This article addresses the meaning and practical application of lawyers' duties to safeguard client property under New York Rule of Professional Conduct (NYRPC) 1.15. This is the rule that perhaps poses the greatest set of challenges for individual lawyers and large law firms alike. Generally, it addresses the obligations that arise in connection with holding client funds—the obligation not to commingle; the obligations with respect to bank accounts; and the bookkeeping and notification requirements. This article focuses on another aspect of the rule—the duties in connection with holding other kinds of property. A recent opinion from the New York State Bar Association Committee on Professional Ethics (the Committee) Opinion 1182 titled "The Disposition of Wills," concluded that lawyers have a duty to retain wills in their possession "indefinitely", even when the testator cannot be found and many decades have passed since their execution. This obligation places an unfair burden on lawyers, particularly solo and small firm practitioners who cannot afford to hold on to records forever.

The problem of holding funds for missing clients is expressly dealt with in Rule 1.15(f) (Missing Clients), which provides:

Whenever any sum of money is payable to a client and the lawyer is unable to locate the client, the lawyer shall apply to the court in which the action was brought if in the unified court system, or, if no action was commenced in the unified court system, to the Supreme Court in the county in which the lawyer maintains an office for the practice of law, for an order directing payment to the lawyer of any fees and disbursements that are owed by the client and the balance, if any, to the Lawyers' Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto.

Thus, with respect to money, lawyers who (after duly diligent search) are unable to locate clients or former clients have a clear mechanism to relieve themselves of the burden of holding on to the money forever. But the Rule provides no such safe harbor for other kinds of property, and no guidance except to state that lawyers are fiduciaries of all property they hold for clients (or others).

Opinion 1182 seeks to answer the question "May an attorney dispose of Wills, when after due diligence and significant passage of time the attorney is unable to learn the whereabouts or other circumstances of the testators?" The question was presented to the Committee by a lawyer

in possession of over five hundred wills where the testators' whereabouts are unknown to the inquirer and/or cannot be discovered with due diligence. The inquirer (or the inquirer's firm) prepared some of these wills, but most came to be in the inquirer's possession by reason of the inquirer's succession to the practices of other lawyers (in some instances, lawyers who had themselves acquired practices and, with them, wills). Among these wills are some prepared more than seventy years ago.

The Opinion acknowledges that "[t]he inquirer has conducted a due diligence search of office records, the Internet, and the Surrogate's Court in the county where the inquirer's office is located in an attempt to find information about the testators, executors, or beneficiaries. To date, these efforts have been to no avail …" Id.

The Opinion proceeds from the text of the Rule:

Rule 1.15(c)(1) of the New York Rules of Professional Conduct (the "Rules") provides that a lawyer shall "promptly notify a client or third person of the receipt of funds, securities, or other properties in which the client or third person has an interest." Rule 1.15(c)(2) – (4) requires the lawyer to preserve such property, keep complete records and render appropriate accounts, and to promptly pay or deliver the property as requested by the client or third person. A will is a piece of property.

From there, Opinion 1182 references a number of earlier New York State and New York City Bar opinions, leading it to the conclusion that "A lawyer may not dispose of Wills, whose testators' locations and/or circumstances are unknown. The Wills constitute property, and the lawyer must safeguard the Wills indefinitely unless the law affords the lawyer an avenue to file or otherwise dispose of the wills."

We suggest that this conclusion is unrealistic—and unnecessary.

To begin with an anecdote, an English law firm of which one of the authors of this article was at one time a partner found in a search of its vault in the 1970s an original will of Napoleon Bonaparte. Now the fact that it still had the will arguably supports the Opinion. In fact, the circumstances of that firm subsequently belie that conclusion. The law firm in question has, since the 1970s, merged with one or more other English firms and then subsequently merged with a global law firm. In other words, in a larger context, that firm is in a similar position to that of the inquiring lawyer to the Committee ("most [of the wills in question] came to be in the inquirer's possession by reason of the inquirer's succession to the practices of other lawyers (in some instances, lawyers who had themselves acquired practices and, with them, wills)"). While the English (now global) law firm possessing Napoleon's will may be happy to retain it as a matter of historic interest (or perhaps curiosity), it is surely absurd to suggest that it is obligated to do so. We suspect, based on anecdotal evidence, that there are many other firms in a similar situation.

Before turning to what a more appropriate rule might look like, it is important to introduce the question of the duty to retain client files—which, as very clearly determined by the New York Court of Appeals in Sage Realty v. Proskauer Rose Goetz & Mendelsohn, 91 N.Y.2d 30, 34 (1997), are every bit as much client property as wills. Evidently, as lawyers whose basements and garages are full of closed client files, and law firms that find themselves paying ever greater sums to keep such files in storage, all find, as a matter of absolute necessity, there has to be a limit to the obligation to retain them, and a right, at some point in time, to destroy them. And this problem is exacerbated when individual lawyers make lateral moves or when firms merge or are acquired, or simply close their doors and cease to practice. Whose obligation (or right) is it going forward either to maintain, or to destroy the files from the prior practice or firm?

In answering these questions, two other legal principles need to be considered. First, Rule 1.15 expressly recognizes the duty to preserve is a fiduciary one. What is significant is that fiduciary duties are not absolute duties—they are duties of trust. In the context of Rule 1.15, a lawyer fiduciary must make decisions with respect to the subject matter of the trust that are for the benefit of the client. But if the client no longer exists (e.g., Napoleon), or cannot be found after thorough and diligent search, the duty surely expires, at least after the passage of time. The only questions are when, and what constitutes diligent search.

Second, implicitly recognizing that in New York wills are to be proved by the production of originals and not copies (Surrogates Court Procedure Act §1407), Opinion 1182 also expressly points out a specific solution available to trust and estate lawyers with respect to wills. "…§2507 of the Surrogate's Court Procedure Act provides that the court 'of any county upon being paid the fees allowed therefor by law shall receive and deposit in the court any will of a domiciliary of the county which any person shall deliver to it for that purpose and shall give a written receipt therefor to the person depositing it.' After exploring other practice management authorities, the Opinion suggests that lawyers should '[c]onsider filing the wills in the local Surrogate's court … Some County Bar associations offer will registries which may be useful. Another law office may be willing to retain the wills of a deceased or retired attorney'." In practice, in our experience many (perhaps most) trust and estate lawyers are very reluctant to part with original wills, in the expectation (or at least hope) that there will in the future be an estate to administer, and that this will require the beneficiaries to come to the drafting lawyer for help. In addition, and perhaps more important for retiring small firm practitioners, there is a fee for such filing that could, at least cumulatively, be prohibitive.

More directly to the point of answering the question of when client documents may be destroyed is Formal Opinion 2010‑01 of the New York City Bar Association Committee on Legal Ethics. That opinion establishes a rational set of rules for the retention and destruction of documents based on the nature and contents of the documents in question:

Category 1: documents with intrinsic value or those that directly affect property rights such as wills, deeds, or negotiable instruments … Category 2: documents that a lawyer knows or should know may still be necessary or useful to the client, perhaps in the assertion of a defense in a matter for which the applicable limitations period has not expired … Category 3: documents that need not be returned to the client because they "would furnish no useful purpose in serving the client's present needs for legal advice," (Sage Realty, 91 N.Y.2d at 36, or are "intended for internal law office review and use." Id. at 37.)

…

Category 1 documents must be preserved or returned to the client, unless the client specifically directs a different disposition. In contrast, there is no obligation to preserve Category 3 documents. …With regard to documents in Category 2, there must be an analysis to determine the appropriate disposition of this material."

The central theme of Opinion 2010-01 is that lawyers and their clients can (and are well advised to) address the question of document and file retention in their initial engagement letter. But for our purposes here, and in contrast to Opinion 1182, Opinion 2010-01 explicitly deals with

instances where the lawyer is unable to locate her client at the conclusion of an engagement, precluding the lawyer from returning files as directed by the client. In such circumstances, prudence will dictate that the lawyer retain Category 1 and 2 documents for some period of time (emphasis added). This approach has been adopted in a number of ethics opinions from other jurisdictions, some of which prescribe the length of time that such files should be retained. See, e.g., Conn. Bar Ass'n Informal Op. 98-23 (1998) (retain Category 1 records for "as long as is practicable"); D.C. Bar Op. 283 (five year retention period beginning at time of termination); Ala. Bar Op. 93-10 (1993) (six year retention period). Special circumstances may require a longer preservation period than others, including for example, representations involving clients who were minors during a period of the engagement or matters involving estate planning.

By the terms of Opinion 2010-01, wills fall into Category 1. But as the Opinion explicitly anticipates, the obligation for Category 1 documents generally is to hold them "as long as is practicable", not indefinitely.

In our view, the appropriate rule for the obligation to preserve, and the right to destroy wills, as with any other client documents, must surely be one of reason, and not absolute and indefinite. In connection with wills, what will be reasonable and practicable may depend on the age of the testator and the time that has passed. Thus, presumably it would be reasonable to hold on to the will executed by a 30-year-old for perhaps eight decades, while for a 90-year-old, two would surely suffice.

Accordingly, it would be helpful for the Committee to revisit this issue in order to provide more practical guidance with respect to wills, based on the approach of Opinion 2010-01 to client documents generally.

Anthony E. Davis and Janis M. Meyer are of counsel at Clyde & Co US.