Law Office Disaster Preparedness: The Liability and Ethics of Attorneys
Dateline: Wednesday, October 19, 2005. Hurricane Wilma churns in the western Caribbean as the strongest Atlantic-based storm in recorded history. The projected path brings this category five hurricane, the third of the season, on a collision course with the Florida peninsula. Retail businesses along the southwestern Gulf coast of Florida begin the task of boarding up. Lines form at gas stations. Store shelves begin to empty. Office employees periodically check their computers for updates on the projected path and intensity of the storm. Even though the impact of the hurricane remains distant — several days away — some workers leave their jobs to ensure that they obtain food, water, and fuel before supplies disappear. When an impending disaster nears, our thoughts first turn to our families and our homes. In the hundreds of law firms up and down Florida’s coasts and inland counties, are staff members considering whether they will have a viable business to return to on Monday? Are attorneys giving serious thought to the preservation of their clients’ property, interests, and case files?
Like other businesses, law firms need to confront and prepare for impending disasters. Law firms must develop and commit to implementing a comprehensive disaster plan. Every member and employee of the law firm should fulfill a definitive role in carrying out the firm’s disaster plan. Of course, this presumes that the leaders of the law firm have given consideration to the idea, have formulated a plan, and designated one or more individuals to ensure that the plan is carried out, even in their absence. Why should lawyers take special precautions? Unlike most other businesses, law firms and their lawyers have greater obligations to their clientele. They have professional, ethical, fiduciary, and legal duties to protect, safeguard, and preserve client funds, interests, and property. With the recent increase in the number of hurricanes assaulting the state, have Florida lawyers directed enough attention toward how they can best protect and preserve their clients’ property and interests? If not, now is certainly the time to do so. While the 2005 hurricane season broke records, predictions call for increased activity impacting the U.S. mainland over the next several decades.1
Preparing for a disaster is painful and time consuming. It results in distractions, lost revenue, and decreased productivity. But taking reasonable steps to prepare for the worst case scenario can make the difference in the law firm’s ability to more quickly recuperate after a disaster. In the wake of a catastrophic event, the price of failing to formulate and carry out a disaster plan ahead of time could ultimately result in the total loss of the firm’s business enterprise, as well as liability to clients and third parties for failing to take reasonable precautions.
The Ethics of Law Firm Disaster Preparedness
Could a lack of preparedness on the part of a lawyer constitute unethical conduct in violation of the Rules of Professional Conduct? Historically, lawyers have possessed an ethical duty to safeguard client property and funds.2 While the Rules Regulating The Florida Bar do not contain a specific requirement that a lawyer have in place a plan for disaster preparedness, arguably, several of the Florida Rules of Professional Conduct impose such a requirement implicitly within their meaning, intent, and design. A lawyer, in considering whether to adopt and implement a disaster plan, should first consider the following Rules of Professional Conduct:
Rule 4-1.15. Safekeeping property: “A lawyer shall comply with The Florida Bar Rules Regulating Trust Accounts.”
Rule 4-1.16(d). Protection of Client’s Interest: “Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client’s interest, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled….”
Rule 5-1.1(a). Trust Accounts: “A lawyer shall hold in trust, separate from the lawyer’s own property, funds and property of clients or third persons that are in a lawyer’s possession in connection with a representation.”
These rules place a broad and considerable affirmative duty on lawyers to preserve client property, funds, and interests within the context of the attorney–client relationship, and they do so without carving out any exceptions for lawyers faced with natural disasters or any other specific type of harm.
Indeed, the Supreme Court of Florida focused on the lawyer’s fundamental ethical duty to protect and preserve client property in The Florida Bar v. Ward, 599 So. 2d 650 (Fla. 1992). In that case, the court noted:
When an individual relies on an attorney for legal assistance, that person places his trust not only in the individual attorney, but also in the legal profession itself…. Never is an individual’s trust in attorneys more evident, or more at risk, than when he places funds or property into the hands of his attorney…. The responsibility of preserving client property rests in the hands of both individual attorneys and the legal profession itself. 3
Ethically, what degree of care must a lawyer exercise to protect and preserve client property and interests? What guidance, if any, is available to instruct the lawyer as to the degree of care that he or she must exercise in safeguarding a client’s property and concerns? Fortunately, the Comment to Rule 5-1.1 provides some insight as to the degree of care required of the lawyer: “A lawyer must hold property of others with the care required of a professional fiduciary.”
Rule 5-1.1 makes no distinction between the level of protection that must be afforded to a client’s funds as compared to a client’s personal property. Therefore, absent a distinction, the lawyer must afford the same level of protection to both. A lawyer may believe that it would be reasonable to treat the client’s property with the same degree of care that the lawyer would exercise if the property were his or her own. In actuality, that degree of care required, whether a lawyer seeks to protect client funds or client property, is even higher. The Supreme Court of Florida has held that “[i]n handling his client’s money the lawyer should guard it with much greater diligence and caution than he does his own.”4 In other words, an attorney should not take risks when handling client property that he or she might be willing to take with his or her own property.
logical extension, if an attorney has purchased hurricane shutters to safeguard and protect a personal home and its contents but has failed to do so to protect his or her office and the clients’ property contained therein, has the attorney acted unethically? Likewise, has the attorney’s conduct constituted negligence given that he or she failed to act even though the attorney possessed knowledge of a foreseeable risk of harm to the client’s property? Although now unanswered, these are questions that in the future may be addressed by the courts and The Florida Bar.
Even after reviewing these fundamental ethical rules, a lawyer may remain reluctant to create a disaster plan given the lack of a specific ethical guideline or code addressing a lawyer’s duties to safeguard a client’s property and interests when faced with an impending natural disaster. Beware, the absence of a specific rule or guideline does not relieve an attorney of the duty to act ethically and prudently in safeguarding and protecting a client’s property and interests.5 The lawyer must remain mindful that the Rules of Professional Conduct are not all-inclusive. As noted in the preamble to the rules, “[m]any of the lawyer’s professional responsibilities are prescribed in the Rules of Professional Conduct and in substantive and procedural law. A lawyer is also guided by personal conscience and the approbation of professional peers.”6 The lawyer may not delegate or shift the burden of adhering to ethical rules to third parties and escape repercussions. The Supreme Court has noted that “an accounting by a third party in no way relieves an attorney from his or her obligation to properly handle and account for money or property entrusted to that attorney by a client.”7
To date, The Florida Bar’s Professional Ethics Committee has not issued an opinion that directly addresses the ethical duties and responsibilities of a lawyer in safeguarding client property from natural disasters. Ethics Opinion 72-37, however, does reinforce the notion that, when handling client property, a lawyer must act prudently and with the degree of care required of a trustee or fiduciary.8 The Restatement (Third) of the Law Governing Lawyersspecifically requires the attorney to “take reasonable steps to safeguard the funds or property.”9 The American Bar Association’s Model Rules of Professional Conduct require the lawyer to ensure that client property is “appropriately safeguarded.”10 The ethical duty to safeguard extends not only to the protection of client funds and personal property possessing intrinsic value, but also to papers contained within a client’s file and the file itself.11
Embedded within the text of the Rules of Professional Conduct and the interpretive decisions issued by the Supreme Court of Florida exists an unmistakable message that a lawyer has an ethical obligation to protect, preserve, and safeguard client funds, property, and interests with a degree of care that goes beyond what a lawyer would undertake to protect his or her own property and funds. A lawyer who is on notice of the threat that hurricanes pose, arguably may only meet these ethical requirements through the preparation and execution of a law office disaster plan.
Civil Liability for Failing to Prepare and Protect Client Property and Interests
Florida recognizes causes of action for the negligent and intentional spoliation of evidence.12 Does an attorney commit legal malpractice, however, by failing to protect client property in his or her possession, supervision, custody, or control? This theory of liability is not without precedent. At least one Florida appellate court, in an action for malpractice brought against an attorney, has held that the question of whether the loss of property under the supervision of the attorney was foreseeable constituted a genuine issue of material fact which precluded summary judgment.13 The attorney in that case was alleged to have lost a marital asset valued in excess of $4,000,000 that he placed with a broker for safekeeping during the course of representation in an anticipated dissolution of marriage case. It should also be noted that the commentary accompanying §44 of the Restatement (Third) of the Law Governing Lawyers provides that “[a] lawyer who violates this Section can be subject to civil liability as well as disciplinary sanctions.”
Would the same risk arise in the event the lost or destroyed property had no intrinsic value, e.g., paperwork maintained by an attorney within a client’s file necessary to prove or successfully defend a client’s lawsuit? The sustainability of such an action, again, would most likely revolve around the issue of foreseeability. In a subsequent legal malpractice action commenced on the aforementioned grounds, the plaintiff would need to demonstrate not only that the risk of harm to the client in failing to protect the paperwork was foreseeable to the attorney, but also that the attorney’s failure to exercise reasonable care in safeguarding the information ultimately resulted in the loss of the underlying litigation and damages to the client.
Plaintiffs commonly plead claims for breach of fiduciary duty against attorneys as companion counts to negligence claims in legal malpractice cases.14 Attorneys are legally explicit fiduciaries meaning that their fiduciary duties to their clients arise by virtue of the attorney–client relationship rather than by implication from a set of facts and circumstances.15 The Supreme Court of Florida has held that “[t]he elements of a claim for breach of fiduciary duty are: the existence of a fiduciary duty, and the breach of that duty such that it is the proximate cause of the plaintiff’s damages.”16
Confidence, trust, and reliance serve as the foundation of the lawyer’s fiduciary relationship and duties to the client.17 When a client deposits property or funds with an attorney, the client does so in trust and in reliance on the attorney to take every reasonable step to provide the protection, accounting, and safekeeping customarily provided by other professional fiduciaries. In an era of increased hurricanes and televised coverage of the aftermath, damage, and destruction that these natural disasters spawn, has it not become reasonably foreseeable to members of the legal profession that the failure to take reasonable steps to protect client property contained within law offices will result in an increase in the risk that such property will be subject to destruction, loss, or harm?
Negligent bailment, though utilized, is pleaded less frequently in cases of legal malpractice arising out of a lawyer’s failure to protect and preserve client property and funds.18 Bailees are not held to as high a standard of care as those individuals acting in a fiduciary capacity. Florida courts have held that “[t]he test of liability of a bailee for entrusted goods which are lost or stolen is whether the bailee exercised that degree of care toward the goods that a reasonably prudent person would bestow on his own goods.”19
Another potential source of liability for an attorney who negligently permits the destruction of evidence in his or her possession resides in a claim for spoliation of evidence. One advantage to bringing a spoliation claim against an attorney, as opposed to a claim for legal malpractice, is that the plaintiff, to prevail, need not show that but for the destruction of evidence, the client would have succeeded on the underlying claim.20
With the potential for liability for the loss or destruction of client property existing under several theories and the threat posed by hurricanes to all Floridians over the next several decades on the rise, what is a lawyer to do? Must a lawyer, upon learning of each hurricane that forms in the Atlantic basin, rent a U-Haul truck and pack up every item, client file, and piece of equipment and property on the premises? Certainly not. What is reasonable, or reasonably practicable, for the lawyer and law firm under the circumstances presented?
A Model for Law Office Disaster Preparedness: Taking Reasonable Precautions
As a practical matter, the analysis for the creation of a law office disaster plan should begin from the exterior and move within.
Checklist of considerations:
1) Was the building in which the law office is located constructed or updated to meet or exceed the standards set forth under post-Hurricane Andrew code?
2) Does the physical structure allow for the addition of hurricane shutters, protective hurricane film, and/or other barriers to wind and rain not currently in place?
3) Is the office building located within a flood zone or area prone to flooding?
4) What category of hurricane or type of other disaster would it take to cause total devastation to the office and its contents?
5) Can the firm feasibly move the law office to a safer, more secure location as an alternative to improving the physical structure?
6) In what manner can the firm best protect client property in the possession of the law firm in the event a disaster strikes?
7) Does the law firm possess a means to back-up and preserve client case information in the event the client’s physical file is lost or destroyed?
8) Has the law firm considered temporary relocation areas, e.g., a satellite office or another location, so that it may carry on firm business after a catastrophe occurs?
9) Does the office possess a plan for the removal of computer hardware or an arrangement for the use of other equipment if office machinery is destroyed? How will the firm gain access to saved data after the storm passes?
10) How will the office track important deadlines and appointments if a disaster destroys everything onsite?
11) Does “going paperless” make sense for our firm?
12) Are the firm and its lawyers adequately insured?
Fortunately, technology has made it easier than ever to safeguard client files and work product. Data that once occupied shelf after shelf of office space may now be saved, copied, and transported on a single compact disc, DVD, or portable hard drive. No heavy lifting is required. Do you still think it cannot be done in a manner that is economically feasible? Hire a technology consultant to evaluate the law firm’s data storage and retrieval requirements. The need for law office disaster preparedness has increased the importance of giving serious consideration to “going paperless.” Recent drops in the price of data storage and technological breakthroughs in optical scanning and encoding software has made the prospect of the paperless office more approachable and affordable for large law firms and sole practitioners alike. Do you lack the personnel to scan large volumes of documents and save them to disc? Some companies serving the legal industry that have traditionally provided only photocopying services now employ high speed copier-based scanners that can quickly scan and save documents to electronic media at affordable rates.
If converting to a paperless office is still not perceived by the law firm decisionmakers as a desirable or viable option, there are other means available to safeguard client property both on and offsite. Consider renting several large safety deposit boxes at a reputable, well-constructed bank far enough away from sources of flooding to safely store original documents and evidence that would be difficult or impossible to replace. Also, consider purchasing fire- and water-proof file cabinets and safes to maintain sensitive documents and property onsite. Equipment of this kind routinely becomes available at auctions and second-hand office furniture outlets at reduced prices.
If the law firm holds sensitive client property that is not immediately needed by the firm, contact the client to arrange for the pickup and temporary storage of those materials. Have the client sign a receipt or acknowledgment. Consider temporarily returning original, not easily duplicated evidence, and property originally received from the client to the client for safeguarding during the storm. Include a provision in the contract of representation with the client specifying how client property shall be handled in the event of an approaching, foreseeable disaster. The Florida Supreme Court strongly urges attorneys to reduce to writing any agreement between the lawyer and client that pertains to the safekeeping of client property during the course of legal representation.21
Neither hurricanes nor other natural disasters delay or toll the statute of limitations. While a jury may feel sympathetic toward a lawyer who failed to file a lawsuit on behalf of a client prior to the expiration of the statute of limitations due to a major hurricane, that fact will not serve as a valid affirmative defense to a legal malpractice action. Losing track of important dates and deadlines following the forced closure of a law office could spell disaster for the lawyer and firm. Take steps to provide for a means to access safeguarded data following the catastrophe. Investing in one or more notebook computers and portable printers can help to ensure that the attorney does not lose touch of critical deadlines and calendared events. How will law firm members and employees communicate with each other in the absence of electricity, telephones, and cellular service? Wi-fi-enabled notebook computers provide an opportunity for firm members to communicate and direct recovery efforts from remote locations.
A record hurricane season has drawn to an end. One thing is certain; records are made to be broken. Lawyers should wisely utilize the time before the next season begins to design and implement a law office disaster plan. An effective disaster plan might spare you and your firm from civil liability toward a client and an ethics investigation. It should also allow you to get back to practicing law more quickly once the danger of the storm has passed.
1 Dr. William Gray’s forecast and predictions are available under the Tropical Meteorology Project at hurricane.atmos.colostate.edu/Forecasts/2004/dec2004/.
2 See generally the Florida Rules of Professional Conduct.
3 Ward, 599 So. 2d 650 (Fla. 1992) (quoting Philip F. Downey, Comment, Attorneys’ Trust Accounts: The Bar’s Role in the Preservation of Client Property, 49 Ohio St. L. J. 275, 275, 280 (1988)).
4 State ex rel. The Florida Bar v. Ruskin, 126 So. 2d 142, 143 (Fla. 1961) (“The funds of a client in the custody of his lawyer should be guarded and protected as securely as if the same were in the custody of the community’s strongest financial institution. The relationship between a lawyer and client is of the highest degree of integrity of fidelity.”).
5 See Rules Regulating The Florida Bar, Preamble.
7 The Florida Bar v. Davis, 577 So. 2d 1314, 1316 (Fla. 1991).
8 Florida Bar Ethics Committee Opinion 72-37 (November 27, 1972). “However, in handling clients’ funds, the lawyer is acting as a fiduciary or trustee and is expected to act as a prudent man.” Id.
9 Restatement (Third) of the Law Governing Lawyers, §44 (2001).
10 Model Rules of Professional Conduct, Rule 1.15, American Bar Association (2003).
11 Florida Bar Ethics Committee Opinion 63-3 (June 25, 1963).
12 DiGiulio v. Prudential Prop. & Cas. Ins. Co., 710 So. 2d 3, 4 (Fla. 4th D.C.A. 1998) (“The cause of action for spoliation of evidence is part of Florida jurisprudence.”).
13 Behr v. Foreman, 824 So. 2d 222 (Fla. 2d D.C.A. 2002).
14 Palafrugell v. Cassel, 825 So. 2d 937, 940 note 2 (Fla. 3d D.C.A. 2001) (“A claim for breach of fiduciary duty, coupled with a claim for legal malpractice, does not necessarily combine to form one claim for legal malpractice.”).
15 Capital Bank v. MVB, Inc., 644 So. 2d 515, 518 (Fla. 3d D.C.A. 1994).
16 Gracey v. Eaker, 837 So. 2d 348, 353 (Fla. 2002).
17 Taylor Woodrow Homes Fla., Inc. v. 4/46-A Corporation, 850 So. 2d 536, 540 (Fla. 5th D.C.A. 2003).
18 State Farm Fire & Cas. Co. v. Bill Ussery Motors, Inc., 653 So. 2d 481 (Fla. 3d D.C.A. 1995).
19 Id. at 481 (quoting Fruehauf Corp. v. Aetna Ins. Co., 336 So. 2d 457, 459 (Fla. 1st D.C.A. 1976)).
20 Miller v. Allstate Ins. Co., 573 So. 2d 24, 31 (Fla. 3d D.C.A. 1990).
21 The Florida Bar v. Fitzgerald, 491 So. 2d 548 (Fla. 1986).