SRA wins approval to destroy 765,000 files from shut-down firms

Files: SRA hopes to save initial £120,000 a year through destruction

The High Court has given the Solicitors Regulation Authority (SRA) permission to destroy immediately around 765,000 files it is storing after intervening in law firms in recent years.

Sir Anthony Mann, sitting as a High Court judge, said the regulator hoped to save £120,000 a year initially, a figure that would increase as more files were destroyed.

In a ruling from last July only published this week, Sir Anthony heard that the SRA had twice previously obtained court orders – in 2009 and 2015 – to destroy files it was holding from interventions.

The Solicitors Act 1974 gives the SRA the power to do this but it has chosen periodically to seek the approval of the court. On this occasion, it wanted permission to destroy the files collected since 2015, with some 765,000 ready for immediate destruction.

Its file retention policy states that most client files are kept for seven years after an intervention.

The SRA told the court that, as of June 2021, it had 346,572 boxes in storage at a cost of 28p per box per month, totalling around £1.2m a year. Storage costs were increasing by 1.5% a year.

It applied for an order on the basis that “it would otherwise be unreasonable for it to incur the costs of perpetual storage of non-original documents and that there is no other satisfactory alternative for preserving the documents”, Sir Anthony recounted.

Non-original documents are routine correspondence, files notes and so on.

The SRA also argued that, to keep the documents forever, or at least beyond a reasonable time, would be contrary to the Data Protection Act 2018 because they contained personal information which there was an obligation not to retain beyond a reasonable time.

The Information Commissioner’s Office backed the SRA’s approach to destruction, the judge said.

He continued that clients only sought the return of a very small proportion of the files and, when they did, it was mostly within the first two years.

For example, looking at interventions in 2015, 15,961 files were returned within two years of the intervention, while 190 were returned in the sixth year following it.

The judge accepted that the SRA’s policy meant most non-original documents were probably kept for longer than the original firm would have done.

Other ways of preserving information – such as scanning the documents or writing to clients to give them a final opportunity to claim the file – were deemed by the SRA to be too expensive.

However, Sir Anthony raised some concern about documents that were clearly marked or otherwise designated as having been deposited with solicitors for safekeeping.

“It may be that those documents would not obviously fall into the category of original documents but it is certainly arguable, if not likely, that they should be treated as if they were original documents.

“The categorisation of some documents as original brings with it the supposition that the client will wish to have the original documents because they will be significant at some point. Those factors do not apply in relation to non-original documents because they are likely to be of much less significance to the client and may even not even belong to the client.”

He said the SRA should consider this further and return to the court with its proposal.

Sir Anthony added that, if the SRA were to make a significant change to its retention policy, he would expect the SRA to seek the court’s permission again.

“It may or may not be that in the future the SRA will seek the court’s approval for a policy of destruction of original documents. That, in my view, presents rather greater difficulties or at least rather more serious matters for consideration than the present application.”

The court in such a situation may need “some extra assistance”, such as the appointment of an amicus, to determine that issue, he said.

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