at http://lsnl.ca/wp-content/uploads/2012/11/Practice-Advisory.pdf