Many moons ago at this point, I wrote a post here with some criticism about ABA Formal Ethics Opinion 471 and the various questions important to client file issues on which it punted. Back then I also wrote about how our effort in Tennessee to get an ethics rule adopted (it would have RPC 1.19 in Tennessee) that would identify specifics for client file materials issues was unsuccessful.
Earlier this week, the BPR in Tennessee (our disciplinary authority) published a formal ethics opinion that certainly goes further than the ABA opinion in terms of answering questions, but now makes me wish I had not criticized the ABA opinion as much for punting questions. Our BPR, in an apparently earnest effort to be helpful (at least I hope that is what it was), has managed to create a minimum 5-year requirement for retaining all client files out of whole cloth.
Formal Ethics Opinion 2015-F-160 upon a quick read seemed like a decent client file opinion. Only in writing about the opinion did I come to understand how seriously flawed it is in a very important respect.
You can go read the full 8-page version of the BPR opinion here. 2015-F-160 addresses three questions: (1) how long should client file materials be retained by lawyers after matters are completed; (2) who owns the materials in the client file; and (3) what are the responsibilities that a retiring lawyer has with respect to client files?
As to the second question, the BPR adopts the “entire file” approach rather than the “end product” approach and says the client owns the entire file. As to the third question, the BPR does a good job of pointing out that just because you retire doesn’t end your responsibility as to files and distinguishes between what that burden means for a lawyer who was a solo practitioner versus one who practiced in a firm.
But it is the portion of the opinion that addresses how long client file materials must be retained that will prove to be highly controversial and deserves real scrutiny.
When I first read it, I thought all the opinion was trying to say was that the only guidance that could be found in the ethics rules was that RPC 1.15(b) required trust accounting records had to be kept for at least five years after a representation was over. But, no, the opinion through some questionable use of ellipses actually stakes out a position that because client files are property of the client, RPC 1.15(b) mandates that all client files must be retained for at least five years from the end of the representation. Imposing a five-year retention period for client files might be a good idea and might be something that even would be worth putting into our ethics rules somewhere, but to act like it is already in there strikes me as a very disingenuous approach.
Here is how the BPR has gone about the process of justifying a claim that the five year requirement applies to client files as a whole (all ellipses below are theirs not mine):
Tennessee Rule of Professional Conduct 1.15 is the foundation for the lawyer’s obligation to maintain client records, which states in pertinent part:
(a) A lawyer shall hold property and funds of clients or third persons that are in a lawyer’s possession in connection with a representation separate from the lawyer’s own property and funds.
(b) …. property shall be identified as such and appropriately safeguarded. Complete records of such … property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.
(d) … Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client … any property that the client … is entitled to received and, upon request by the client …, shall promptly render a full accounting regarding such … property.
I think you would be hard pressed to find lawyers in Tennessee, who prior to the issuance of this opinion, would ever have taken the position that the five year requirement in RPC 1.15(b) applied to anything other than bank records or safety deposit box records. Hopefully, you the reader, will understand why when I give you the versions of (b) and (d) sans ellipses:
(b) Funds belonging to clients or third persons shall be deposited in a separate account maintained in an FDIC member depository institution having a deposit-accepting office located in the state where the lawyer’s office is situated (or elsewhere with the consent of the client or third person) and which participates in the required overdraft notification program as required by Supreme Court Rule 9, Section 29.1. A lawyer may deposit the lawyer’s own funds in such an account for the sole purpose of paying financial institution service charges or fees on that account, but only in an amount reasonably necessary for that purpose. Other property shall be identified as such and appropriately safeguarded. Complete records of such funds and other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.
(d) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such funds or other property.
Reads a lot different with the gaps filled in, doesn’t it. It sure doesn’t read like a rule that contemplates the client file as being the type of property being referred to that has to be kept separate. Under this approach, I guess, if you are on a plane and you put a book you own to read on the plane into the same accordion file folder holding the client file you are also going to read on the flight, then you’ve just engaged in unethical commingling. Right?
And, in case the intention of (b) as not being about client files wasn’t otherwise clear, Comment [2] to our RPC 1.15 states as follows: “Paragraph (b) of this Rule contains the fundamental requirement that a lawyer maintain funds of clients and third parties in a separate trust account. All such accounts, including IOLTA accounts, must be part of the overdraft notification program established under Supreme Court Rule 9, Section 29.1.”
I can’t say I’m speechless because I just wrote 1000 words about this, but …