Monday, June 4, 2012

Law Firm Records Management: Properly Handling Client Information (When Firms Dissolve)


 A reader sent in an excellent article exploring the information risks clients face when law firms go under: "Dewey & LeBoeuf collapse highlights importance to clients of safeguarding records."
  • Much of Dewey’s stable of attorneys decamped to other law firms. “Unlike other professional services, such as consulting firms, when an attorney leaves a firm, they typically take their client’s files with them. The client records are transferred to the new firm.”
  • "The issue of records pertaining to clients not associated with any departed attorneys is more problematic, because the firm has an obligation to notify such clients and arrange for the proper disposition of the records."
  • "'The wind-down process should include this notification and disposition should occur as instructed by the client — which typically means a transfer to the new law firm or delivery to the client. Records for clients that do not respond to the notification — some may no longer be in business or deceased — will need to be reviewed and retained in accordance with the requirements in the jurisdictions where the law firm practices,'" said a client records management consultant.
The article goes into great detail comparing and contrasting US vs. UK approaches to records management in these scenarios and provides several recommendations to firms and clients alike.
  • "In Britain, the records that a law firm kept about its clients legally belonged to the firm itself, said Rob Moulton, a partner at law firm Ashurst. Sometimes financial services firms might have “subconsciously relied” on law firms to retain their records rather than keeping adequate documentation themselves, he said. He said that lawyers were expert at keeping records, while other firms might not be so exact."
  • "Britain’s financial industry regulator, the Financial Services Authority, has clear requirements for recordkeeping, Moulton said. Firms must have proper systems and controls in place and must organise their recordkeeping processes effectively. He said that instances where firms had sought advice from lawyers on whether or not to file suspicious transaction reports were prime examples of the types of legal records to which the FSA might need access."
  • "A 'core concern' for compliance officers should be the effect which such a collapse might have on any privileged information held by the law firm, Moulton said. 'Does it mean that the Financial Services Authority can get hold of documents in a way they couldn’t before hand? The answer is no. That privilege remains,' he said."

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