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Records retention and disposition is a headache for any organization, but it is a particular challenge for law firms because of the very nature of what they do and how they operate. According to the 2018 ABA Legal Technology Survey, 53 percent of respondents report that their firms have a policy to manage the retention of data held by the firm, a figure that increases with firm size. Indeed, roughly 9 in 10 law firms with more than 100 attorneys now have a formal data retention policy in place.

But in these days of increasing law firm data breaches—Legaltech News reported recently that more than 100 law firms have reported breaches across 14 states since 2014—appropriate records disposition is a critical first step in data protection.

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Two Categories of Law Firm Records

The records management burden is especially onerous for law firms because they have two main categories of records, each of which comes with its own unique disposition challenges.

First are records related to client representation. A fundamental question in developing a retention program is how to classify these client-matter related materials. A law firm's retention classification may be specific based on the type of document or may be more broadly applied to the entire matter file based on matter type. We suggest that matter type is a more manageable option, in part because it requires less granular analysis on an ongoing basis and is easier to operationalize. Firms that elect to use matter type as the basis for their retention schedule determine retention periods based on the type of legal work being provided (e.g., litigation, regulatory advice, transactional) and apply a consistent retention period across all document types for the matters related to a given type of work.

Other key considerations that govern how these records must be treated include applicable legal ethics rules. relevant statutes of limitations and client service requirements. A consistent and scheduled file preservation/destruction plan can help demonstrate compliance with ABA Model Rule 1.16(d) regarding lawyers' obligations to clients upon termination of representation, as well as ABA ethics rules for disposition of a lawyer's closed or dormant files.

The second category of law firm records is law firm administrative records—these are the electronic files and data associated with the business of the law firm itself. The records retention and disposition program hierarchy that is required for client representation records may not necessarily work for firm administrative records. A method we have seen work well to manage administrative records is to create a "client" for each administrative department and then a "matter" for each core business activity performed by the department. This provides a mechanism to organize and apply retention rules in a consistent fashion across both client representation and firm administrative records.

Key issues to consider for firm administrative records include the typical records retention criteria such as any state and federal laws and regulations that govern these business records and privacy regulations, such as the GDPR, the soon to go into effect California Consumer Privacy Act (CCPA) or other such state regulations. There can be challenges related to typical law firm operations, with some firms' administrative departments working outside of the firm-approved data repositories, potentially widening the data footprint that must be covered by the program.

For both of these categories of records, formal retention and destruction schedules can deliver a practical benefit to law firm business operations by providing the impetus many lawyers need to purge their files, more efficiently manage the firm's historical knowledge and reduce data storage costs.

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Five Steps for Cleaning Up Legacy Records

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Once the firm has a go-forward records retention and destruction plan in place, your team can focus on the disposition of older, legacy records. Here is a simple five-step approach to implementing a records disposition program for those older records:

1. Data Gathering: Identify the scope and content of the firm's data repositories, then collect information and metadata about the records as available.

2. Analysis: Review the collected data for potential classification opportunities (e.g., bulk classification against the retention schedule or, for records where that is not feasible, applying a risk tolerance thresholds approach), then develop your business case for the program. This should include data storage savings, e-discovery cost avoidance, risk and exposure reductions, and other potential ROI factors.

3. Strategy: Document the process you plan to follow and secure the necessary approvals. Identify and allocate the resources to support the effort, and socialize the disposition program components with the key stakeholders.

4. Characterization: Develop records characterization criteria based on the organization's defined risk tolerance (e.g., date created, last accessed date, departed authors, etc.). Prioritize some "quick win" opportunities for the program so you can get off to a good start.

5. Execution: Identify records eligible for disposition, secure approvals per the newly defined process, prepare documentation for the disposed materials and then execute destruction of the identified records. Update your records management systems and complete the workflow by attaching a destruction certificate with the internal documentation. Finally, don't forget to notify clients where applicable.

Of course, it is important to acknowledge a tension that exists within law firms between knowledge management programs and records disposition programs. Knowledge management seeks to identify, assess and retain data from the firm's internal databases and information systems, while records disposition seeks to identify, assess and eliminate data from those same systems. The key is for the firm's key stakeholders to work together to determine specific criteria for what constitutes value-added knowledge so you can identify which content should be retained, then strip out client and matter specifics from those files to avoid any conflict with the firm's new records disposition policy.

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Conclusion

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A well-designed and carefully implemented law firm records disposition program can reduce the impact of potential data breaches, lower the cost of data storage and ensure compliance with ethical rules associated with the management of client records. The structural impediment that often traps firms with making progress is the resistance from lawyers who just don't want to let go of old files.

This makes it all the more important to just get started somewhere, even if it is with small steps, and begin to show some progress. Once lawyers realize they do not actually need access to all of those records, they will be more willing to let them go—and let you get on with the job of creating a smart records disposition program.

Terry serves as a managing director in the Legal Transformation + Innovation practice within the Advisory business at HBR Consulting, specializing in advisory services to the world's largest law firms and corporate law departments. By leveraging an integrated approach to managing the continuum of law firm information, Terry delivers value to clients by reducing expense, mitigating risk and improving legal service delivery. With over 25 years of experience working in information governance and risk management across many industries, Terry is at the forefront of innovative thinking, providing clients with exceptional insight and positive outcomes.