The bankrupt law firm Dewey & LeBoeuf is presenting an interesting ethical dilemma that we can all learn from. The firm says they have hundreds of thousands of boxes of client files in various locations all around the world. However, given their current financial limitations, who should pay to have these documents destroyed is being debated.
Before filing for bankruptcy, the firm had offices in 12 countries. Many of their confidential files are located in third-party warehouses, including over 100,000 in Brooklyn, New York. The problem is the firm has claimed in bankruptcy hearings that it’s about $500,000 behind on warehouse fees and needs to be rid of storage costs to help them repay creditors.
The law firm has suggested giving former clients (about 4,500 of them) the opportunity to retrieve their files within 75 days. What’s left unclaimed would be destroyed. But there are concerns over details of the proposal, including how the documents would be destroyed, or even located in the first place. Clients and creditors fear trade secrets could be compromised in the process.
“There’d be nothing stopping anybody from sending these files to The New York Times,” said U.S. Bankruptcy Judge Martin Glenn, who is overseeing the Dewey & LeBoeuf proceedings. “That really bothers me.”
Financially functioning law firms are required to dispose of client files, paying legal document shredding companies like Accu NW to handle the process securely and in a timely manner. Normally, a firm doesn’t have to destroy and shred the paper and documents all at once, choosing a more savvy approach to administering a records management budget.
So there’s a standoff: Dewey & LeBoeuf says they don’t have the funds to destroy what probably amounts to millions of boxed documents, and the document storage companies housing them don’t want to be left to foot the bill either.
The law firm’s predicament is that there is a clash between their fiduciary duty to maximize funds to pay creditors and the ethical responsibility to pay for document shredding. Dewey & LeBoeuf says what they are proposing goes along with the American Bar Association’s Model Rules of Professional Conduct, which is based on the sale of a law firm. One of the rules requires giving clients 90 days to retrieve records before transferring them to the acquiring firm. But they are giving only 75 days for file retrieval and there is no “acquiring firm.” So, it sounds like there’s a pretty long legal battle ahead.
Dewey & LeBoeuf’s high profile clients over the years have include bond insurer Ambac, National Football League players’ groups and Lloyd’s of London.
Tags: legal document shredding