Disclosure refers to the stage of the litigation process when each party is required to disclose the documents that are relevant to the issues in dispute to the other party. It normally takes place after each party has set out its position in their statement of case.
Disclosure is intended to ensure that the parties show their hands in respect of documentary evidence at an early stage. It consists of three stages:
- the parties undertake a reasonable and proportionate search for relevant documents, including electronic documents, with an emphasis placed on the need for proportionality (see below);
- a list of the relevant documents is provided to the other party – this includes those documents that were once in the possession of the disclosing party and those documents which, although relevant, do not have to be disclosed because they are privileged; and
- inspection of the documents and data by the other party.
The disclosure exercise must be treated seriously because it can impact heavily on the outcome of proceedings. Credibility at trial can be affected if a party fails to give proper disclosure because documents have been overlooked or destroyed. The court can impose severe sanctions on a party that does not comply with its disclosure obligations.
Parties are required to discuss disclosure issues with the other party with the objective of agreeing a proposal on disclosure which will meet the needs of justice and proportionality.
A lawyer owes an independent duty to the court to ensure that proper disclosure is given.
The disclosure obligation
- The obligation to make disclosure will arise from either a court order or the parties' agreement, selecting from a menu of disclosure orders as follows:
- Order dispensing with disclosure
- Order to disclose documents on which a party relies, and request any specific disclosure required from the opponent
- Order to disclose documents on an issue by issue basis
- Order for disclosure on a “train of enquiry” basis (the old Peruvian Guano test – useful in fraud cases, where there is a need to trace assets)
- Order for standard disclosure; or
- Any other order the court considers appropriate
- The selected order for disclosure will be one that is proportionate by reference to the nature, complexity and the size of the case. The question of whether a document should be disclosed will be determined by reference to the issues raised in the parties' statements of case.
The obligation to disclose documents extends to those that are within a party's control. This includes documents which are, or which were, in a party's physical possession and documents to which a party had a right to possession or a right to inspect and take copies. It will include documents in the possession of an employee or agent over which a party has control. It may, but does not necessarily, include documents held by subsidiary companies, professional agents and ex-employees.
The meaning of 'documents' is not restricted to paper or to originals – it also includes electronically stored information (ESI). Invariably there will be ESI that is relevant to the dispute, for example emails (including deleted emails) and data held in databases. ESI also extends to anything on which information of any description is recorded and will include sound files, electronic personal organisers, file servers and back-up tapes and hard drives. Disclosure of ESI can also extend to the metadata attached to each document - hidden data including the history of the document itself such as original author, creation date, hidden notes and blind copy recipients. Carrying out a simple act such as opening and printing a document can alter the metadata, so great care must be taken when dealing with ESI.
Hard copy documents will include correspondence, faxes, memoranda, reports, photographs, plans, diaries and board minutes.
As soon as a dispute arises, a party should take steps to ensure that relevant documents are not destroyed or modified. A Litigation Hold Notice should be issued to the relevant parts of the organisation requesting that any document retention policy be suspended.
Relevant documents must be disclosed whether or not they are confidential, unless they are 'privileged' (see below). However sensitive information which has very little or no relevance to the dispute and which is contained in a document that has to be disclosed can be 'redacted' or blanked out.
The search for documents
Each party is required to make a reasonable and proportionate search for documents covered by standard disclosure. Proportionality however will "trump" reasonableness. Determining what is reasonable and proportionate will be different in every case, however it will include:
- reviewing the nature, complexity and size of the case;
- considering the number of documents which may potentially be involved;
- considering the cost and ease of retrieval of any documents;
- considering the likelihood of locating relevant documents.
The need to search ESI will invariably be part of a reasonable and proportionate search, using key words and date ranges. The search may involve instructing external data recovery service providers to extract ESI from hard drives and back-up tapes.
It is usual for a lawyer to work with the client, its IT department and external service providers in order to provide guidance on what is reasonable and proportionate for each case, and it will usually be necessary to agree the parameters with the other party.
For more information about Electronic Disclosure, please see our separate OUT-LAW Guide.
The Disclosure Report
- At least 14 days before the first case management conference (CMC), the parties are required to file at court, a Disclosure Report setting out briefly:-
- the documents that exist or may exist or may be relevant
- the location and custodians
- how documents stored
- the broad range of costs that could be involved in giving standard disclosure and also if any other disclosure order is sought, the broad range of costs for that disclosure as well
- which menu disclosure option has been chosen
- The Report should be prepared after mandatory discussions with the other party which are aimed at seeking to agree a proposal about disclosure1. If the Report states that the order asked for has been agreed with the other party, the courts will be more likely to make that order.
The List of Documents
Disclosure is made by serving a List of the Documents on the other party. This List follows a standard form and must identify and describe the party's documents in a convenient and concise manner.
The List must also separately identify those documents which are no longer in the party's control and which cannot be inspected - stating what became of them - and those documents in respect of which a right to refuse inspection is claimed. The right or duty under which inspection of a disclosed document is refused, usually legal professional privilege, must also be indicated.
The Disclosure Statement
The List will also include a 'Disclosure Statement'. This is a statement signed by the party making disclosure or, in the case of a company or other organisation, a person with appropriate authority who has conducted or supervised the search for documents. The Disclosure Statement must set out the extent of the search made and certify that the maker of the statement understands the duty to disclose documents and that to the best of his knowledge he has carried out that duty.
Proceedings for contempt of court may be brought against a person if he makes, or causes to be made, a false disclosure statement without an honest belief in its truth.
In addition, the Disclosure Report will be accompanied by a statement of truth to be signed usually by the person signing the Disclosure Statement.
Each party and its advisers are entitled to look at, and require copies of, the documents disclosed in another party's list. Any objection to inspection will be set out in the list where the disclosing party has a right or duty to withhold inspection of the document, for example if a document is privileged, or where the disclosing party considers it would be disproportionate to permit inspection of documents within a particular category. This latter objection can be challenged.
Continuing nature of disclosure
The disclosure obligation continues until the conclusion of legal proceedings. If relevant documents are identified or created after the list is served, they must be disclosed to the other side immediately.
If either party is dissatisfied with the disclosure given by the other, either in terms of the documents disclosed or the extent of the search undertaken, an application can be made to the court for an appropriate order.
Misuse of disclosed documents
A disclosed document may only be used for the purposes of the proceedings, unless the court orders otherwise or the document is referred to in open court. If a document is particularly sensitive, a court may be asked to make an order that the document may not be used for any purpose other than for the purpose of the litigation.
Once a document has been read in open court, its contents can be freely reported unless the court orders otherwise.
A privileged document need not be disclosed to the other side.
The relevant types of privilege are likely to be 'legal advice privilege' and 'litigation privilege'.
Legal advice privilege attaches to confidential communications and evidence of those communications, between a client and its lawyers which were created for the purpose of giving or obtaining legal advice. This will include presentational or strategic advice provided that it relates to a client's legal rights and obligations. It will not apply to advice, for example, of a purely strategic or commercial nature. Documents such as internal memoranda prepared by employees or third parties are not protected by legal advice privilege as there is a narrow legal definition of who the 'client' is. It does not apply to communications with third parties.
Litigation privilege attaches to confidential documents that were created for the dominant purpose of actual or pending legal proceedings. It includes documents prepared by employees and third parties.
It is important to understand the distinction between confidential and privileged documents. Not all communications between a client and its lawyers are privileged even if they are of a confidential nature. However, privilege will no longer apply if a document loses its confidential status – this makes it important to maintain confidentiality in all privileged documents.
Because the disclosure obligation also relates to any new document that may be created even after the lists have been exchanged, any internal documents discussing the merits of the litigation should be created with care. If new documents are created in the future, there is a risk that they may be disclosed to the other side unless they are covered by privilege. Care must therefore be taken over what is said in, for example, internal reports, board minutes and emails about the subject matter of the dispute. Reports about the litigation and its merits should therefore be prepared by internal or external lawyers, otherwise such reports should do more than pass on or summarise legal advice.
Any documents recording discussions between the parties aimed at reaching a compromise or settling the dispute will be 'off the record', in the sense that they may not be used in evidence by either party. Such documents are usually referred to, and labelled, as 'without prejudice' communications.
Practical early steps
Any routine policy for the destruction of documents, including ESI, which may be relevant to a dispute must be suspended and any documents which may be potentially relevant to a case preserved. The destruction of such documents could have serious implications and may amount to a contempt of court.
At the outset of a potential dispute, you should gather and collate all hard copy documents that may possibly be relevant to the dispute and transfer these to a central safe location. Documents should not be annotated, marked or altered in any way, and documents within files should not be rearranged.
Care should be taken to avoid the disclosure of any privileged documents.
If there is a large volume of ESI, you should discuss the best method for it to be searched, collected, filtered and reviewed with your lawyer. For more information on Electronic Disclosure CFAs, please see our separate Out-Law Guide.
These steps should be taken at the earliest opportunity and a senior manager should be given responsibility for the disclosure exercise and, ultimately, asked to sign the disclosure statement.
1 Such discussions to take place at least seven days before the first CMC, but ideally these discussions should be held much earlier - waiting seven days before the CMC will usually be too late to prepare properly for the CMC.