Sixes and sevens over limitation

Law firms should retain closed files for at least seven years and make a decision on how long to keep each one when the matter finishes, a leading professional indemnity insurer advised this week.

Issuing guidance in the wake of the House of Lords ruling in Cave v Robinson, which restored the six-year limitation period for claims against professionals (see [2002] Gazette, 2 May, 1), Zurich Professional said firms should keep all files for at least an extra year.

This would allow for the four-month period during which a claim form issued on the last day of the limitation period remains valid for service and for any extensions for service allowed by courts.

Zurich risk manager Andrew Nickels said: 'Long-term file storage can be expensive but the absence of a file when a claim is made can severely prejudice the solicitor's defence.

Partners and fee-earners dedicate considerable time to their files and in our opinion best practice would be for an individual decision to be made at the conclusion of the file as to how long it should be kept.'

Long-stop provisions of section 14A of the Limitation Act 1980 provide for a 15-year period within which proceedings can be issued, but Mr Nickels said there were some areas which were a low enough risk to allow destruction after seven years: crime, immigration, debt collection, county court litigation, personal injury (from the date of judgment), and property sales (of whole properties).

However, claims experience suggests a greater risk of later claims coming from matrimonial matters, wills, trusts and probate matters, secured lending, financial services, commercial property, commercial transactions, tax matters, children (including personal injury awards for minors), and personal injury cases involving lifetime awards.

Conveyancing claims often crop up only when the property is subsequently sold, and so such files should be retained for longer, Zurich said.

Other fields where it said files should be retained for up to 15 years and in some cases indefinitely include change of name, declarations of trust, company formation, partnership agreements, and intellectual property matters.

LINKS: www.zurichprofessional.co.uk