Client Files, Revisited

Who owns an Oregon lawyer's client files - the lawyer or each client? The answer to this seemingly straightforward question is not that simple. The answer is obviously of great importance to lawyers and their clients. Ownership disputes usually come up when a lawyer's services are terminated and the client still owes the lawyer money for those services or when the lawyer-client relationship ends on a sour note.

While an Oregon lawyer has a retaining lien on a client's papers and property for the work performed,1 the lawyer may have to forego the lien as a matter of ethics when retention of particular items might result in prejudice to the client's interests. George Riemer, general counsel for the Oregon State Bar, published two columns in the OSB Bulletin in 19962 on the ethical duties of Oregon lawyers concerning their clients' file materials. Two issues are worthy of further consideration at this time. As a matter of state law, who really owns the lawyer's client files? Additionally, who owns the intellectual property in the material under federal copyright law? This article offers suggested answers to these questions; they may surprise you.

Oregon Disciplinary Rule 9-101(C)(4) provides, in part, that Oregon lawyers shall '[p]romptly pay or deliver to a client as requested by the client the funds, securities or other properties in the possession of the lawyer which the client is entitled to receive.' What property in the lawyer's possession is the client entitled to receive? Unfortunately, the disciplinary rules provide no explicit answer to this question. Under existing OSB ethics opinions3 a lawyer must provide a client with a copy of the parts of the file that a 'client might reasonably need in order to protect the client's interests.'4 The fact that a lawyer may have an ethical duty to provide a client with a copy of certain portions of the lawyer's file does not determine whether the lawyer or the client owns the file as a matter of state substantive law. As a lawyer pays for the tangible property used to create a physical client file and also creates many of the documents placed in a client's file, it would appear that the client file is, in fact, the property of the lawyer.5 The lawyer nevertheless has an ethical duty to provide a client with a copy of certain portions of the file and also the ethical duty to promptly deliver to the client or other appropriate parties original items of property the lawyer received from the client or received from others for the benefit of the client. Thus, for example, a lawyer has the ethical duty to promptly return, upon request, original stock certificates or original corporate records that the lawyer received from a client.

COPYRIGHT
Copyright protection was deemed so fundamental that it was dealt with in the U.S. Constitution. Article I, Section 8, Clause 8, grants Congress the authority to 'promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.'6 The first Congress enacted a copyright law, and that law, as amended from time to time, remains in effect today. Copyright is not all encompassing; rather, it is limited to protecting works fitting specific definitions.

The U.S. Supreme Court in Feist Publications, Inc. v. Rural Telephone Service Co.,7 for example, opined that the U.S. Constitution requires more than an independent work of authorship to obtain copyright protection.8 The court reasoned that the work must also contain a 'modicum of creativity.'9 Copyright, therefore, assures authors a right to their original works but will not provide protection for a mere compilation of facts. Though facts in and of themselves are not eligible for copyright protection, a compilation of facts may possess the requisite originality if the author chooses which facts to include, in what order to place them, and how to arrange the data so that readers may use it effectively. Copyright protection, however, extends only to those components of the work that are original to the author, not to the facts themselves.10

As applied to a client's file, a lawyer's assimilation of facts, research and experience combine to create an 'original work of authorship.' It should follow that the lawyer's original work of authorship, even if the lawyer-client relationship has ended, is protected under the Copyright Act.

PREEMPTION
It might appear that there is a conflict between the Oregon Code of Professional Responsibility, as interpreted by the Oregon Supreme Court and the Oregon State Bar, which provides that clients are entitled to copies of the bulk of the material in their files, and copyright law, which states that the independent contractor who creates a work owns the copyright unless it is deemed a 'work made for hire' within the meaning of the statute. As noted above, it is important to distinguish between ownership as a matter of state substantive law and the ethical duty to return the client's original documents to the client and to provide the client with copies of other material in the lawyer's file. Furthermore, Section 301 of the Copyright Act appears to resolve any ownership conflict by providing that 'all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright . . . are governed exclusively by this title . . . [and] no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.'11

To date, no case has considered whether copyright law preempts inconsistent state bar ethics rules, such as DR 9-101(C)(4) of the Oregon Code of Professional Responsibility, to the extent they are claimed to grant a client property rights in his or her lawyer's file. It would seem that federal copyright law should preempt bar disciplinary rules with regard to ownership issues. State law cannot grant clients ownership interests in property that federal law protects as the property of a lawyer.

WORKS MADE FOR HIRE
Germane to the discussion of copyright ownership and client files is the 'works made for hire' doctrine. This doctrine is divided into two principal categories: 1) the employer and employee relationship; and 2) the independent contractor. The importance of distinguishing between these two categories is seen in the ownership of the copyright. The employer is the initial owner of the copyright in the first category when the work is created within the scope of employment. The independent contractor is the owner of the copyright in the second category.12 In the case of an independent contractor, Section 101 of the 1976 Copyright Act13 provides that a work will be deemed a work made for hire if it is specially ordered or commissioned, falls into one of nine enumerated categories14 and there is a signed agreement between the parties. Guidelines for determining whether someone is an independent contractor or an employee are provided by the principles of general agency law.15

The concept of initial ownership is an important one. Employers or commissioning parties are only presumed to be initial owners of a copyright, and the presumption may be rebutted by an agreement in writing between the parties.16

In Community for Creative Non-Violence v. Reid,17 the U.S. Supreme Court expressly held that a sculptor was an independent contractor and, therefore, entitled to retain control and ownership of the copyright, even though the hiring party contracted with Reid to sculpt a specific nativity scene which CCNV created. The extent of control the hiring party exercises is not dispositive. Thus, for a client to assert that he or she is an employer for purposes of the 'works made for hire' doctrine, the client must show that the employment is in the regular course of business.18

The 1976 Copyright Act entitles lawyers in many circumstances to properly claim copyright ownership of their client files. While states may disagree as to whether the client or the lawyer owns the lawyer's file as a matter of state law, it remains clear that an Oregon lawyer has an ethical duty to promptly return to the client upon request the original property of the client which the client gave to the lawyer during the course of the representation and the ethical duty to provide the client with a copy of certain portions of the lawyer's file. It does not follow, however, that these ethical duties would permit a new lawyer to use the prior lawyer's original work without permission. As an independent contractor, the former lawyer's original work, e.g., briefs and memoranda, is protected under federal copyright law since it is not only an original work of authorship, but also satisfies the 'modicum of creativity' test from Feist.19 A lawyer's work is not merely a recitation of facts but involves a great deal of original creative work. While the specific facts of every case are the foundation of the research and problem solving, the individual lawyer determines which facts are relevant, how they apply to current case law and creates documents using his or her experience, as well as a multitude of other resources.

SCOPE OF PROTECTION
Section 106 of the Copyright Act20 provides that the owner of a copyright 'has the exclusive rights to do and to authorize' reproduction of the copyrighted work, to prepare derivative works, to distribute copies and to perform the copyrighted work publicly.21 Since a lawyer is granted these exclusive rights under the copyright statute, no one else can exercise these rights without the lawyer's permission. Thus, federal copyright law not only prevents the reproduction of protected work, but also prevents creating work derived from it. A derivative work is anything based upon one or more preexisting works that has been recast, transformed or adapted.22 Thus, it appears that a new lawyer could not merely create slight variations in a former lawyer's work, but would be forced to create independent material when taking over a file from another lawyer unless the former lawyer and the client come to an agreement concerning payment for the right to create a derivative work.

There is a limitation on the exclusive rights enumerated in Section 106. The 'Fair Use' doctrine provides that a reproduction of a copyrighted work will be deemed fair use if it is used 'for purposes such as criticism, comment, news reporting, teaching . . ., scholarship, or research . . . .'23 In order to determine whether a particular use is 'fair use,' the statute provides that a number of factors should be considered. These require evaluating the nature of the work, the nature of the use, the extent of the copying and the effect the use would have on the copyright owner's market. Whether a court would consider a subsequent use by a lawyer to be fair use is not clear since no courts have heard this point, but it makes sense for the author of the work to argue that permitting reproduction of a copyrighted work would deprive that lawyer of its economic value, particularly when the author has not been paid in full for the services rendered the client.

RESTATEMENT OF THE LAW (3D): THE LAW GOVERNING LAWYERS
A discussion of client files would not be complete without noting the new Restatement's view on withholding client files. For the last 13 years, the American Law Institute has been working on a new Restatement governing the conduct of lawyers. This important work was recently completed and has been made available to interested parties through the Institute's Website at www.ali.org. Among other things, the new Restatement deals with the question of client files, taking the position that the entire file belongs to the client and must be turned over when the relationship ends. While certain Oregon State Bar formal ethics opinions suggest that a client owns some portions of his or her lawyer's file and the lawyer owns the remainder, Oregon's disciplinary rules do not establish as a matter of state substantive law who owns a lawyer's client files. Both the Restatement and Oregon take the position that a client's file is subject to a lawyer's retaining lien as long as the client is not prejudiced by its assertion. While Oregon does not adhere to the 'entire file' doctrine, the new Restatement takes the minority view that lawyers may not withhold client files or property in an effort to get paid.24 Under the Restatement, a lawyer may only withhold documents for which the client has not paid as long as withholding them will not cause the client any harm.25 This is a heavy burden for the lawyer. The fiduciary relationship between the lawyer and the client means that the lawyer must always keep the client's best interests in mind, even if that means turning over files at the expense of payment of a bill for legal services. The new Restatement places a higher importance on the client's ownership than protecting an attorney's work. The new Restatement does not analyze the lawyer's copyright interests in his or her client files, and the Restatement is not the substantive law of Oregon.

CONCLUSION
While lawyers have an ethical duty to return original client documents and also to provide clients with access to material prepared on their behalf, still the work product of the lawyer is protected and may not be used absent the author's permission. Most private practitioners, other than in-house lawyers, are independent contractors with protected intellectual property rights to their creative work (briefs, memoranda, contracts, etc.). The original work the lawyer creates through an assimilation of facts and experience is protected by the 1976 Copyright Act and is not affected by the concomitant ethical duties of the lawyer.

The rights of lawyers to their client files under federal copyright law has received little attention to date. Nonetheless, these rights should not be overlooked in analyzing the appropriate position to take when a client demands his or her file. Of course, the efficacy of a lawyer's remedy under federal copyright law concerning a client or successor lawyer's misuse of copyrighted material must also be considered. Regardless, it is important for lawyers to be aware of their rights under federal copyright law and that their ethical responsibilities to their clients can still be met while they assert them. +

ENDNOTES
1. ORS 9.370 permits lawyers to assert possessory liens under ORS 87.430.
2. George A. Riemer, Fighting With Clients Over Files: Do (Should) Lawyers Always Lose?, Oregon State Bar Bulletin, Feb./March 1996; Whose File Is It Anyway? Possible Solutions to the Problem of Fights over Files, Oregon State Bar Bulletin, April 1996.
3. Oregon State Bar Formal Ethics Opinion 1991-90. See also OSB Formal Ethics Opinions 1991-60, 1991-70 and 1991-125.
4. Riemer supra.
5. See John W. Allen, Ownership of Lawyer's Files About Client Representations: Who Gets the 'Original'? Who Pays for the Copies?, Michigan Bar Journal August 2000, p. 1062, 1063 ('The ownership of the physical materials composing the file is to be distinguished from access to the information contained in them. While the physical record itself belongs to the lawyer or law firm, the client is entitled to have access to that information made available for copying or inspection. This distinction between ownership and access is consistent with the prevailing law of agency and fiduciary duty.')(footnote omitted).
6. U.S. CONST. art. I, §8, cl. 8.
7. 499 U.S. 340, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991).
8. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 105 S.Ct. 2218, 18 L.Ed.2d 290 (1985).
9. Feist supra.
10. Id.
11. 17 U.S.C. § 301 (1976).
12. CCNV v. Reid 490 U.S. 730, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989).
13. 17 U.S.C. § 101 (1976).
14. Section 101 allows this designation only for commissioned works or works that are specially ordered and are a contribution to a collective work, issued as part of a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional text, a test, an answer material for a test or as an atlas.
15. Restatement (2d) of Agency § 220(2) contains an exhaustive list of factors to be used in determining whether a person is an independent contractor. These include, inter alia, the skill required, the location of the work, the duration of the relationship, and the extent of the hiring party's discretion over when and how long to work.
16. Melville B. Nimmer, et al., Nimmer on Copyright § 5.03[D].
17. 490 U.S. 730, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989).
18. If the 'regular course of business' argument is rejected, the only other alternative is arguing that the work was specially commissioned, and the work must fall within the statutory requirements and the arrangement must be evidenced by a signed writing. A party not meeting the statutory requirements may still be able to claim joint authorship. See Melville B. Nimmer, et al., Nimmer on Copyright § 5.03[B][1][a][iii], at 5-26.
19. Supra.
20. 17 U.S.C § 106 (1976).
21. Id.
22. Melville B. Nimmer supra § 3.01.
23. 17 U.S.C. § 107 (1976).
24. Sylvia Hsieh, New Restatement Offers Guidance On Legal Ethics, Malpractice Issues, Lawyers Weekly USA, Oct. 30, 2000 at 1.
25. Id.

ABOUT THE AUTHOR

Leonard DuBoff, of The DuBoff Law Group LLC, Portland, is the author of more than 20 books on business and intellectual property law. DuBoff was a law professor for more than 24 years, teaching copyright and related courses, and in 1994 founded his own law firm, which represents clients in the United States, Canada and other countries. The author thanks Meredith A. Houston and Christy O. King for their valuable assistance with this article and Emil Berg and George A. Riemer for their suggestions and comments.

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