You’ve got to know when to hold them

8 August, 2014

Practitioners often ask whether there are certain files they should never destroy or at least not destroy until a particular event occurs.

Legal practices and practitioners are required to retain, securely and confidentially, any documents to which a client is entitled for at least seven years after the end of the engagement.  Something often overlooked is that practitioners are not free to destroy the file at the end of the seven-year period – the file must be dealt with in accordance with the client’s instructions.

If you wish to destroy client files after seven years, the simplest way of getting the necessary instructions is to have an appropriate provision in your standard terms of engagement.  The Law Institute of Victoria’s File ownership, retention and destruction guidelines and the LPLC article The seven-year ditch provide valuable information on document destruction.

There are some files we recommend should not be routinely destroyed.  They include will and estate planning instruction files and files relating to financial agreements under the Family Law Act 1975 (Cwlth) and adoptions.

One practitioner told us he initially marks all will instruction files ‘not to be destroyed’.  Whenever the practitioner is instructed to act on a deceased estate involving a will he prepared, he consolidates the will instruction file with the estate file.  He then destroys both files with client authorisation seven years after the estate file is closed.

You should also consider the need to keep files longer than seven years where you have acted in connection with:

  • a mortgage where the term exceeds seven years
  • a lease, especially one with an option to renew
  • any matter where the period for ratification of an instrument by an infant exceeds seven years
  • a power of attorney or deed.

We would like to hear from you if you think there are any other categories that should be included in this list!

Finally, before destroying any file it is up to you to make a risk assessment, taking into account your needs such as how long it may take before a cause of action could accrue and the need to keep files to assist in the defence of a potential claim.