File Closure Management – Law Society Jun24

Introduction

File management processes and procedures

Files may be paper based, maintained in a case management system, or a hybrid of the two.

Emails, in particular, may be stored digitally, even if there are paper-based files.

In addition, incoming letters, documents, and other papers are increasingly scanned and filed digitally. Files are now frequently scanned when the paper copy file is closed and destroyed.

An important element of your systems for managing risk should be the implementation of effective and clear processes and procedures, reviewed regularly, for the prompt and efficient closure of a file, encompassing both paper-based and digitally-stored records, at the end of a matter.

This will also be an important element of your systems for managing risk and will help to satisfy the obligations set out in paragraph 2 SCCF.

The firm’s managers must determine the appropriate processes and procedures, and ensure that all supervisors and fee earners are aware of, and comply with, those requirements promptly at the end of a matter.

Fulfilment of the obligations set out in paragraph 2 SCCF will, in turn, also help you to:

• comply with the SRA Principles
• satisfy the duty of confidentiality (paragraph 6, SCCS and SCCF), and
• fulfil your obligations to provide a competent service to your client (paragraph 3, SCCS and paragraph 4, SCCF)

File closure policy and checklist

Your firm should have a written, standardised policy for file closure.

Unless there are clear and compelling exceptional reasons to the contrary, you should ensure that a file is fully closed promptly and in accordance with your policy, once you are satisfied that all issues relating to the matter have been concluded.

Sometimes confusion can be created for the client in relation to communications with the client around the closure of their file where there are outstanding actions which need to be taken on behalf of that client.

It is strongly recommended that, where there are still actions that need to be taken, the client is not informed that the retainer has ended until these actions have been taken.

A checklist that accords with your policy will help to preserve a consistent approach. It should be used and completed on every file closure and retained on the file after being signed off.

The contents of your checklist will vary depending upon your firm’s policies, processes and procedures, and whether your files are maintained in a paper or digital format or a combination of both.

However, you should consider whether to include the following matters and to check that:

• the client’s objectives have been achieved and all related administrative work has been fully completed, including any issues and/or complaints raised by the client
• if required, a report is made to the client on any further action they are required to take in the matter and what (if anything) your firm will do
• the file has been maintained in an orderly manner in accordance with your procedures and all the papers, file and attendance notes, and drafts are correctly and sequentially marked and identifiable
• information relating to your work on the file that is present in other repositories (for example, an e-signing platform) is moved from that repository into the file
• any original documentation or other property belonging to the client is returned (save for items which are by agreement to be stored by the practice), duplicate papers and emails removed whenever possible, and correspondence stored in date order
• all transactions have been completed and/or registered
• the final bill has been forwarded to the client, or other party, and has been paid. All outstanding disbursements and administrative charges have been paid and any other outstanding monies have been agreed to be written off by the firm
• the accounts ledgers are clear and you have accounted to the client for any outstanding money
• any undertakings have been discharged and the discharge recorded. A final risk review has been carried out and any identified further action has been undertaken
• if necessary, contact has been made with the firm’s professional indemnity insurers
• any agreement made with the client to use the matter for publicity purposes has been signed off
• administration has been completed for archiving and recording the date for destruction of documents where appropriate
• if appropriate, the client has been advised about arrangements for storage and retrieval of papers (and associated costs) and other items retained and any charges to be made in this regard

Your checklist should also contain provisions that assist you in meeting the outcomes in paragraph 3.2 SCCS and paragraph 4.2 SCCF (ensuring that the service you provide to clients is competent and delivered in a timely manner).

In particular, on closure you should check that at the conclusion of the matter, you:

• have reported the outcome of the matter to the client and explained any further action that they or the firm are required still to take
• maintain a copy of the closing letter on the file
• have advised the client, where appropriate, about arrangements for storage, destruction and retrieval of papers, and any related charges (unless this has already been agreed in the terms of business)
• have advised the client, if required, when the matter should be further reviewed

You may need to delete digitally stored data on closure of the file.

In these circumstances, you should take into account the fact that the deletion of electronic files from a hard drive is not as straightforward as the destruction of paper files.

There are forensic tools with which “deleted” data can be retrieved and accessed.

Your records management policy should therefore make provision for the “scrubbing” of data, where appropriate, so destruction and storage of electronic files is consistent with the management of your paper records.

Data protection

Throughout the lifespan of each client matter, you should bear your data protection obligations in mind.

In particular, you must ensure that any personal data you hold is:

• processed lawfully, fairly and in a transparent manner
• collected for specified, explicit and legitimate purposes
• adequate, relevant and limited to what is necessary in relation to the purpose or purposes for which it is processed
• accurate and, where necessary, kept up to date (for example, client address details)
• not kept for longer than is necessary for the relevant purpose
• processed in accordance with the rights of data subjects
• kept secure
• not transferred to a country outside the UK unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data (for example, the restricted transfer is covered by an adequacy decision, or other appropriate safeguards such as model clauses or binding corporate rules apply)

Under the Data Protection Act 2018, individuals have a right to have personal data erased in specific circumstances, such as where the personal data is no longer necessary in relation to the purpose for which it was originally collected/processed, or when the individual withdraws consent, as well as the right to prevent processing in specific circumstances, such as where the accuracy of the personal data is contested by the data subject.

They also have the right to prevent processing in specific circumstances, such as where the accuracy of the personal data is contested by the data subject.

You should ensure that the file is managed in such a way that personal data relating to a client’s matter can be easily identified.

You should identify and take appropriate steps to mitigate the risks associated with the storage of personal data in an electronic filing system.

You should also consider breach of security and confidentiality risks specifically associated with the storage of digital data.

Computer networks and servers can be compromised and confidential information may be stolen.

Viruses can infiltrate networks, servers, and backup tapes, erasing firm and client information.

You should implement appropriate technical and organisational measures to prevent unauthorised or unlawful processing, accidental loss, destruction or damage.

You should also keep in mind that the Data Protection Act 2018 stipulates the need to:

• notify the Information Commissioner’s Office of a personal data breach where such breach is likely to result in a risk to the rights and freedoms of individuals, and
• notify the affected individuals if a breach is likely to result in a high risk to their rights and freedoms

Outsourcing

You should consider whether you outsource any activities that could have an impact on your policies and procedures for file closure.

For guidance on this, refer to our practice note on outsourcing.

Accounts

Your policies and procedures for file closure should include provision for the closure of the file within your accounts system.

You should ensure that such provisions fully comply with the SRA Accounts Rules.

Your procedures should ensure that a file is not closed where there is:

• a credit/debit balance in the office or client accounts
• a ‘work in progress’ balance yet to be invoiced or written off
• an outstanding bill
• any interest that is yet to be paid to the client

The procedure should also allocate responsibility for dealing with these outstanding issues and finalising the closure of the file upon their resolution.

Other information and resources