Germany: The Electronic File

Last Updated: 20 December 2000
Article by Helmuth Jordan

Data Security and Attorney-Client Privilege

The following report will clarify how the electronic file can supplement the conventional file. Hereby emphasis is on the description of a solution with practical applications which, although it does not completely eliminate the mountains of documents with which an attorney now is confronted, nevertheless substantially reduces an attorney's involvement with paper.

The technical development will also shake the principles of the attorney-client privilege.

Skeptics Of The "Paperless" Office

"Burst dream of a paperless office" – so titled "The World Online" its report on a study in year 1999 by the business consulting firm Boston Consulting Group on the worldwide use of paper. There it was predicted that PC printers would be able to handle approximately double their paper capacity by the year 2003. Recent studies in Australian offices show that, despite the electronic revolution since 1983, the consummation of paper has increased five fold.

Reports such as these strengthen the skepticism over the realization of the vision of a paperless office, and appear to agree with those who consider this objective as unachievable anyway. Many of these skeptics can be found in German law offices. Attorneys trust nothing and no one more than their files which, stuffed to the brim with papers, form the organizational core.

It is true, that even a fully electronic office is no real threat to the paper industry for the consumption of paper. The one medium does not exclude the other. No one has made the bicycle obsolete merely because there are automobiles in the meantime. Significant is simply the recognition, that the electronic file promotes efficiency in an attorney's office.

Organization Of The Electronic File

At the core is the electronic file. This is a data bank that keeps all documents of each case available in digital form. The individual documents (briefs, letters from the client, the opponent and the court), which are also compiled in the conventional paper file, are digitalized by scanning and stored in a manner which can be read by a computer. During scanning of a document, additional distinguishing features are recorded which serve the purpose of assignment of a document to a file and placement within the file. As with the conventional file, these are the file number, the designation of the parties, the date of the document, and the nature of the document (correspondence with client, opponent, third parties, etc.).

A new feature is the "optional space for text" for designation of the document with head note. These texts are used later as a table of contents for the file. The texts serve as organizers within the file.

In scanning a document, the scanner creates a picture file in which the original is faithfully depicted.

Alternatively, there is the possibility that the picture file created during scanning is processed with the help of so-called OCR software (OCR stands for Optical Character Recognition) in a manner whereby the picture file is converted to a document that can be edited. In view of the fact that the current OCR programs are not nearly completely refined, the second method presently is not very well suited for application in an attorney's office. Moreover, it must be considered that no need exists to edit a third-party document that has been recorded. Indeed, with this alternative there is a risk of falsifying or manipulating the files. Therefore, an alternative is simply not desirable: document authenticity and document security have precedence in particular for attorneys. Ones own documents remain editable by means of word processing, likewise documents in Word received via E-Mail.

Software systems are available for law office, which likewise convert attorneys' briefs to electronically maintained files. The disadvantage of the exclusive use of such programs is that documents from third parties are not recorded electronically. The attorney, therefore, must still use the paper files to work on a case. This is different in the case of the concept presented here, because the electronic file contains all materials and makes the use of paper duplicates superfluous, although this nevertheless remains possible.

To record and administer a scanned document, in addition to a scanner with automatic feed, which can handle a group of papers as a stack, archiving software is necessary. A variety of archiving and document management systems are available on the market. The adaptation if an existing system to the special requirements of a law office, or the development of a specially tailored individual program, should definitely be left to a competent programmer, so that in the event of problems in daily application a consultant familiar with the system is always available.

Research in an electronic file occurs by use of a research tool on the monitor, where individual document features which are searched for are recorded. Under the name of the client, name of the opponent, or the number of the file, there appears a list of all documents belonging to the file, arranged in chronological order. By use of the "optional space for text", which contains a short description of the contents of each document, one very quickly accesses the desired document. The document appears on the monitor, one can also "flip through the pages." If needed, of course, the document can be printed, for example to underscore text or to make notes thereon. However, a person who has resolved to maintain a paperless office will not consider this necessary very often, since marginal notes can also be recorded electronically.

Even in the case of use of electronic files, the original documents are retained in physical form in a paper file. However, the need to refer to the paper file will become increasingly less, because instead of these, the electronic equivalent forms the basis for the attorney's work. Organization of a conventional file will be simpler: With the exception of court pleadings, the complex subdivision of the file which was formerly necessary is no longer required. This subdivision is even more precise in an electronic file.

A consistent and uniform handling during recording of documents is necessary in order for an electronic file to always be as complete and likewise reliable as a conventional file. Incoming letters, faxes and E-Mail are recorded through the use of the archiving system before they are placed in the paper file, and then assigned to the appropriate electronic file. The same occurs in the case of outgoing briefs and messages. A process diagram tailored to the attorney's office consolidates the referral function to an electronic and a paper file.

Where Is The Efficiency Benefit Of An Electronic File?

There are diverse advantages of the electronic file in comparison to the conventional paper file, and they quickly make up for the time, work, and expense of recording documents.

  • Speed of access

The electronic file affords access to every recorded document in a matter of seconds. The time-consuming search for a document in a paper file is eliminated. With a conventional file, only a mono-use is possible, whereas multiple use of the file simultaneously is necessary: the bookkeeper needs the file to record costs, the legal assistant wants to research a legal problem in the library, the junior attorney is preparing the draft of a petition, and the senior partner needs the file for an urgent telephone conference with the client. The constant collision of the group described here is not unknown in any large law firm. Each person has faster access than before to that portion of the file that is of interest parallel to the use by the others.

  • Mobility

Use of the electronic file enables the attorney to be mobile and flexible: He can take hundreds of files on the hard drive of a laptop or on a CD-ROM disk everywhere, and work on them anywhere. He can have access to new documents, which arrive in the office during his absence and are added to the electronic file, by connecting to the office network by means of a modem and data line, and examining the file. If the archiving software has set up a research tool to track the filed "Scan Date", the attorney who is away from the office remains currently informed about all incoming and outgoing occurrences on the day that interests him. Thereby the attorney has two levels about the degree of information:

  1. Table of Contents: Only those files are listed in which there has been activity on the day in question.
  2. Detail information: Precisely only the documents written or scanned on that day of interest to the attorney can be called up.

The attorney can access this information 24 hours of the day. He can then timely decide – regardless of where he is located, but precisely informed – whether to respond to a particular matter.

Furthermore, data or entire files can be transferred worldwide, without delay and without risk of loss, whereby of course a safe security method must be selected.

  • Cooperation

The possibility of access to files from different locations eases close cooperation between attorneys on an interregional or international level. Thereby various "use structures" are conceivable:

  1. A star-shaped network, in which all files are processed and administered in a central office, to which all participating attorneys have access. The technology is developing in the direction such that firms are placing their data on the Internet, where it can be accessed throughout the world. The optical network will be the system of the future in regard to speed of data transfer (Business Week of 09.10.2000). Companies with businesses in over 100 countries could find a practical solution in the year 2000. By comparison thereto, the requirements for law firms are technologically not complicated.
  2. A circular network, in which several offices with electronic file maintenance are connected.
  • File storage

Maintaining files for seven years, often 10 years, presents a significant cost factor: Even a medium size firm stores tens of thousands of files, most of the time in a basement. The necessary room is a factor in rental costs. It is also not an insignificant factor in personnel costs, because the storage system requires its own numbering system by which the storage is carried out. Not infrequently, an old file will be needed precisely a short time after it has been destroyed.

With the electronic file, there is no more storage of the file, in the technical sense. The file remains in the system, and can be accessed at any time. Closing of the file occurs simply by way of a closing designation noted in the optional space for text. If all files are listed in the Table of Contents, it is immediately noticeable that a file was closed on a particular date.

As a further security measure, old files can be recorded on CD-ROM disks – an infinite advantage in space saving in contrast to the voluminous paper files, which can only be "buried" for good only after 7 years following their "death". A closed file can also be copied to CD-ROM disk for the client – an additional space saving service of the law firm.

Additional Electronic Aids:

Anyone who has instituted electronic files will expand the electronic environment, with the result of eliminating paper media. All publishers are prepared for this conversion. The library will become an impressive backdrop. Electronic media are increasingly the means of work.

  • Own databank

Every reader of professional newspapers, magazines, technical books, and so forth is permanently overwhelmed with a flood of data. The interesting article that has been read one time cannot be so readily recalled that the details can be reconstructed later.

The construction of one's own data bank with the texts considered worth saving enables the user to quickly and efficiently reactivate briefly noted material when it is needed. This includes not only the substantive relevant text, but also the appropriate quotations of sources. The more succinct the caption and texts in the "optional space for text" are formulated (the search is also possible over a particular time period), the faster the user can quote from his own databank that he created himself. The reconstruction is possible only with electronic archiving of the selected materials, not with highlighting in professional journals, which at best are systematically read only once.

  • Electronic time keeping

More and more – under the influence of the Anglo-American practice – the calculation of fees on an hourly basis is catching on. The calculation of fees according to the Federal Statute Regulating Attorneys' Fees is outdated and transparent. At the lower end the fees do not cover costs, and at the upper end clients often complain of a discrepancy between the amount of work and the amount of the fee. From this standpoint, the fee based on amount of time expended is the proper alternative. Electronic time keeping assists the attorney in keeping a record of time that is precise to the minute and, particularly, complete. Field tests over a 10-year period have shown:

Attorneys grossly underestimate the administrative portion of their work (non-billable hours) between 30 and 50 %. This applies also to attorneys who claim that they never do anything wrong. The competition between productive and unproductive hours apparently proceeds in the correct direction: Many of an attorney's telephone calls, are not registered for time keeping purposes because the file is not handy. The registering of the time without the file and its transfer is too complicated. The correct solution exists in recording the information in the paperless file immediately upon the conclusion of the activity. According to studies, as much as 15% of the billable hours can be "dropped" through manual recording of time.

Daily control of the electronic reporting of the daily activities, including the nonproductive time, gives the attorney valuable indications whether and how unproductive times can be reduced. Recording administrative time by month and by year permits comparison of its relationship to production.

The extent of the administrative responsibilities depends, of course, on the amount of administrative duties the partners assign to an individual partner. Assuming a more or less equal division of the work, long-term evaluations have determined that a good month requires at least 20 administrative hours, and a catastrophic month requires up to 50 hours.

Electronically maintained time sheets not only form the basis for calculating fees for the client, but they also serve as a basis for evaluation of different criteria. The structure of a firm will be more transparent when the electronic time records with their evaluation criteria are available. The electronic time sheet can be used parallel to the electronic file without difficulty.

  • Laws and court decisions on CD-ROM

Worthy of mentioning are especially the diverse collections of statutes, court decisions, forms, and publications on CD-ROM, which in paper form fill volumes and meter-long shelves. To mention only the NJW as an example: the annual volumes since 1981, which in paper form weigh several hundred kilograms, occupy only two compact disks weighing only 15 grams. Aside from saving room and paper, the use of this medium offers a much faster and more precise research in a huge database. For example, with the use of key words and a personal computer, thousands of decisions can be reviewed in their complete text. That is not possible in any conventional library. Here also a complete collection of laws and court decisions are accessible everywhere, also outside of the office, on feather-light CD-ROMs. This overcomes the well-known (not only in the legal field) file chaos.

The Swiss literary Peter Weber believes that, to effectively write, an author needs only one square meter of room – and earplugs. The modern attorney can get his entire files and library in this same space (laptop with CD-ROM disks). From this sparse model, the attorney can and should expand with newly defined parameters.

  • Online research

Providers of online information offer an even larger databank. Millions of classic legal documents, as well information about firms, such as bona fides reports and public records riled electronically, are accessible through ISDN or, more recently, primarily through the Internet. A further advantage on the road to a paperless office is the fact that every attorney thereby has complete access to the entire archived text of numerous daily and weekly newspapers. In addition, all publishers of legal materials are working on some day making their entire collection of materials available through the Internet.

  • Use of modern telecommunications devices

Another means for reducing the mountains of paper in an office is through the use of modern paperless telecommunications devices, such as a PC telecopier and E-mail. According to the most recent decision of the Federal Supreme Court sitting en banc (Decree of April 5, 2000; Cause Number GmS-OBG 1/98), a fax containing a scanned signature sent directly from a PC, even without prior printing, satisfies the legal requirements as to form for certain briefs in legal proceedings. Soon, E-mail containing a digital signature also will satisfy the requirements as to form (compare the clerk's draft for the law to conform the form requirements of private law and other requirements to the modern legal correspondence at http://www.bmj.bund.de/). According thereto, case files can be maintained electronically, even in court. In the near future, filing of a petition via E-mail will no longer be unusual. In view of this adaptation of the form requirements and the rules of procedure to the current technical communications possibilities, there is no obstacle to the use of modern communications devices in the attorney's daily work. This can help to reduce the flood of paper, and moreover is considerably more advantageous in terms of cost and time in comparison to conventional mail.

Successful forerunners of electronic real property records and business records already exist: the Austrian Real Property Records maintained electronically are currently generally recognized as progressive in record maintenance.

Moreover, new software solutions which support and improve the flow of communications between employees and firms, through either a firm's internal network (intranet) or the Internet, are constantly being offered in the marketplace.

Thus, a system was developed which can link photocopy machines with computer networks so that a copy can be sent as E-mail directly from a copy machine to any desired number of recipients. In addition, virtual circulating folders can be attached to documents, which can pass from one worker to another according in the sequence registered therein.

Also of significance for the daily work are network programs which not only permit scheduling for the individual user but also help in determining mutual appointments, such as a meeting of partners.

  • Tele-Workplaces

External employees can be integrated through Tele-Workplaces. Fundamental information about telecommuting can be called up on the homepage of the Institute for German Economy in Cologne at http://www.telekop.de/. The Institute conducts research on tele work in the framework of a promotional program of the European Union.

Conversion To An Electronically Maintained Office

The transition requires a rearrangement of the work process in the law office. In the beginning, this certainly is associated with a greater amount of organizational difficulty, which however, thanks to the electronic file, is quickly amortized through increased efficiency and saving of time. The initial difficulties, however, can only be overcome if all involved, from the attorney to the intern, is familiar with the new concept and is convinced of its advantages. Acceptance is a condition sine qua non for the new team spirit. An alternative to "sink or swim" no longer exists. An employee who does not accept the electronic file as the central means of work causes a leak in the boat. Even more dramatic than on the level of the employees is the cell division at the attorney level.

The transition requires extensive planning, which as early as possible should involve all employees of a law firm. In addition to the planning of the future organization model, a concept of the demarcation between the "old files", which will continue in the traditional manner, and the electronic files is necessary.

The introduction of the concept of electronic files signifies not only quick realization of an increase in flexibility and efficiency, but also an investment in the future viability of a firm. Just as in the case of every technical development of this nature, the principle applies here as well: What is innovative today can become an absolutely necessary standard tomorrow. A prominent quotation of the later president of the United States, Rutherford B. Hayes, from the year 1876, proves this impressively: Upon the installation of the first telephone in the White House, he asked skeptically, "Who would ever want to use a phone?"

Data Security And Attorney-Client Privilege

Professor Radermacher is the director of the research institute for the applied orientation of implementation of knowledge (FAW) in Ulm. As a public foundation, the FAW is supported by the State of Baden-Wuerttemberg in addition to firms with worldwide reputations. Radermacher deals with challenges into the year 2025. He is of the opinion that we are on the way to a worldwide lasting information society. In his opinion, the fundamental question of future viability will be decided in the constituency of the future information society. Technical and societal processes will become less significant (F.J. Radermacher, Information society and lasting development, p. 156).

If this prognosis is correct, data security and the attorney-client privilege must be reexamined. Dynamic processes inevitably will be introduced. As is the case with every new advancement, new priorities will develop.

To now, the definition of the attorney-client privilege is naturally oriented to the condition up to now: The point of origin is the attorney file in paper form. This type of file is an Unikum. In the days of the horse-drawn postal carriage, the attorney-client privilege was satisfactorily secured through the security of the mail, even though misuse and criminally punishable actions occurred during all times. In the past, however, whoever illegally appropriated a single document most of the time could not recognize the entire context of the file. In the case of the electronic file, the risk of illegal access to the entire file has become greater. Even extensive files can be duplicated within seconds. With the use of optical networks the entire contents of the Library of Congress in Washington, D.C. can be downloaded in a matter of minutes.

The distinguishing feature of these technical changes is speed, which is without historical precedence.

The extreme ease with which duplication is possible will call into question the legal definition of Copyright in many countries. The existing widespread practice of illegal copying has already caused a change in the awareness of illegality. It does not matter whether this development is considered to be positive or negative. If the technical development makes the possibility to duplicate increasingly easier, this development can no longer be stopped. Legal mechanisms at best will delay the process. Legal data banks already advertise an "unlimited access platform".

In the future, the degree of data security will be the measuring point of the attorney-client privilege. In this context the discussion about a firewall seems to be short lived. It is reminiscent of a – costly – race between the hare and the tortoise (EDP-Technicians and Hackers).

Of course every attorney obligated to take appropriate precautions to secure data and the attorney-client privilege.

In a technologically advanced information society, however, the attorney can no longer rely on the degree of security from the age of the horse-drawn postal coach. In the obligation to preserve the attorney-client privilege, the attorney will be exposed to a new – dramatic – conflict. The objective of the information society is well defined: Everyone should have the possibility to obtain all information desired.

In conservative Switzerland, cutting back on the doctor-patient privilege has already begun. (Züricher Weltwoche September 29, 2000, page 1). Similar tendencies have been recognizable recently in the case of German insurance companies – of course, always with the argument that they are in conformity with the system. If the attacks against the doctor-patient privilege should lead to a dismantling thereof, the overt or covert attack against the attorney-client privilege only a matter of time.

The electronic file is increasingly the standard with firms. The attorney can no longer avoid this standard.

Approximately 80% of an attorney's work consists of processing information, in particular transfer of data, and only about 20% involves legal processing of the data contained in the file. In view of the American procedural rules (pre-trial discovery), the percentage of strictly information processing in the U.S. is probably higher than in Europe.

Sooner or later will come the demand of the client to have direct access to "his file".

With the electronic file the sharply defined concept of an attorney's file will be diminished. The client will access "his" data which (coincidentally) are located in his attorney's files. With a direct exchange of data between the client and the attorney, the attorney-client privilege will be (tacitly) riddled with holes. The attorney loses control over what happens to the data.

This can lead to the following situation: The attorney's security measures at least the consequence, that he can successfully defend against liability claims and still claim insurance coverage from his liability insurer. Since the possibilities of duplication of and access to data are no longer controllable, the attorney can no longer avoid adopting a new viewpoint. He no longer can avoid accepting the ideal of the tenacious information society: "everyone knows everything". This viewpoint is the best preparation against future shocking electronic experiences. Forerunners already exist with the conventional file: The client's girlfriend has access to his attorney's briefs. She copies these briefs and passes them to the opposing attorney. The opposing attorney – either openly or covertly – uses this information. In a perversion of the attorney-client privilege, the opposing attorney relies on this privilege with respect to his source.

This forerunner, which actually occurred in Europe outside of Germany, gives a premonition of the potential for problems which the attorney can count on in the future in dealing with electronic files. Nevertheless, the progress of the electronic file can no more be stopped than the introduction of the automobile.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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