It is now essential – rather than a luxury – to be able to conduct electronic searches efficiently.
Described by Lord Justice Jackson in his Review of Civil Litigation Costs (preliminary report) as “the search for electronically stored documents and information and organisation of that material for litigation”, e-disclosure is currently a very hot issue. Below, we provide a brief overview of the reasons for this growth and outline some of the implications facing insurers.
Over the last 20 years, technology has revolutionised the way in which people work. Email is now the prevalent method of communication, distribution lists may include hundreds of people and a vast amount of data can be stored on a memory card no bigger than a stamp.
This change has dramatically increased the number of documents produced. Although a traditional disclosure exercise may have involved a prolonged search through a client’s archives, the actual amount of documentation produced was often insubstantial. Nowadays, even a mediumsized case may generate a huge amount of material; retrieving 500Gb of data is not unusual and while this information can be stored on a book-sized hard drive, it could contain over seven million documents (or around 26.5 million pages).
Printing, sorting, reviewing and copying this amount of data using standard disclosure methods would be prohibitively expensive in time and costs. However, technological solutions have developed to process digitally both electronic and hard-copy documents.
The most common example of an e-disclosure process is the elimination of identical documents, inelegantly known as “de-duplication”. For example, if a set of meeting minutes is emailed to 10 people, there will, in theory, be at least 11 identical copies of the document and 11 identical copies of the email.
Using an algorithm de-duplication scan of, codes and indexes documents simply removes duplicates. This process alone usually reduces the volume of documents by 20-30% (even more in larger cases).
The pool of documents requiring manual review can be further reduced by searching for nearidentical documents (i.e. above 95% similarity) or those that are clearly irrelevant. Documents may be given topical tags (enabling more efficient searching and filtering) and email threads can be pulled together to be read in a logical order, all of which are of benefit when analysing and preparing a case. More nascent processes include concept searches, where software will analyse the juxtaposition and frequency of keywords within a document, and then automatically pull together a bundle of documents relating to a particular topic.
The growth of specialised e-disclosure service providers makes these processes readily available, and affordable, to nearly all litigants. As technology improves and these services are increasingly utilised, the costs and timescales involved will fall.
The enthusiasm of the courts
The courts are also aware of the problems caused by the increased volume of electronic documents and are taking steps to ensure there are sufficient guidelines to clarify what is expected of litigants. The Civil Procedure Rules already contain provisions on e-disclosure (see Practice Direction 2A to Part 31). However, in practice, these are not always followed by the parties and the approach of the judiciary to e-disclosure is not always certain.
In July 2009, Senior Master Whitaker’s working party on e-disclosure produced a draft updated practice direction. This sets out procedures for dealing with e-disclosure – for example, the early consideration and the use of an ESI (electronically stored information) questionnaire. Similar guidelines can already be found in the Chartered Institute of Arbitrators’ protocol for e-disclosure and in the US Federal Rules of Civil Procedure.
The new e-disclosure practice direction and questionnaire will take effect from 1 October 2010 and will apply to multi-track cases (including those in the Technology and Construction Court).
At the end of 2009, Senior Master Whitaker gave a taste of what was to come by annexing the ESI questionnaire to his judgment in Gavin Goodale v The Ministry of Justice  EWHC B41 (QB).
Recent case law also makes it clear that simply waiting for the revised practice direction is not an option. In Earles v Barclays Bank Plc  EWHC 2500 (QB), the successful defendant’s costs were reduced by 50% because it did not disclose electronic documents: the bank had mistakenly taken the view that the electronic documents in question were irrelevant and their disclosure would be disproportionate.
An opportunity not a threat
Daunting upfront costs, the use of complicated new technology and the need to invest in a new range of skills may not appear to be a particularly appealing prospect. Yet when the bigger picture is considered e-disclosure offers more opportunities than threats. The initial processing of documents (for example de-duplication) may cost thousands of pounds but this should be offset against the more incremental (but generally higher) costs of conducting a traditional review process (i.e. by printing and reviewing each document). The simple de-duplication of even 20% of recovered documents is likely to save far more in lawyers’ fees than the cost of running the process.
The indexing and tagging of documents makes document management far easier and this becomes especially relevant in cases approaching trial. Documents relevant to a particular topic in dispute can be called up onscreen, and analysed there and then. This is a far quicker and more responsive system than having to refer to the paper files and search through reams of paper for potentially relevant documents.
The ever growing numbers of electronic documents – and the desire of the judiciary to manage the disclosure procedure efficiently – make the increased use of e-disclosure inevitable: it will become the norm and quickly. Insurers should not seek to reject or avoid this but see it as an opportunity to assess their case at an early stage and reduce expenditure on legal fees.
Drawing up a plan of action
Although technology can give a great deal of help, the principles behind standard disclosure still remain. It is essential, therefore, that lawyers develop the necessary technical skills to deal with e-disclosure issues. Indeed, one of the recommendations in Lord Justice Jackson’s Review of Civil Litigation Costs (final report) is that e-disclosure should form part of training programmes for solicitors, barristers and the judiciary (see chapter 37, para 4.1(i)).
The early involvement of senior lawyers is necessary to construct a proportionate disclosure programme, liaise with the opposition (to decide on relevant keywords, sources and date ranges) and to develop an adequate plan of action. Once this is agreed – or at least discussed – the appropriate service provider and software package can then be selected, managed and continually reviewed.
Failure to manage such issues adequately from an early stage can prove expensive. In Vector Investments v Williams  EWHC 3601 (TCC), the successful claimant was ordered to pay £20,000 towards the defendant’s costs after a large number of duplicate and irrelevant documents were disclosed. Similarly, in Digicel (St Lucia) Ltd v Cable & Wireless  EWHC 774 (Ch), there was a failure to discuss keywords at the start of the litigation and the defendant was ordered to repeat a disclosure process estimated to include 1.1 million documents and to cost approximately £2m.
An essential skill
Clearly insurers should evaluate each case on its merits but they should be wary of underestimating the usefulness of e-disclosure solutions, especially on the basis of upfront costs. The volume of reviewable documents in litigation can be overwhelming but this does not diminish the need to apply the disclosure provisions of the Civil Procedure Rules. E-disclosure should not be viewed as an optional luxury: it is now essential to carry out adequate electronic searches and to instruct lawyers and service providers with the technology and skills to do it – failure to do so may not only inhibit your own case but also incur serious cost consequences at court.