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11 N.J.L. 2117
170 N.J.L.J. 343
October 28, 2002
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
OPINION 692 (Supplement)
Retention of Closed Clients Files
The ACPE has been asked to clarify Opinion 692, in which the Committee
responded to a request for advice concerning the length of time an attorney
must retain a client file following the final disposition of a matter. There
the Committee held that, absent specific instructions or express agreement, and excepting property
of the client, attorneys are required by applicable ethics rules and principles to
retain and maintain closed files for seven years. The Committee noted in Opinion
692 that RPC 1:15(a)(b) may, by implication, require that property of the client
be maintained indefinitely. The opinion defined such property as (1)
that which the
client has entrusted to the attorney, such as original documents, photographs, things
that which has been created or obtained by the attorney as part
of the undertaking and for which the client retained the services of the
By way of example of the latter category, Opinion 692 refers to
original wills, trusts, deeds, executed contracts, corporate bylaws and minutes, and, in a
footnote, points out that what may be included in this category of property
depends on the nature of the representation and the matter. See Opinion 692,
The first of the two inquiries before the Committee seeks clarification of Opinion
692 in the following respects:
(a) provision of a more specific explanation of what constitutes property of the
client, including whether medical records, x-rays, expert reports, deposition transcripts, and answers to
interrogatories constitute property of the client;
whether the entire file or only that portion falling within the definition of
property of the client must be retained for seven years; and
whether there must be separate agreements concerning destruction, prior to the expiration of
the seven-year period, of the property of the client and the remainder of
In responding to this inquiry, the Committee takes this opportunity to provide guidance
to the bar on a related issue, namely, (d) who bears the responsibility
to retain and maintain closed client files under certain circumstances.
The second inquiry seeks the Committees clarification in cases where the insurer hires
counsel to represent its insured, (e) as between the insurer and an insured,
who is the client for purposes of providing instructions on file retention or
(a) Definition of Property of the Client
As Opinion 692 emphasized, determining what constitutes property of the client is fact
sensitive and depends on the nature of the matter and of the representation
itself. We note that the definition adopted and examples referenced in Opinion 692
are consistent with definitions adopted and examples used in other states. See, for
example, Cal. Standing Comm. on Profl Responsibility & Conduct, Formal Opinion 2001-157 (2001)
(finding that a lawyer has an obligation to permanently safeguard original materials and
materials of inherent value); Mich. Ethics Comm., Opinion R-5 (1989) (requiring record retention
plans to include safeguards for permanently maintaining client property such as stock certificates,
original wills, and unrecorded deeds); ABA Comm. on Ethics and Profl Responsibility, Informal
Opinion 1384 (1977) (stressing that a lawyer should not discard or destroy property
of the client or information that the client may foreseeably need).
In responding to the current request for clarification, we apply the Opinion 692
definition of property of the client and conclude that in most cases, including
those involving personal injury or malpractice claims, medical records, x-rays, expert reports, deposition
transcripts, and answers to interrogatories do not constitute property of the client. That
does not mean, however, that there is no case in which such materials
and documents could ultimately fall within the definition of property of the client.
It may well be that, depending on the nature of the matter or
the representation itself, it would be foreseeable that the former client will need
such documents in the future to protect an interest or defend a claim.
In such a case, the types of documents specifically referenced in the inquiry
(medical records, x-rays, expert reports, deposition transcripts, and answers to interrogatories) could constitute
property of the client
and, as such, be subject to the retention requirement applicable to client property.
See Opinion 692 and below. Practitioners will need to apply discretion to these
matters on a case-by-case basis.
(b) What Portion of the File Must be Retained for Seven Years
Absent specific written instructions or an express agreement or other legal authority, such
as a court order,
(1) property of the client must be returned, or retained and maintained indefinitely
(see Opinion 692, finding that R.P.C. 1.15(b) implies that property of the client
may never be destroyed without the clients permission or some legal authority such
as a court order); and
(2) the remainder of the file must be retained and maintained for seven
years (see Opinion 692, concluding that a client can reasonably expect an attorney
to have a file available for seven years after the conclusion of representation).
At the end of the seven-year retention period, a lawyer has an obligation
to examine the closed file to determine whether it contains property of the
client. If a file contains such property, the lawyer should take reasonable steps
to notify the former client. Reasonable steps include, but are not limited to,
mailing a notice to the clients last known address by regular or certified
mail and waiting a reasonable period for a response. Cf. D.C. Legal Ethics
Comm., Opinion 283 (1998) (holding that an attorney must make a reasonable effort
to reach the former client by sending a letter to the clients last
known address and waiting an appropriate period of time (perhaps six months)).
See footnote 1
Some files may contain client property that has inherent value, such as bonds,
stocks, or jewelry. Where a file contains inherently valuable property and the client
cannot be found at the end of the seven-year retention period, the lawyer
should dispose of the property in accordance with New Jerseys Uniform Unclaimed Property
N.J.S.A. §§ 46:30B-1 to -109.
While the inquiry here at issue did not include a specific question on
retention of criminal files, the Committee takes this opportunity to provide guidance to
the criminal bar by noting that it will generally not be prudent to
dispose of criminal files after seven years. That is because criminal convictions can
have significant consequences long after the final judgment, sentencing, and closure of the
See footnote 2 Thus, absent an express agreement, a lawyer should not discard or destroy
files relating to criminal matters while the client is alive.See footnote 3
Accord, State Bar
of Cal. Standing Comm. on Profl Responsibility and Conduct, Opinion 2001-157 (2001) (holding
that client files in criminal cases cannot be destroyed without the clients authorization
while the client is alive).
Finally, we emphasize again that practitioners must use their judgment and apply discretion,
and must consult substantive law requirements in particular practice areas to determine the
appropriate retention period beyond the required seven years for files or portions of
files in certain matters. For example, where the matter involves a minor, materials
in the file may affect the clients rights well beyond the seven-year retention
period. See, for example, N.J.S.A. § 2A:14-21 (providing that the statute of limitations for
claims brought by minors tolls until the minor reaches majority). Thus, a lawyer
may need to retain file records relating to the representation of a minor
until the minor reaches majority and thereafter until the statute of limitations runs.
Cf. D.C. Legal Ethics Comm., Opinion 283, fn. 10 (1998) (explaining that files
relating to matters involving a minor may need to be kept beyond the
minimum five-year retention period established in that jurisdiction). See also N.J.S.A. § 2A:14-7 (providing
for a twenty year statute of limitations for actions relating to real estate).
Other extended retention requirements may apply by operation of state and federal laws
that require particular information to be retained for more than seven years. While
these requirements may not specifically apply to attorneys, to the extent an attorney
has these types of records in a client file, and absent an agreement
with the client, the attorney may be required to maintain them for the
period specified in the applicable law. See, for example, 29 U.S.C. § 1059 (a)(1)
(ERISA) (requiring indefinite retention of documents essential to the determination of benefits payable
to employees); 29 C.F.R. § 1910.1020(d) (OSHA) (requiring that medical records pertaining to an
employees exposure to toxic or hazardous substances in the workplace be retained for
the duration of employment plus thirty years).
Before destruction, whether based on the clients consent or at the end of
the seven-year retention period, the attorney should carefully review the files contents to
make certain that documents that the lawyer is required by law to maintain
or that the client may foreseeably need are not destroyed. Once again, the
Committee notes that counsel must exercise reasonable discretion in these matters, based upon
the particular facts, and as may be required by applicable law.
As Opinion 692 emphasized, when destroying client files, the manner in which they
are destroyed must conform to the confidentiality requirements of RPC 1.6. See Opinion
692 (stressing that simply placing the files in the trash would not suffice).
Accordingly, a lawyer must take appropriate measures to ensure that confidential and privileged
information remains protected from improper disclosure.
(c) Agreements to Destroy Client Property
The inquirer has asked for clarification whether there must be separate agreements concerning
destruction of property of the client in less than seven years. Specifically, the
inquirer seeks guidance whether, in the case where there is a general agreement
with the client on the destruction of the entire file (in a retainer
agreement or otherwise), a specific agreement is required for the destruction of property
of the client that may be contained in the file.
As Opinion 692 makes clear, an agreement to destroy property of the client
should be executed only after the property is in the attorneys possession, and
should specifically describe the property intended to be destroyed or otherwise disposed of.
See Opinion 692 (holding that if a general retention policy calling for the
destruction of a closed file is intended to be made applicable to client
property . . . the agreement should be executed only after the property
is in the attorneys possession). Therefore, unless the attorney is in possession of
the client property before a retainer agreement is signed, generally an agreement to
destroy a file contained in a retainer agreement is insufficient to permit destruction
of client property.
(d) Responsibility For Retention and Maintenance of Closed Client Files Under Certain Circumstances
From time to time the Committee has been asked for guidance on the
question of who has responsibility for the retention and maintenance of client files,
including property of the client, in circumstances where a sole practitioner retires or
dies, the attorney who worked on the matter leaves the firm, or when
the firm dissolves. The Committee takes this opportunity to provide guidance to the
bar on this issue.
Ordinarily, clients of a law firm employ the firm as an entity rather
than employing a particular member of the firm. See State v. Belluci, 81
N.J. 531, 541 (1980) (reasoning that the access to confidential information among members
of a firm and the shared economic interest of the entire firm support
treating a partnership as one attorney); Staron v. Weinstein, 305 N.J. Super. 236,
242 (App. Div. 1997) (When a client retains a lawyer [associated with a
law firm] the lawyers firm assumes the authority and responsibility of representing that
client, unless the circumstances indicate otherwise . . . .) (citing Restatement (Third)
of Law Governing Lawyers § 26, cmt. h (Proposed Final Draft No. 1, 1996)).
Accordingly, under RPC 1.16, a law firm has an ethical obligation to protect
the interests of former clients. Where a client employs a firm, it is
the firm that has the obligation to comply with the procedures for disposition
of client files set forth in Opinion 692 as clarified in this opinion.
See N.Y. State Bar Assoc. Comm. Profl Ethics, Opinion 623 (1991) (holding that
a law firm, and not just the member of the firm who actively
represented a client, has a professional obligation to maintain that clients closed files).
Likewise, in the event that a firm dissolves, the former partners or members
of the firm have a professional and ethical obligation to make arrangements for
the disposition of client property in a manner consistent with this opinion and
Opinion 692. This requirement conforms with the ethical obligations imposed on many of
New Jerseys licensed professionals to establish procedures for retrieval of records following the
cessation of their practices. See, for example, N.J.A.C. 13:30-8.7(f) (Dentists); N.J.A.C. 13:35-6.5(h) (Physicians);
N.J.A.C. 13:42-8.1(h) (Psychologists); N.J.A.C. 13:44E-2.2(g) (Chiropractors).
Under RPC 1.3, a sole practitioner has an ethical duty to plan for
disposition of files in the event of his/her death or retirement. See Model
Rules of Profl Conduct R. 1.3 cmt. 5 (amended 2002) (To prevent neglect
of client matters in the event of a sole practitioners death or disability,
the duty of diligence may require that each practitioner prepare a plan, in
conformity with applicable rules, that designates another competent lawyer to review files, notify
each client of the lawyers death or disability, and determine whether there is
a need for immediate protective action.); ABA Comm. on Ethics and Professional Responsibility,
Formal Opinion 92-369 (1992) (noting that the Model Rules on diligence and competence
require a sole practitioner to plan for death); Fl. State Bar Assoc. Comm.
of Profl Ethics, Opinion 81-8 (1981) (holding that when planning for death, a
lawyer must make a diligent effort to contact all clients, review each file
for documents that must be safeguarded, and index such documents before putting them
in storage or turning them over to the attorney who assumes control of
the practice). RPC 1.3 specifically requires a lawyer to act with reasonable diligence
and promptness in representing a client. We conclude that reasonable diligence requires a
sole practitioner to make arrangements for disposition of client files in the event
of death or retirement. This is an obligation which all law firms and
sole practitioners must prepare for now.
When a sole practitioner has not arranged for file disposition in the event
of death or disability, New Jersey Court Rule 1:20-19 provides for the disposition
of the practice, including client files
See footnote 4. Pursuant to Rule 1:20-19, an interested party
may petition the Assignment Judge in the vicinage where the attorney maintained a
practice to appoint a member of the bar to perform an inventory of
the practitioners files and take actions necessary for the protection of the attorneys
clients. N.J. Ct.
R. 1:20-19(a). Cf. Model Rules for Lawyer Disciplinary Enforcement, 28
(1989). When dealing with retention and disposition of client files and client property,
the appointed attorney must comply with the seven-year time period established in Opinion
692 and clarified in this opinion. See ABA Comm. on Ethics and Professional
Responsibility, Formal Opinion 92-369 (1992) (concluding that ABA Informal Opinion 1384 regarding the
duty to preserve client files applies to lawyers who assume responsibility for a
deceased practitioners clients).
(e) As Between the Insurer and the Insured, who is the Client for Purposes
of Complying with the Requirements set forth in Opinion 692, as Clarified Herein
Concerns about the disposition of closed client files multiply in the conflict-ridden tripartite
relationship among a law firm, an insurance company, and the insured party. Based
on RPC 1.6 and 1.8 and legal precedent, the Committee reaffirms that the
insured, and not the insurer, is the client for the purposes addressed in
this opinion and in Opinion 692. To the extent that Opinion 542 conflicts
with this holding, we now reject it.
In Opinion 542, we addressed whether an attorney for an insured breached his
duty of confidentiality by delivering closed files to the insurer without retaining copies.
N.J. Advisory Comm. on Profl Ethics, Opinion 542 (1984). We explained that the
insured and insurer could agree to the disposition of claims files. However, we
emphasized that the attorney must return all materials unrelated to the claims at
issue to the insured, unless the insured authorized other means of disposal. Although
we held that the attorneys procedure described in that inquiry for disposing of
claims files was proper, we limited our response to files that contained no
confidences of the insured. Opinion 542 did not address whether the attorneys duty
to safeguard client property limited the attorneys ability to transfer the entire claims
file to the insurer. However, to the extent that Opinion 542 does permit
destruction of a file based on a contract between the insured and the
insurance company, it is rejected.
Although this is an issue of first impression in New Jersey, prior decisions
regarding the relationship between the attorney, an insurance carrier, and the insured support
a finding that the file and all client property belong to the insured.
See footnote 5
In New Jersey, courts have concluded that an attorneys primary duty is to
Prevratil v. Mohr, 145 N.J. 180, 194 (1996); Lieberman v. Employers
Ins. of Wausau, 84 N.J. 325, 338 (1980) (emphasizing that the relationship between
defense counsel and the insured should be treated as if the insured had
hired and paid for the attorneys services); Montanez v. Irizzary-Rodriquez, 273 N.J. Super.
276, 286 (App. Div. 1994) (concluding that defense counsel cannot ethically attack the
credibility of the insured given the undivided loyalty that the attorney owes to
the insured); Longo v. Am. Policyholders Ins. Co., 181 N.J. Super. 87, 92
(App. Div. 1981) (holding that an attorney has an ethical obligation to represent
the insured with undivided loyalty); N.J. Advisory Comm. on Profl Ethics, Opinion 542
(1984) (We first observe that in the situation where an attorney is employed
by an insurance company to represent the interests of the insured party to
an action, that attorneys client is the insured.). Similarly, the New Jersey Supreme
Court has held that an attorney owes undivided loyalty to the insured. Lieberman,
supra, 84 N.J. at 338-39. Based on the existence of an attorney-client relationship
between the attorney and the insured, the Lieberman Court stressed that there is
no diminishment of ethical obligations and standard of care applicable to insurance defense
counsel. Id. Accordingly, as a baseline, the attorney owes all ethical obligations, including
the obligations to safeguard client property and protect client interests, to the insured
and not the insurer.
RPC 1.8, Conflict of Interest, makes clear that an attorney has an ethical
obligation to preserve the insureds confidentiality. Pursuant to RPC 1.8, an attorney can
only accept compensation from a third party if there is no interference with
the lawyers independence of judgment or with the lawyer-client relationship, and the clients
confidential information is protected. See also Restatement of the Law (Third) Governing Lawyers
§ 134, ill. e (2000) (directing an attorney to maintain the confidentiality of the
insured). Documents that an insured delivers to the attorney in the course of
representation, such as medical records or financial statements, constitute property of the client
as that term is defined in Opinion 692 and clarified in this Opinion.
These materials may contain client confidences that, under RPC 1.8, cannot be disclosed
to the insurance carrier without the informed consent of the insured. Therefore, concerns
over maintaining client confidences support a finding that the insurer cannot control the
disposition of closed client files.
Because the attorneys employment by the insurer does not limit the attorneys ethical
obligations to the insured, the Committee holds that materials contained in a claims
file that clearly fall within the meaning of property of the client must
be disposed of in accordance with the insureds instructions, or maintained indefinitely under
RPC 1.15(b). The insured may consent to the destruction or retention of a
claims file by the insurer, but such consent must be fully informed. Therefore,
the insured must be aware of the materials contained in the file at
the time the insured gives consent. See In re Rules of Profl Conduct
and Insurer Imposed Billing Rules and Procedures, 299 Mont. 321, 346-47 (2000) ([F]or
an insured to make fully informed consent to disclosure of detailed professional billing
statements, the consent must be contemporaneous with the facts and the circumstances of
which the insured should be aware.). Accordingly, in most cases, an insured may
not consent to disposal of client property by way of a provision to
that effect in a liability policy executed before any claims materialize.
In sum, legal precedent in this State makes clear that the insured is
the client of the attorney, even where the insurance carrier hires and pays
for the attorneys services. All resulting ethical obligations, including the obligation to retain
closed client files and property of the client, apply to the insured. Thus,
the Committee concludes that, where a claims file contains materials delivered by the
insured to the attorney or prepared or obtained for the insured in the
course of representation, the attorney must obtain the insureds instructions or consent regarding
the disposition of the property in accordance with Opinion 692 and this opinion.
* * *
The New Jersey Administrative Code provisions regulating other licensed professionals provide guidance
on the scope of reasonable efforts. Pursuant to the Code, when preparing to
retire or terminate their practices, psychologists, chiropractors, dentists, and physicians must establish procedures
by which patients may obtain treatment records.
See N.J.A.C. 13:30-8.7(h) (Dentists); N.J.A.C. 13:35-6.5(h)
(Physicians); N.J.A.C. 13:42-8.1(h) (Psychologists); N.J.A.C. 13:44E-2.2(g) (Chiropractors). These procedures and a notice of
cessation of the practice must be published in a newspaper of general circulation
in the geographic location of the licensees practice, at least once each month
for the first three months after the cessation. Id.
See, for example, N.J.S.A. § 2C:7-2 (providing that a registered sex offender who
has not committed an offense within fifteen years after conviction or release, whichever
is later, can apply for termination of the registration obligation); N.J.S.A. § 2C:43-7.1 (authorizing
extended sentencing for repeat violent offenders).
The New Jersey Public Defender maintains files for 50 years pursuant to a
departmental policy that was approved by the State Records Committee pursuant to
§ 47:3-20 in 1983.
The Court Rule alternative is unlikely to be as practical and effective
as advance planning by the responsible firm or practitioner.
Footnote: 5 Neither the courts nor the legislature in this State has addressed whether
the insured and the insurer are, in some circumstances, both clients of the
See Paradigm Ins. Co. v. Langerman Law Offices, 200 Ariz. 146, 154
(2001) (holding that when an insurer assigns an attorney to represent an insured,
the lawyer has a duty to the insurer arising from the understanding that
the lawyers services are ordinarily intended to benefit both insurer and insured when
their interests coincide). Because we find that this is a question of substantive
law, we do not address it. See N.J. Ct. R. 1:19-2 (granting the
Committee jurisdiction over inquiries concerning the proper conduct for members of the New
Jersey bar). However, if, in the future, the courts or legislature determine that
an attorney owes a duty of loyalty to both the insurer and the
insured, the Committee will have to revisit the question of retention and destruction
of the insured clients files and property.
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