Help Us Help You!! Keep A Complete Copy of Every File

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Help Us Help You!! Keep A Complete Copy of Every File

“I did not keep a copy of my file.” …   Those are some of the most tragic and disappointing words I can hear from an Insured as we are discussing the malpractice claim they recently reported.  Those nine little words can drastically change the outcome of a claim.  Defending a malpractice claim filed against an Insured without a file or without a complete copy of the file makes the defense of that claim more expensive and difficult – and sometimes close to impossible.

You may have heard this before from ALPS or from another malpractice carrier – keep a complete copy of your files stored electronically or a hardcopy until the statute of limitations on any potential malpractice claim has expired – at a minimum.   The length of time to keep a file will depend on your jurisdiction and your area of practice.  If you have questions regarding how long you need to keep a file, please refer to Mark Bassingthwaigthe’s article on file retention.

If you receive a claim or potential claim from a client, former client or third-party non-client, having the ability to provide a complete copy of your file for the work in question to ALPS and defense counsel as soon as possible is essential to realizing the best possible outcome.  A complete copy of the file does not mean just the pleadings or final contracts.  It does not mean advising ALPS the file is at the Court.  Rather, a complete file includes all emails or electronic correspondence including text messages, in some cases audio files and voicemail messages, invoices, notes, drafts, research as well as final documents and pleadings.  It should include the retainer agreement, scope of representation, and written documentation of any changes to the scope of representation.  Additionally, the file should contain:

  • Notes on critical decision making if your advice was followed or not
  • Experts hired or not and why not
  • What course of action was taken and decided upon and why

This last point is particularly important when you and the client are debating the right course of action or the client does not wish to pay for experts or for certain research you believe is necessary.

All of this documentation and information is critical to successfully defending against a malpractice action.

Recently, I have noticed several of the same reasons mentioned by Insureds for why they have not retained a complete copy of their file after they report a claim for malpractice:

  1. It’s too expensive. It was too costly to make an electronic copy or hardcopy of everything and too expensive to maintain storage of the file.  Thus, they might have the pleadings or some of what they believe are the critical portions of the file but they did not save or print all emails, invoices, research or written documentation of critical decisions.
  2. Client hired new counsel and the file went with the new counsel.  Accordingly, the Insured did not retain a copy of the file.  Now, fast forward a year, the former client through the new counsel has made an allegation of professional malpractice against the Insured.  It also includes a demand with a short expiration deadline to respond.   Since the Insured did not retain a copy of the file, ALPS has to request the file from new/opposing counsel who may or may not cooperate prior to the expiration of the demand deadline.   This is far from an ideal situation.
  3. Attorney/firm dissolved and/or merged with a new firm.  File is not accessible or is lost in merger.  If the firm is dissolved and is no longer an active entity but has an extended reporting period within which to report claims under its prior policy with ALPS,  it may be difficult to access the dissolved firm’s files if there are no longer any current employees who have access to the firm’s files or know the firm’s IT system.  How will the firm access the files?  Alternatively, if the firm merged with another firm, the transfer and retention of the former firm’s files may not have been a priority in the merger.  When firms have different billing systems and email there can be incompatibility between the old firm and the new firm’s IT systems and a potential loss of the former firm’s electronic files upon merger.  If a malpractice claim arises based on an electronic file from the old firm, how will the file be retrieved?  Re-created?  Can it be or is it lost?

ALPS appreciates there is a cost to maintain former client files whether electronically on a server or as a hardcopy with storage costs.  However, the increased cost to defend a future malpractice claim resulting from your firm’s failure to maintain a complete copy of your file can be staggering and potentially jeopardize the defense of the claim.  Without the file, the best possible defense may not be realized.  Additionally, what might have been a defensible claim with a file may not be defensible when the firm has no written documentation of its work.  The defense of claims where there is no file to defend the Insured’s work can increase the defense costs to such an extent they erode the outside defense limit and begin reducing the limit of liability.  This could put the firm and the individual attorney’s personal assets at risk.

If your client hires new counsel, do yourself and your firm a favor and keep a complete copy of the file.  Even if your relationship with the client is good and there is no animosity, when another attorney reviews the file, your client may receive a different opinion and change of perspective.  If this happens and you receive a claim alleging professional malpractice, you will be able to promptly notify ALPS and provide your file for immediate review and evaluation.  If there is a demand with a short expiration period extended with the allegation of malpractice (which is becoming more and more common), the ability for ALPS to have complete information and make an informed decision prior to the expiration of the settlement offer is imperative and could save significant money and prevent risk of exposure of personal assets.

Dissolution and merger of law firms are happening at an increased rate.  The benefits from economies of scale make it difficult to imagine this trend will not continue to grow.  It is critical that when a firm dissolves or ceases to exist the firm:

  • Makes a complete copy of all files
  • Identifies a former partner who will be the contact for the firm
  • Identifies a system to access the files and information in the files in case it is necessary to respond to a court order or to defend against a malpractice claim requiring production of the file.

In the case of a merger of two firms, the transfer of files and complete copies of former files should not be an afterthought.  A deliberate process to transfer and have the ability to access complete copies of all former files should be planned and executed.  Current and former clients of both firms should also be tracked meticulously in the conflict check system during the merger to avoid future conflict of interest claims by clients.

Ultimately, the file storage method whether that be electronic or hardcopy, and the length of time your firm keeps files is a cost benefit decision that every firm must evaluate and make an informed decision upon. Help ALPS provide you and your firm with the best possible defense against a potential malpractice claim by maintaining complete copies of all client files so you are able to provide us with a complete copy of your file upon request should a claim arise.  You will not regret it.

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Kobi Gibbs, Senior Claims Attorney

Kobi L. Gibbs is a Senior Claims Attorney with ALPS Property & Casualty Insurance Company responsible for managing complex high exposure legal malpractice claims, coverage litigation, cyber and employment liability claims. Kobi has been with ALPS for 14 years and has conducted extensive risk management visits at law firms around the country. Kobi routinely presents to attorneys on professional liability risk management. Before joining ALPS, Kobi worked in private practice focusing on tax and estate planning and at the Yellowstone County Public Defender’s Office in Billings, Montana, where she tried felony criminal cases. Kobi received her Bachelor of Science in Economics with Honors from Montana State University in Bozeman, Montana and her Juris Doctorate and Certificate in Alternative Dispute Resolution from Willamette University College of Law in Salem, Oregon.