Who owns file notes?

The Supreme Court of New South Wales recently considered1 the perennial issue of ownership of a solicitor’s file notes, concluding that notes made during conferences and meetings with third parties were the client’s property.

The firm which resisted disclosure of those documents was ordered to pay costs of the action.

The case, Alexiou v Alexandra White t/as HWL Ebsworth2 applied existing authorities, rather than breaking new ground but clarifies how these should be approached.

Context: HWL had previously acted for Mr Alexiou in relation to an Australian Securities and Investments Commission enquiry into the conduct of his employer. The employer had agreed to pay Mr Alexiou’s costs of the representation. Mr Alexiou was the ‘client’ within the meaning of the Solicitors’ Conduct Rules. The costs agreement was silent on ownership of documents and cost of file storage/uplift.

What are the principles?

The starting point for determining ownership of file documents remains Wentworth v De Montfort,3 which focuses the enquiry on three issues – the purpose for which a record was created, whether the client was charged for the record, and ownership of the paper upon which information resides.4

The last is difficult to apply in the context of electronic file keeping and information exchange. For want of a better alternative, principles which relied upon the concept of property in the paper passing have been translated into modern practice.

In summary, documents ‘belonging’ to the client include those:

  1. provided to the solicitor by third parties as the client’s agent
  2. prepared or acquired by the solicitor for the benefit of the client, or
  3. for which the client has been charged, either for the content or the copy.

Documents ‘belonging’ to the firm include those:

  • prepared by the solicitor for their internal purposes, benefit or protection, for which the client was not charged
  • instructions from clients to the solicitor, and
  • documents sent to the solicitor, property in which was intended to pass on receipt.

The live issue before the court in this instance was whether the client had been charged for file notes concerning the solicitor’s dealings with third parties.

Whether a client has been ‘charged for’ a document is not as easy as it may first appear. Even if there is no line item in the bill: ‘preparing file note of meeting with A’, if the note is made during time for which the solicitor is charging, can it really be said that the client was not charged for it? Similarly, if a firm charges in billable units justified partly on the basis that there will be collateral work associated with an attendance – such as making and filing records of attendance – was the client only charged for the attendance itself?

The court in Alexiou5 concluded that – in the particular context of this retainer – the client had been charged for the meeting, so, absent evidence to the contrary he had been charged for the preparation of the notes made during the meeting. The bill made no mention of a charge for production of the note, however Justice Cavanagh did not consider such an absence persuasive.

One factor taken into account was a charge for a junior solicitor also present during the meeting. Justice Cavanagh noted that the making of notes of the discussion is usually a primary function of the less senior solicitor.6

Costs of file uplift

The firm suggested that it should be entitled to charge for the time it would take to ‘review’ the file in preparation for uplift. His Honour disagreed on the basis that, if the firm chose to spend time removing its own property from the file, it did so for its own benefit and must do so at its own cost. The firm was also unable to point to anything in their costs agreement which would entitle them charge for such work.7

Rules 14 and 16 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 20158* – were considered and applied. His Honour observed:9

“The Solicitors’ Rules guide solicitors in the conduct of their practice. The obligations of a solicitor include returning client documents to the client when requested to do so. It seems to me that this is an ordinary function of operating a professional practice. A request by a client to return client documents to him should not be met with a further costs agreement allowing the solicitor to charge an hourly rate for returning client documents to the client.”

Practical points

  • If you do not intend a particular record to become a client’s property, it should not be created during time paid for by the client. This fact should be expressly stated in the record.
  • A timekeeping system should be able to record (and allow authors to be credited for) non-billable time spent on a file. This time is not wasted, it is important to the proper discharge of professional obligations.
  • If you still print paper files, ensure that the disbursement recovery system does not automatically bill all printing allocated a particular file reference to that file.

*identical to the Australian Solicitors Conduct Rules 2012 which applies in Queensland.10

Footnotes
1 Alexiou v Alexandra White [2021] NSWSC 485 (Alexiou).
2 Ibid.
3 Wentworth v De Montfort [1988] 15 NSWLR 348.
4 See Stafford Shepherd, ‘Mine or yours?’, QLS Ethics and Practice Centre, (Online, November 2011), qls.com.au/Knowledge_centre/Ethics/Resources/Client_documents_and_liens/Mine_or_yours_Proctor_Nov_2011.
5 Alexiou (n1).
6 Ibid 70.
7 Ibid 84.
8 Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) rr14, 16.
9 Alexiou (n1) 87.
10 Queensland Law Society, Australian Solicitors Conduct Rules 2012 (at 1 June 2012).

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