An overview of file ownership

When a solicitor retains client documents, they do so pursuant to the law of bailment. This means that the solicitor must:

• exercise reasonable care in relation to the client’s documents,
• as soon as reasonably possible following a request by the client, deliver the client’s documents to the client, and
• follow instructions where the client provides instructions regarding access to their documents.

Most documents in a file belong to the client (client document), but some belong to the solicitor (solicitor document).  Ownership generally depends on when, and why, a document came into existence. A document will be a client document if the client was charged for the document or if the document is for the benefit of the client.

Client documents may include documents:

• in existence before the client retained the solicitor,
• the client provided to the solicitor,
• the solicitor prepared for the benefit of the client,
  • for example, the solicitor’s notes of conversations with third parties for the purpose of advancing the client’s case, records of attendances at court, and briefs to counsel and notes of conferences and telephone conversations with counsel, or
• prepared by a third party and that the client paid for,
  • for example, expert reports.

Who owns file notes?

Who owns the file notes varies depending on the facts of each case.

In Alexiou v Alexandra White & Ors t/as HWL Ebsworth Lawyers [2021] NSWSC 485, the Court relied on the principles set out in Wentworth v de Montfort (1988) 15 NSWLR 348 and ordered the defendant to provide the file notes to the plaintiff.  In this case, the plaintiff sought the delivery of some file notes held on file and which the law firm submitted were for internal purposes and were not charged to the plaintiff.

The principles in Wentworth v de Montfort broadly include the following:

• clients generally have a right to documents and files created or obtained for their benefit,
• solicitors retain ownership of documents created solely for their own purposes, and
• while clients have ownership over documents created on their behalf, the solicitor may retain possession of certain documents till their fees are paid.

See ‘Who gets the file notes?‘ for more information on the ownership of file notes.

Solicitor documents may include documents that:

• the client provides to the solicitor for the solicitor’s own benefit or use, or
• are prepared by the solicitor for their own records, protection or benefit. These are document/s that the client is not expected to pay for, such as notes of attendances on the client, notes of work done and notes of matters requiring attention.

Some documents may have been created for the benefit of both the client and the solicitor.  In such cases, it will be necessary to consider the main purpose for the document’s creation.

The Law Institute of Victoria’s File Ownership, Retention and Destruction Guidelines discusses further the difference between client documents and solicitor documents.

Rule 14 of the Solicitors’ Conduct Rules (Client documents)

Rule 14 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) (Solicitors’ Conduct Rules) provides that a solicitor may destroy client documents after a period of seven years has elapsed from completion or termination of the engagement, except where there are client instructions or legislation to the contrary.

If a client’s documents are not returned to the client at the completion or termination of the retainer, Solicitors Conduct Rule 14 requires a solicitor to retain the client’s documents in their original form for at least seven years after the termination of the retainer, unless there is an exception, being either legislation or client instructions to the contrary.

From a practice management perspective, it would be in the interests of a solicitor to agree with the client to return all client documents upon the completion of the engagement to minimise storage costs in complying with Rule 14.

It should be noted however, that Rule 14 does not apply to safe custody documents.

Practice among solicitors

Many solicitors enter into a written agreement with their clients authorising the solicitor to return the client’s file to the client, upon completion or termination of the engagement, or authorising the solicitor to destroy the file after a specified period.

Practice among solicitors in this regard varies.  For example, some solicitors keep files for a period longer than seven years after termination of engagement.  Reasons may include the type of matter or the type of documents in the file, any applicable statutory limitation period, possible tax implications and the age of the client.  When a client is a minor, a solicitor may wish to keep the file for seven years after the minor turns 18.

Broadly, the obligation under Conduct Rule 14 requires a solicitor to retain a client’s documents in their original format, unless the solicitor seeks the client’s consent to hold it in some other agreed format.

Accordingly, we recommend that solicitors keep electronic documents (including emails) in their original or native format, so as to capture potentially relevant meta-data pertaining to the document that may not be apparent on the face of the document.

Some practical guidance for solicitors

1. Where a solicitor returns a file to a client or transfers it to another practice, it is recommended that they keep a paginated copy of the file at their own expense.
2. To clarify obligations, as well as to provide flexibility regarding the storage of documents, it would be prudent for the Retainer/Costs Agreement to include that all documents, whatever their original format, will be kept electronically and returned to the client electronically. Where the document is an original with signatures, it is recommended that the solicitor treat it as a safe custody document.
3. Where possible, hand back original documents to the client.

The Law Society’s Professional Support Unit (PSU) provides free and confidential  guidance to all solicitors regarding their obligations under the Legal Profession Uniform Law in the areas of costs, ethics and regulatory compliance.

Enquiries can be made to PSU by telephone, email, or in person. The contact details of the Regulatory Compliance team of PSU are [email protected] or (02) 9926 0115.