Cost Of Giving Disclosure In Commercial Litigation

A mandatory Disclosure Pilot Scheme has commenced in the Business and Property Courts of England and Wales – the specialist courts that handle a wide range of commercial, property and insolvency litigation. The Scheme replaces the existing rules on documentary disclosure in High Court cases to whittle down the volume of documents disclosed, and where necessary, compel the parties and their legal representatives to focus on only the most critical material.

BACKGROUND

Disclosure is the process through which the parties identify and, if necessary, disclose relevant documents to each other that get to the heart of the issues in dispute in litigation. Most commercial litigation today involves several gigabytes of data. In all but very small cases, the number of electronic documents to be considered for disclosure may range from hundreds, to thousands, or even millions of documents.

The Disclosure Pilot Scheme is the product of two years’ work, led by the judiciary, following feedback from business about the excessive cost, scale and complexity of giving disclosure. To achieve meaningful change, the existing rules based on the well-established but increasingly outdated and expensive “one-size fits all” model of standard disclosure, have been replaced with a more tailored approach fitted to the requirements of the case.

NEW DISCLOSURE PILOT SCHEME

The Disclosure Pilot Scheme is mandatory and applies, with some limited exceptions, to existing and new High Court cases in the Business and Property Courts in London, Birmingham, Bristol, Cardiff, Leeds, Liverpool, Manchester and Newcastle.

TWO-STAGE PROCESS

Initial Disclosure

Each party must provide limited disclosure (key documents relied on or necessary to understand the case) early in the litigation i.e. with their claim or defence. Initial Disclosure is not intended to be overly burdensome, the parties can agree to dispense with it and there is no obligation to comply if it would mean providing more than 200 documents or 1000 pages.

Extended Disclosure

A party seeking documents beyond Initial Disclosure must request Extended Disclosure from the court. Extended Disclosure will only be ordered if it is appropriate and proportionate and will be limited by reference to (a) Issues for Disclosure drawn up by the parties (this will not be every issue in dispute in the litigation but only those that need to be decided by the court with some reference to contemporaneous documents) and (b) a range of five Disclosure Models that escalate in terms of the searches required and the volume of documents to be disclosed. Greater use of technology will be encouraged to reduce the volume of documents and to home in on the most relevant material.

While the scope of disclosure is likely to be more limited under the two-stage process, parties must not sit on “adverse” documents (documents that contradict or materially damage their version of events or support their opponent’s version of events) simply because they have not been ordered to disclose them.

PRACTICAL STEPS

Greater care will now need to be taken by the parties and their legal representatives, and at an earlier stage i.e. as soon as litigation is intimated, to devise a disclosure strategy that is tailored to fit the requirements of the case. Initial steps should include:

• Appointing a senior individual within a company or organisation to oversee the disclosure process.

• Suspending routine procedures for the deletion or destruction of documents.

• Rapidly identifying sources of potentially relevant documents.

• Preserving (making copies of and storing) paper documents and electronic documents held on computer systems and other devices and media, including information that is stored on servers and back-up systems, “deleted data” and metadata which is not typically visible on screen or a print out.

• Sending a written notice to relevant current and former employees, agents and third parties identifying documents, or classes of documents, to be preserved.

• Keeping of a written record of the document preservation steps undertaken.

• Controlling the creation of any new documents (e-mails, internal reports, etc.) which may be damaging and may also have to be disclosed, unless subject to legal privilege.

COMMENT

The “one-size fits all” model of standard disclosure substantially increased the cost of litigation, undermining the reputation of the English and Welsh courts as a national and international dispute resolution centre for business, so change was long-overdue.

The Disclosure Pilot Scheme, however, is complex and requires disclosure to start at an earlier stage which is likely to result in a frontloading of costs, although a more targeted approach should lead to costs savings during the later stages of litigation. The Scheme will run in the Business and Property Courts until 2021, and if it results in a highly efficient and flexible disclosure process, is likely to rolled out across more courts, including the County Courts in due course.

If you’d like further advice about this please don’t hesitate to contact a member of our Dispute Resolution Team.