Legal
The firm holding its clients' records
You hold the papers of two hundred companies and none is yours. That makes your archive the problem, not the solution.
Your archive is the documentary memory of two hundred companies that are not you. That position has an obvious advantage —you hold everything— and a risk rarely sized properly: **a problem in your archive is not one problem, it is two hundred at once**.
The four questions that reach a firm
| Who asks | What they want | What answers it |
|---|---|---|
| A client | Their documentation, now | Knowing what you hold of theirs and where |
| A departing client | Everything of theirs | A procedure, not a negotiation |
| An authority | Something about one client | That client's file, not the firm's |
| **The client, years later** | **Something from when they were a client** | **The retention policy you set** |
Important
**The question you must be able to answer at any time is «what do I hold of this client and why do I hold it?».** It is not about tidiness: it is what separates custody from hoarding. A firm that keeps everything just in case carries more risk, not more service — every extra document is one to protect, justify and eventually delete, and multiplied by two hundred clients it becomes the firm's largest exposure.
What is worth settling, and almost nobody has
- 1
What is kept per client and for how long
Written once and applied to all, not decided case by case.
- 2
Who in the firm may open what
«Everyone sees everything» stops being sustainable past a few clients.
- 3
What is handed over when a client leaves
In what format and by when. Before the first one leaves.
- 4
And what happens to a client who disappears
The awkward case, and commoner than it sounds.
Watch out
The specific risk of this position, and the worst to handle: **the client believes you hold everything, and you believe they hold their own**. Both are wrong simultaneously. They kept no copy because «the firm has it» and you kept only what your engagement required. When a question arrives about something outside that engagement, nobody has it. Stating in writing what you keep and what you do not, at the outset, avoids that entire conversation.
Worth knowing
What documentation a firm must retain, for how long, what confidentiality and data-protection duties apply and what must be handed over on ending an engagement depends on the subject matter, professional rules and data-protection law. **Your professional body or adviser settles that**; here we cover the organisational part that decides whether you can answer.
›Do I return everything to a departing client?
Theirs, yes — and have the procedure written before you need it.
›Can I keep a copy?
It depends on the subject and applicable period. Set it once for everyone.
›What if the client says they hold nothing?
Which is why it pays to state at the outset what you keep and what they must.
A real case
The situation
A client asks for their documentation and what is held has to be reconstructed.
What you do
- Keeps an index per client of what is retained and why
What you get
The handover is prepared in hours rather than days.
The situation
The firm keeps everything «just in case» for two hundred clients.
What you do
- Sets a retention policy and applies it to everyone alike
What you get
Exposure falls without losing anything that must be held.
The situation
A client leaves and the handover is negotiated on the fly.
What you do
- Has it written down what is handed over, in what format and by when
What you get
Departure is a procedure rather than an argument.
The situation
A question arrives about something never within the engagement and nobody holds it.
What you do
- States at the outset what the firm keeps and what the client must keep
What you get
Each side retains their own, knowingly.
The situation
The whole team can open every client's folders.
What you do
- Restricts who opens what according to the engagement they work on
What you get
Sensitive material stops being within reach of those who do not need it.
The situation
A client disappears and their documentation sits ownerless in the archive.
What you do
- Decides beforehand what happens in that case and documents it
What you get
The archive stops accumulating files nobody can claim or delete.
This article answers
- accountancy firm holding client records
- how long do i keep a clients documents
- adviser liability for the archive
- what if i lose a clients documentation