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England and Wales pilot can make disclosure 'more intelligent, tailored'

ANALYSIS: Disclosure can make or break a case. What is in the often large number of documents involved in a commercial dispute is frequently central to its outcome.05 Dec 2018

A party which does not master the issues and develop an effective disclosure strategy will often not make the most of its own case or maximise opportunities to undermine its opponent's position. As a result, businesses need to fully understand the impact of a two year pilot of a new disclosure regime in the Business and Property Courts in England and Wales that starts on 1 January.

The pilot offers real opportunity to make disclosure a more intelligent, tailored process which imposes a more proportionate burden on businesses involved in litigation. Businesses can help maximise the benefits of the pilot by embracing it fully.

The pilot responds to dissatisfaction expressed by in-house counsel, the legal profession and other court users about the disproportionate burden and cost of the litigation disclosure process. The view was taken that the existing disclosure regime required a major overhaul, particularly given the proliferation of electronic data in recent times. The pilot is intended to introduce "wholesale cultural change" to the disclosure process.

There have already been some indications that courts may take into account the principles of the pilot when considering disclosure issues prior to the 1 January 2019 commencement date.      It is therefore critical that businesses get to grips with the requirements of the pilot now, so that they can use it to their advantage.

The pilot is aimed at making disclosure more proportionate and more focused on the issues in dispute between the parties. Although it has for some time been possible for the courts to make disclosure orders of differing scope, in practice it has remained common for parties simply to propose, and courts to order, "standard disclosure". This involves parties carrying out "reasonable and proportionate" searches for documents which support or undermine the case of any of the parties. In practice this can be an extensive exercise. Parties often disclose large volumes of documents, many of which serve only as background rather than being directly relevant to the issues in dispute, and are therefore little referred to at trial.

The pilot will apply to almost all cases in the Business and Property Courts from 1 January 2019. This encompasses the Commercial and Circuit Commercial Courts, Financial List, Business List, Technology and Construction Court, Insolvency and Companies Lists and a number of other specialist courts. The pilot applies in both the London and regional Business and Property Courts, though not the County Courts. It will not affect cases in which an order for disclosure has already been made, and there are certain categories of case which are excluded from its scope, such as public procurement and competition claims. Beyond such excepted cases, however, its remit is wide. Although termed a "pilot", it is mandatory and expected by many to continue beyond its initial two year lifespan and to be rolled out to other courts.

The pilot involves changes in these areas:

  • initial disclosure: parties will generally be required to give 'initial disclosure' of key documents, on which they rely or which are necessary to understand their case, upfront with their statements of case. The documents must be listed out and electronic copies provided to the other parties.
  • further disclosure by reference to a range of 'models': parties will then say whether they seek any further disclosure, termed 'extended disclosure', in respect of any of the issues in dispute in the case. This will be done by reference to a 'list of issues for disclosure' which must be developed between the parties. For each issue on which a party seeks extended disclosure, it must indicate which of five 'models' of disclosure it considers appropriate. The models are:
    • Model A: no further disclosure except for the handing over of 'known adverse documents'
    • Model B: limited disclosure, comprising the key documents on which a party relies or which are necessary to understand their case, to the extent not already provided by way of initial disclosure, plus known adverse documents
    • Model C: request-led search-based disclosure similar to that used in international arbitration
    • Model D: narrow search-based disclosure, which involves a party carrying out a reasonable and proportionate search for documents in relation to the issues for which this has been ordered. This is the closest model to the current 'standard disclosure', though that term has disappeared and there is no presumption that its replacement will be ordered. Unless specifically ordered by the court, Model D disclosure should not include 'narrative' documents relevant only as background, which are often disclosed at present
    • Model E: disclosure requiring broad searches for anything which might lead to a 'train of enquiry', available only in exceptional cases

The court will only order extended disclosure to the extent that it considers it reasonable and proportionate. It should not be expected that the same model will necessarily apply to all issues in the case. The idea of the pilot is that more tailored orders for disclosure will be made.

  • cooperation: collaboration between parties on disclosure is central to the pilot. While this has long been expected, it is now expressly set out as a duty. The process of identifying the 'issues for disclosure' and which model each party argues should apply to each issue, and presenting this to the court, is done through the preparation of a new single form, the 'Disclosure Review Document' (DRD). The DRD also contains sections intended to structure mandatory discussions between parties about, for example, search methods, including the use of technology, and parameters. The process is involved, and parties and legal representatives must be ready to cooperate meaningfully in relation to disclosure, regardless of their differences in the dispute.
  • disclosure of 'known adverse documents': the pilot sets out a range of duties on parties and legal representatives. Of particular significance is the continuing duty on parties, once proceedings have been commenced, to disclose "known adverse documents", regardless of the models of disclosure ordered. This means that a party who is aware of a document which undermines its case must reveal the existence of that document. Even if the disclosure order made only requires a party to, for example, respond to particular requests for documents, it should not be possible to hide a 'smoking gun' by arguing that the document was not specifically asked for.

There is scope for dispute in this area. In particular, in some cases there may be arguments about what constitutes awareness of a document on the part of an organisation. The pilot rules seek to address this, and amongst other things impose an obligation on organisations to take reasonable steps to check with former staff who had responsibility for the relevant events or proceedings, whether they are aware of adverse documents.

  • strong duties to preserve documents: the need to preserve documents has long been an important feature of litigation and this is reinforced under the pilot. It is now set out expressly that once a business knows that it is or may become a party to proceedings it must take reasonable steps to preserve relevant documents in its control. Moreover, the pilot goes further and specifies that this requires: the suspension of relevant document deletion or destruction processes; sending a written notification to preserve documents not only to all relevant employees but also to all relevant former employees; and also taking reasonable steps so that agents or third parties who may hold relevant documents do not destroy them. Parties will have to confirm expressly that they have taken these steps.
  • sharper focus on the use of technology: the DRD mandates the parties to have discussions about the use of technology, including considering the use of technology assisted review (TAR) to assist in the document review process. Parties who decide against the use of TAR must set out their reasons, particularly where the 'review universe' exceeds 50,000 documents, as will be the case in many commercial disputes. In addition, determining which models are proportionate may require early input from e-data providers about the scale and cost of the likely review exercise. If any party seeks disclosure which involves searching for documents, the DRD requires a detailed data mapping exercise, identifying data sources and custodians, types of software, potential difficulties with any of these, proposed date ranges for searching and initial suggestions for search keywords. Again, input from e-data professionals may be needed.

Implications for businesses

There will inevitably be challenges and wrinkles to be ironed out as parties and the courts navigate their way through the new regime. But the pilot offers the chance to make disclosure more intelligent, more tailored and to ensure the burden of disclosure for litigating businesses is more proportionate. Businesses can help maximise the benefits of the pilot by taking the following steps now:

  • know your data: information governance is now more important than ever. Businesses must have a comprehensive understanding of what data they have and where, and be able to retrieve and search this as quickly and effectively as possible. Consider the extent to which your systems, policies and processes enable you to do this. The timescales under the pilot may be challenging for an organisation which does not have adequate systems and discipline around data, particularly if it finds itself defending litigation of which it had little notice. Parties which cannot locate helpful evidence may also find themselves disadvantaged because they will no longer necessarily be able to rely on their counterparty having the relevant documents and producing these as part of "standard disclosure".
  • take document preservation seriously: the pilot sets out detailed duties with which parties must comply in relation to document preservation. The court may impose a range of sanctions against parties who do not comply with their disclosure duties, and may draw adverse inferences from the absence of a document if adequate document preservation steps have not been taken. If in any doubt as to what your document preservation obligations require, take legal advice.
  • engage with e-data providers early: early input may be needed from e-data providers or professionals as part of the process of deciding what models of extended disclosure to seek and completing the DRD. Since it is now mandatory for parties to consider the use of TAR - and in most commercial cases a decision not to use TAR will be difficult to justify - it is critical to consider at the outset a variety of e-data tools which might be deployed and which of these will be best suited to your needs and objectives in the particular dispute. You should instruct lawyers with deep e-data expertise and strong relationships with a range of e-data providers so that they can guide you through this process.
  • prepare for some costs front-loading: the more tailored approach under the pilot is likely to require more input, from an earlier stage, from senior individuals within the business, in-house legal and your external law firm. It will be necessary from the outset for the whole team to develop a clear strategy and understanding of what the party's case is and which aspects will need to be proved using documentary evidence. Initial disclosure and preparation of the 'list of issues for disclosure' are additional new steps, though neither should be particularly burdensome. The data mapping exercise and discussions about search parameters will be early and involved.  There is therefore likely to be some front-loading of work and cost, and you should factor this in to your case strategy. However, the aim of the pilot is that any additional early effort should be repaid later by a reduction in the overall volume of documents requiring retrieval, review and consideration.
  • don't fear collaboration: adopting a cooperative approach towards the other side on issues of disclosure is not a sign of weakness on the part of legal representatives and will not be seen this way by the court. Rather, it is required by the pilot. Further, if the pilot achieves its aims, it should mean that less time and money is spent on unhelpful satellite disputes between parties over disclosure and on review exercises which are disproportionate in the context of the case.

Richard Dickman is a litigation expert at Pinsent Masons, the law firm behind Out-Law.com. Dickman was a member of the Disclosure Working Group which developed the pilot.