1. What's Changing?

From April, controlling the cost of disclosure will form a vital part of the courts’ new role of limiting recoverable costs through cost management. There are three main areas of change:

  • The introduction of a ‘menu’ of disclosure options for all multi-track cases other than personal injury claims;
  • An obligation on the parties before the first case management conference (“CMC”) to a) file a report on disclosure and b) discuss disclosure; and
  • Greater focus on the first CMC and an expectation that the court will take some control of the disclosure process from the parties at that point.

These changes, which will complement and reinforce the new Practice Direction 31B on electronic disclosure which came into force in October 2010, still mean a significant investment of time at an early stage in the scoping and costing of the disclosure process.

2. New rule 31.5

In summary, the new rule, in force from 1 April 2013, provides as follows:

it applies to all multi-track cases except personal injury claims.

For all other cases, the default order for disclosure will continue to be an order to give standard disclosure unless the court directs otherwise.

  • Not less than 14 days before the first CMC, each party must file and serve a report verified by a statement of truth which 1) describes briefly what documents exist which are or may be relevant to the matters in issue and where and with whom these are located or how (in the case of electronically stored documents) they are stored, 2) estimates the broad range of costs which would be incurred if giving standard disclosure and 3) states which type of disclosure order is to be sought.
  • Not less than 7 days before the first CMC, the parties must, at a meeting or by telephone, discuss and seek to agree a proposal in relation to disclosure that meets the overriding objective.
  • If the parties agree a proposal and the court considers the proposal to be ‘appropriate in all the circumstances’ the court may approve the approach without the need for a hearing.
  • At the first CMC, the court will decide which of following orders to make:
    • no disclosure (Option 1);
    • each party discloses documents on which it relies and at the same time serves a request for specific disclosure from any other party (Option 2);
    • disclosure be given by each party on an issue by issue basis (Option 3);
    • each party discloses any documents which is it is reasonable to suppose may contain information which enables that party to advance its own case or to damage that of any other party, or which leads to an enquiry which has either of those consequences (Option 4);
    • standard disclosure (Option 5); or
    • any other order which it thinks appropriate (Option 6).
  • The court may at any time give directions as to how disclosure is to be given and in particular in relation to:
    • searches – where, for what, by whom and in respect of what time periods;
    • the need for lists of documents;
    • the form or need for a disclosure statement;
    • the format of documents disclosed;
    • documents which no longer exist; and
    • disclosure in stages.

3. The courts’ likely approach

The order in which the new menu has been drafted is not significant and there has been relatively little discussion by Lord Justice Jackson as to when each of the various options might be considered appropriate. It seems clear that there is intended to be a move away from standard disclosure but much will depend on the nature and value of the dispute and the volume of documents which might be in issue. Lord Justice Jackson has stressed that the new rule is intended to operate together with the existing rules on e-disclosure and that completion and exchange of electronic documents questionnaires will assist the parties and the court to select the most appropriate disclosure order. The intention is also to harmonize practice across the different divisions of the High Court.

4. Disclosure Report

The requirement to file a report at least 14 days before the first CMC fits with the general move to a much greater focus on accurate early planning and costs estimating.

Preparation of the report will require detailed knowledge of:

  • the critical issues in the case;
  • your data structure (current and historic as relevant);
  • what documents are required from the other party(s);
  • how technology could be used to minimise costs;
  • the likely costs involved in providing standard disclosure and any proposed alternative; and
  • which menu option is the most appropriate and why.

The report will also call for detailed technical input and close collaboration with a leading disclosure expert in many cases. Whilst this highlights the increased front-loading of costs, investment of time and expertise in the preparation of the report, these will be duly rewarded if the recoverable costs are to be prima facie limited (as part of the court’s new approach to costs management) to those estimated at this stage.

5. Meeting of the Parties and the first CMC

The requirement for the parties to meet to agree a disclosure proposal encompasses the existing requirement in PD31B that the parties discuss the nuts and bolts of managing electronically stored information and the disclosure of electronic documents. The need for a report to the court also mirrors the existing arrangements for electronic documents. However, the obligation in the new rule goes further as it requires the parties to seek to agree a proposal and there may well be costs consequences if one party is judged to have acted unreasonably in not agreeing a proposal which the court eventually adopts. Again much will depend on early preparation, thorough knowledge of both the key issues and the client’s documents, a proper understanding of the technological tools available, accurate costs-estimating and a good working relationship with one’s opponent. All this will incentivise the parties to present a proportionate strategy for disclosure or to respond effectively to any unsatisfactory proposal put forward by another party.

The expectation is that the judges will seek to take a strong grip of disclosure at the first CMC. Presumably their starting point will be the parties’ disclosure reports and the proposals tabled at the parties’ meeting (the outcome of which should be carefully minuted), and signed points of agreement and disagreement may be helpful in an appropriate case. In addition, parties will need to be able to explain their menu selection alongside their proposal for what searching should be carried out to deliver their selected level of disclosure. This is where the new rule 31.5 and the PD31B will effectively meet. Attendance at the CMC by the persons responsible for the Disclosure Statement could be beneficial and may be required by some judges.

6. Really addressing the costs issues

None of the menu options save for ‘no disclosure’ will guarantee proportionate disclosure costs and the way the disclosure is managed will remain critical. Effective cost management could be achieved in a number of ways including:

  • better costs estimating at the outset (consequent on the new rule 31.5(3)(d);
  • increased use of advanced technology, in particular early data analysis and predictive coding;
  • creative use of lower-cost options for resourcing first and second line document review (in house and external, including off-shoring);
  • compulsory exchange of electronic documents questionnaires and enforcement of the ‘collaborative’ approach required by PD31B and the new disclosure rule;
  • adopting a staged approach so that most critical documents are identified and disclosed first;
  • improved project management of all stages; and
  • closer and better informed judicial scrutiny of the process.

Whatever option is selected/ordered, if this includes the need to search any significant volume of electronic data, as it often will, the process needs to be carefully managed and the directions the court makes under the new rule 31.5(8) will be possibly even more critical than the selection of the disclosure option.

7. The Changes in Practice

Given that virtually all disclosure in complex litigation (and indeed in less complex commercial litigation) now involves predominantly electronic documents, the practices introduced in 2010 by the amendments to PD31 should mean that the disciplines now being written into the main CPR are not a culture shock.

It has been thought that including significant cultural changes in relation to electronic documents in a PD rather than a rule has enabled insufficient attention to be given to compliance. The incorporation of the same culture into a rule combined with a tougher compliance requirement, should speed up the changes to the general approach to commercial litigation which are already taking place.

We have been collaborating with our opponents since 2010 to scope the disclosure phase appropriately to the needs of the case, using the Electronic Documents Questionnaire (“EDQ”) and agreeing a pragmatic approach to resolution of the dispute. We have been planning the project from the outset with careful budgeting and an in-depth understanding of the use of technology through our ESI Taskforce. Litigants want cost-effective settlements (not trials) and this means getting to the heart of the issues quickly and focussing on the important documents early on.

It is hoped that more firms will willingly embrace the culture of collaboration and the proper use of technology. A well-informed and sensible opponent law firm always assists in containing the costs. Resisting the new approach will have an adverse impact on the case costs.