The cost of retaining old records

In 2008 the Law Society estimated that it held in storage 3.5 million files, in 180,000 boxes, at an annual cost of some £500,000 per annum. Those numbers can only have increased considerably since then. These are files gathered as a result of interventions in law firms by the Solicitors Regulation Authority (SRA) which, although an independent body, is administered and funded by the Law Society. An intervention involves the closing down of a firm, and the seizure of all money held by the firm (including clients’ money) and all documents and papers that relate to its clients, including files and accounting records. What happens to the money has been the subject of much analysis, and litigation, and the position is reasonably settled. But what happens to the files is less clear. Until 2001 the Law Society was of the opinion that it had the power to destroy obsolete files, but its confidence in that stance waned, and in The Law Society (Solicitors Regulation Authority) [2015] EWHC 166 (Ch) it sought, under paragraph 9(10) of the Solictors Act 1974 (“the Society may apply to the High Court for an order as to the disposal or destruction of any documents [or other property] in its possession by virtue of this paragraph”) an order that it could destroy

non-original documents seized from 885 firms, totalling around 1.5 million files (the equivalent of some 109,600 boxes), the destruction of which would produce an estimated annual saving of £344,000 per annum 

In making an order to that effect Iain Purvis QC, sitting as a Deputy Judge of the Chancery Division, noted that the risks in doing so were low: it was highly unlikely that any person would need the documents in question. That low risk needed to balanced against the data protection risks in retaining the documents (it was observed that permanent retention was likely in contravention of the fifth data protection principle in the Data Protection Act 1998) and the high costs of doing so. Moreover, the judge took into account that a responsible law firm would have had a document destruction policy under which the documents in question would have been unlikely to have survived. And finally, he considered whether there were any alternative measures which could be adopted, but the obvious ones – scanning the documents, or writing to the original clients – were prohibitively expensive.

What the judge declined to do was to make a formal declaration to the general effect that the SRA had the power to destroy documents (without the need for a court order). Although he accepted that such power did exist under paragraph 16 of Part II of Schedule 1 of the 1974 Act, the application he was hearing was unopposed, and so a declaration would have no obvious legal effect.

Nonetheless, the Law Society cannot be unpleased with an order which should save them almost £350,000 per annum. Document storage is not cheap, and excessive retention is both unnecessary and inherently risky in data protection terms. Most organisations don’t have the complex statutory underpinning of their functions as the Law Society does in this regard. A comprehensive and robust document retention policy can save a lot of money.

The views in this post (and indeed all posts on this blog) are my personal ones, and do not represent the views of any organisation I am involved with.

Leave a comment

Filed under Data Protection, records management

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s