The law firm may have dissolved, but the records remain
By Catherine Ho,
When the Washington law firm Howrey dissolved and entered bankruptcy last year, most of the firm’s lawyers landed new jobs, bringing with them their clients — as well as the electronic and paper records of those clients’ active matters.
But left behind were 55 years’ worth of documents and servers full of data containing financial records, e-mails and other confidential information about companies and individuals. Those files did not get transferred to other firms because either the matters were inactive or closed, or in the case of active matters, the lawyers had not yet moved them to their new firms.
Now, the Howrey estate is mapping out a plan to return or destroy those files, which are currently stored in 220,000 document boxes in storage facilities in Washington, Chicago, Los Angeles and Houston, and two data centers in Ashburn and Amsterdam.
Such is the complexity of winding down a major institution that bridged the paper and digital ages.
When a law firm goes bankrupt, the estate has the legal obligation to notify all former clients that they can either take steps to retrieve their files or give the estate the authority to destroy them.
On Wednesday, Allan Diamond, the Houston lawyer who was appointed the Howrey trustee last fall, will present a proposal to the bankruptcy judge that details exactly how the estate plans to do that. If the judge approves the plan, the estate will start sending out notices to more than 10,000 former clients, asking them to respond within 90 days if they want their files back.
Some former clients have already put in urgent requests to have their information returned, and lawyers and staff for the estate have started the painstaking process of finding, reviewing and sending back both paper and electronic records to clients, said Diamond, managing partner of the business-litigation firm Diamond McCarthy.
“Howrey had a client list in the tens of thousands,” Diamond said. “They want their files back. Figuring that out is not easy. This is a monumental task of the estate. It will probably take six to eight months.”
Diamond declined to name clients, but in the past Howrey lawyers have represented Exxon Mobil, Caterpillar, Bristol-Myers Squibb, Monsanto, General Motors, Procter & Gamble and Intel.
Winding down a law firm’s data cache is especially complicated because virtually everything in it is owned by clients who have to be tracked down and contacted, whereas in bankruptcies involving other types of businesses, most of the data stored over the company’s life span is owned by the company itself. And because information retained by law firms is protected under attorney-client privilege, the estate must be particularly careful about returning or destroying the files so no one other than the client can access them.
The reviewing, indexing and sending of the files comes at a cost. Each box of documents must be thoroughly checked to make sure it doesn’t contain information from multiple clients, lest one company receive the proprietary information of an industry competitor. As part of the plan, Diamond is seeking court approval for former clients to reimburse the Howrey estate to defray the costs.
“It could be as cheap as a FedEx overnight if they’ve got one folder,” said Sharon Hughes, an executive administrator at Diamond McCarthy who is working with Diamond on the Howrey matter. “Or it could easily be thousands of dollars. In some of these cases, I’m literally talking about delivering 10,000 or more boxes. And those 10,000 or more boxes are not all in the same location.”
On the digital side, the estate has begun contracting with technology services firm Aldridge Co. to transfer the data stored on large servers to smaller platforms in order to cut down on data storage fees. The Ashburn and Amsterdam facilities cost the estate a combined $100,000 a month to maintain.
220,000 Approximate number of boxes of client documents stored in four cities across the country that must be returned or destroyed.