UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 92-37
Lawyer L is a shareholder and director of Corporation C. Lawyer L also has served as counsel for Corporation C from its creation. P, the president of Corporation C, fired Lawyer L as counsel, apparently believing that L had a conflict of interest. P subsequently demanded that L return all files and records held by L that relate to Corporation C., Lawyer L has offered to make available the files in his possession, allowing Corporation C to make copies of the entire contents. Corporation C would retain any original corporate documents, with copies returned to Lawyer L. All other documents in the files, would be returned to L, with copies retained by Corporation C.
Corporation C has demanded that Lawyer L make any copies he wishes to retain and provide the original files to the corporation in their entirety.
Question:
What is the obligation of Lawyer L with regard to the return of files relating to Corporation C?
Summary:
Lawyer L should deliver the file to Corporation C as requested. However, Lawyer L may first copy the file and charge Corporation C only for the actual cost of copying any documents in the file that previously had been provided to the corporation and any other documents that do not belong to the client as a matter of law. Lawyer L also may remove from the file prior to delivery any documents relating to other clients that had been placed in the file simply as information for the lawyer.
Opinion:
The handling of client files at the termination of a representation is an important issue both to the client that wishes to provide information to new counsel and to the lawyer who may desire, for various reasons, to maintain copies of the file. In the scenario presented, the question appears to be essentially one of who must pay the cost of copying the file.
The Rules of Professional Conduct provide only that when a lawyer is dismissed or withdraws from the representation of a client, the lawyer must surrender "papers and property to which the client is entitled" although the lawyer may "retain papers relating to the client to the extent permitted by other law." Rule 1.16(d). The rule offers no guidance as to the definition of papers "to which the client is entitled." The few disciplinary cases touching on the issue do not definitively resolve the question. In each case the lawyer was alleged to have either mishandled or neglected the client's matter. The Court in In re Crosland, 270 S.C. 546, 243 S.E.2d 198 (1978), and in In re Palmer, 289 S.C. 264, 346 S.E.2d 23 (1986), indicated that a lawyer fired for cause must return documents, including medical records, that belong to the client and are contained in the files. In In re Mims, 280 S.C. 188, 311 S.E.2d 926 (1984) and in In re Haddock, 283 S.C. 116, 321 S.E.2d 601 (1984), the Court used broader language indicating that when the lawyer was dismissed for cause the files belonged to the client and should have been returned. Also, in In re an Anonymous Member of the South Carolina Bar, 287 S.C. 250, 335 S.E.2d 803 (1985), the Court indicated that a retaining lien may be enforce unless (1) the lawyer is fired with cause or (2) retention of the file would prejudice the former client.
This Committee noted in Advisory Opinion 92-19, that given the circumstances of each of those decisions, the law is unclear as to legal ownership of client files and their contents. The decisions do make clear that, when a lawyer is fired for cause, the client should have access, upon demand, to materials in the client's files. It also seems clear under In re Crosland and In re Palmer that as client is entitled to the return of original materials provided to the lawyer and of other original materials such as promissory notes or corporate documents. However, we do not believe that the court necessarily intended by the broad language of In re Mims and In re Haddock to deem all materials that might have found their way into a file automatically to be the property of the client.
The answer as to which original papers may be retained by the lawyer and which must be turned over to the client, and ultimately the question of who bears the copying charges, depends upon the resolution of that ownership issue. In the absence of agreement otherwise between the lawyer and the client, we offer the following guidelines for handling client files upon the dismissal of a lawyer by the client.
When a lawyer is fired, the lawyer, upon request, should deliver the file to the client within a reasonable time so as not to prejudice the interests of the client. The contents of the file delivered should be determined as follows:
(i) The lawyer must return to the client any materials provided by the client to the lawyer and any other original materials, including promissory notes, affidavits, medical or academic records, or corporate documents obtained by the lawyer on behalf of the client. The lawyer may retain copies of that material at the lawyer's expense.
(ii) The lawyer must return to the client all correspondence sent or received by the lawyer on the client's behalf relating to the representation and any other material prepared in final form by the lawyer on the client's behalf during the representation, including pleadings and legal memoranda. The lawyer may retain copies of that material. The client should bear the actual expense of copying any such material previously provided to the client. The lawyer should bear the expense of other copies.
(iii) The lawyer is not required to provide notes in the file regarding the lawyer's personal impressions of the client or documents, such as memoranda, relating to similar issues in other matters handled by the lawyer that may have been copied to the file for the lawyer's own information.
(iv) As to any other materials in the file, the lawyer may retain copies thereof. The allocation of actual copying costs would depend upon the nature of the document and whether the documents belonged as a matter of law to the client. The actual cost of copying materials that do not belong to the client should be borne by the client.
A lawyer, dismissed for cause, would have no retaining lien, and may not require payment for copies prior to delivery of the file. If the lawyer is fired without cause, the lawyer may have a valid retaining lien that would permit the lawyer to retain the file until the client has paid its outstanding bills including the actual cost of those copies allowed to be charged to the client. The lawyer may retain the file, however, only as long as retention does not prejudice the client's interests.
Applying these guidelines in the situation presented, we believe Lawyer L must deliver the file to Corporation C as requested. However, Lawyer L may first copy the file and charge Corporation C only for the actual cost of copying any documents in the file that previously had been provided to the corporation and any other documents that do not belong to the client as a mater of law. Lawyer L also may remove from the file prior to delivery any documents relating to other clients that had been placed in the file simply as information for the lawyer.