File closing risk management

Poor file closure is not a knowledge problem. Practitioners know what needs to happen. The risk arises when time pressure, competing deadlines, and the relief of completing a difficult matter combine to push final steps off the list. A reliable file closing process protects the client, creates a defensible file and prevents the kind of claim that no practitioner expects to face.

Start the file closing process within seven days of the matter's conclusion, whether that is settlement, judgment, execution of final documents, or termination of the retainer. Create a task in the firm's practice management system or diary at that point. Do not leave file closure as an undated intention.

Before closing any file, confirm that every substantive obligation to the client has been fulfilled. The most common claims in this area arise from steps that were assumed done but never checked, including:

• registering interests or stamping documents

• responding to outstanding requisitions

• serving or filing court orders within the timeframes set by the court.

A clear closing letter protects both the client and the practitioner. Send the closing letter within seven days of the matter's conclusion.

• Confirm the retainer has ended by writing to the client and stating that the firm's involvement in the matter is complete.

• Set out any outstanding issues in that letter, including any deadlines the client must meet (such as option exercise dates, licence renewals, or registration deadlines), who is responsible for each step, and the consequences of missing any deadline.

• State the file retention and destruction arrangements agreed at the start of the retainer, so the client has a written record.

• Render a final account or confirm in writing that no fees are owing, within seven days of the matter's conclusion.

• Account for all trust money by reconciling the trust ledger for the matter and distributing or refunding any balance before the file is closed.

• Return all original documents to the client and obtain a signed acknowledgement of receipt.

• Retrieve briefs to counsel and court exhibits by contacting counsel's clerk and the relevant court registry before archiving the file.

• Check the file is complete in accordance with firm policy. For hard copy files, print and file any loose emails. For electronic files, confirm all documents are saved in the correct location and backed up.

• Complete the firm’s archive request form and actively consider the required archive time and whether the file should be kept longer than 7 years.

Where the retainer is terminated before the matter concludes, whether by the client or the firm, complete all the steps above and also address the following.

• Assess whether any professional liability exposure exists by reviewing the file for any acts or omissions that may give rise to a claim and notify the LPLC if necessary.

• Give appropriate notice to the client in writing and, where the firm is on the court record, to the court.

• Release the file promptly to the client's new solicitor, retaining a complete copy. Note any lien the firm may hold over the file for unpaid costs and take legal advice before withholding documents on that basis. See LPLC’ article Guide to delivering up documents.

The LPLC has published a file closing checklist that practitioners can integrate into their practice management system or attach to every file at the time it is opened. Completing the checklist at the conclusion of every matter, before archiving the file, is the single most effective step a firm can take to prevent file closing claims.

Download the checklist, adapt it to the firm's practice areas, and make its completion a mandatory step before any file is archived.