Termination of Representation and the Retention of Files

Posted: November 7, 2018

A court ruling recently solidified the majority perspective that attorneys have an ethical duty to turn over and surrender their entire file to clients upon termination of representation. This ruling included returning information such as privileged communication and confidential settlement agreements. However, the specific ruling in the case TCV IV L.P. v. Tradingscreen, Inc. goes against an interpretation of ABA Model Rule 1.16 that requires only the return of end product, not the entire file, to former clients. It is important for litigators to be cautious and aware of their individual jurisdiction’s interpretation of Model Rule 1.16 to avoid sanctions.

Former Defendant Seeks Entire File

The case of TCV IV L.P. v. Tradingscreen, Inc. began after a group of shareholders sued the company’s CEO and board of directors for a violation of fiduciary duty. The CEO refused to accept the decision of termination from the board, resulting in the board filing a second lawsuit to determine if the CEO could maintain his leadership. Even though the CEO and board members were represented by the same, single law firm during the initial lawsuit, the CEO took an adverse position during the second lawsuit, inevitably establishing a conflict requiring their lawyers to withdraw as counsel.

After the termination, the parties reached an agreed settlement for the original suit. The CEO objected to the settlement and filed a motion to obtain their former counsel’s entire litigation file because it had not been provided after the termination of representation. Even though the law firm refused to do so on the basis of the other board member’s attorney-client privileges, the Court of Chancery of the State of Delaware ordered the law firm to present the complete litigation file. Consequently, the firm provided over 5,000 documents pertaining to the litigation including all pleadings, invoices, and emails.

Rule 1.16 – Entire File vs. End Product

The Tradingscreen court ruling ultimately required the former firm to provide the entire litigation file, including the settlement agreement, and provided clarity on the requirements of Rule 1.16 in regard to termination of representation. Rule 1.16 states that upon withdrawal of representation, the attorney is responsible for providing the client papers and property to which the client is entitled. However, the rule does not explicitly state what the papers and property they are entitled to means or consists of. Therefore, like many jurisdictions, The Delaware Rules of Professional Conduct emulates the ABA Model Rules of Professional Conduct and looked to similar decisions made in accordance to the rule.a group of lawyers determining which files to release to a former client after terminating representation

The court determined that the majority of jurisdictions interpret Model Rule 1.16 as justifying a lawyer’s need to provide a former client with the entire litigation file, with limited exceptions. Therefore, the Tradingscreen ruling fell in line with the majority decision to warrant the entire-file approach as it adheres closest to the attorney’s duty to their clients and the transparency of the attorney-client relationship. In contrast, this meant the court declined to implement the minority approach of only needing to provide the end-product file, which differentiates a lawyer’s external and internal work.

The Importance of Case Law

Litigators must be informed of the specific policies their jurisdiction requires pertaining to the retention policy of their files after withdrawing representation. Although in many jurisdictions the definition of Rule 1.16 does not define what the client is entitled to, knowing past case law can provide clarity. Its imperative litigators stay up-to-date on issues pertaining to jurisdiction-specific rulings. The study of past cases could have defined the exact property previous clients have been entitled to.

In the example of TCV IV L.P. v. Tradingscreen, Inc. Rule 1.16 did not explicitly state what property was to be returned to a former client upon termination of representation. Upon looking at similar case law and rules of professional conduct, the court ruled with the majority that the entire case file must be provided. Both studying previous cases and addressing the court with questions could provide clarity to avoid sanctions. Moving forward, litigators would have an advantage by studying past case law pertaining to similar issues and addressing the court with questions previously, rather than a biased approach and risking sanctions afterward. Litigators should be knowledgeable about jurisdiction-specific interpretations to avoid sanctions.