Parties using the Business and Properties Courts need to familiarise themselves with a new Disclosure Pilot Scheme that is set to commence operation on 1 January 2019. In this article, co-authors of Electronic Disclosure: law and Practice (OUP, 2017) Michael Wheater and Charles Raffin run through an overview of the Pilot Scheme and flag some practical steps that parties and advisors can take to best prepare themselves for the enhanced disclosure related duties, and requirements, found under the Scheme.
Subject to Ministerial consent (and perhaps some minor tweaks) a two-year Disclosure Pilot scheme is set to commence in the Business and Property Courts (B&PCs) in England and Wales on 1 January 2019. Taking effect as a new Practice Direction to the Civil Procedure Rules (CPR) the Pilot Scheme will apply, with some limited exceptions, to existing and new proceedings across the B&PCs in the Rolls Building and in Bristol, Birmingham, Cardiff, Leeds, Liverpool, Manchester and Newcastle. As a result, significant banking and finance litigation is likely to fall within its ambit. The Pilot Scheme represents, in substance and form, a marked evolution from the current rules relating to document disclosure and production that are found at CPR Part 31. It has been designed to foster and to compel a wholesale shift in litigation culture concerning disclosure and document production.
To the extent they still do, court users and courts affected will be required to stop considering the well-established, but increasingly ineffective, CPR “Standard Disclosure” as the default model that should direct disclosure.
Instead, great care will now need to be given to see to it that disclosure (and document production with it) is crafted to fit the requirements of the case in question, with the need for any disclosure broken down and analysed on an issue-by-issue basis, and then by reference to a range of potential disclosure Models A-E which escalate in terms of the likely time, cost and effort required to undertake disclosure under them.
Furthermore, driven by duties binding them (and their legal representatives) to cooperate between themselves to facilitate the disclosure process, parties will be required to give deep and careful consideration to the use of technology to expedite, and reduce the burden and cost of, any disclosure exercise. While the scale and scope of disclosure exercises stand to be reduced, a perceived hallmark of litigation in this jurisdiction – the ability to obtain an order for a party to disclose documents that are adverse to its claim – has been preserved, and enhanced. Parties will now operate under new duties, which bite regardless of the order for disclosure made, that require them to disclose all known adverse documents (being, in sum, non-privileged documents of which a disclosing party is aware where the document, or information it contains, contradicts or materially damages its case or supports the contention or version of events of an opposing party).
Where the Pilot Scheme applies, much of the CPR relating to disclosure will be set-aside. However, some provisions, include those relating to pre-action, and non-party, disclosure will prevail in much the same form.
Background to the Scheme
The Pilot Scheme is the product of two years’ work by a Working Group, with a drafting sub-committee, chaired by Lady Justice Gloster. In light of critical feedback from court users and the profession over the perceived excessive cost, scale and complexity of disclosure (in particular where CPR Standard Disclosure continued to be deployed in the majority of cases), the Working Group was tasked with critically appraising the existing disclosure framework.
That we have reached this point is unsurprising. CPR Standard Disclosure is now close to 20 years old. Itself introduced to transform the costly and cumbersome discovery process under the former Rules of the Supreme Court, Standard Disclosure represented a marked simplification and streamlining of the discovery/disclosure process. However, over time it has itself in turn become increasingly inefficient. Over the last two decades the volume of electronically generated and stored information, which could fall for review within a Standard Disclosure exercise, has increased by an extraordinary amount. Standard Disclosure projects have typically become increasingly expensive with large amounts spent on searching for, and reviewing electronic documents.
In some cases, large amounts of irrelevant documentation has ended up being circulated between parties. Over the last eight years, laudable efforts have been made to update and amend the CPR to respond to this changing documentary environment. 2010 saw the introduction of a Practice Direction 31B, dedicated to facilitating the management and disclosure of electronic documents. Next, further to reforms recommended by Lord Justice Jackson, 2013 saw a suite of changes to the CPR including those relating to disclosure. However, notwithstanding the introduction of (amongst other things) a “menu” of potential approaches to disclosure at CPR 31.5(7), of which Standard Disclosure is just one, there has been poor take up of alternative orders. Recognising that orders similar to “standard disclosure” may be appropriate and strongly desirable for factually complex cases, it was perceived that a new approach to disclosure was required. Against that backdrop, the Working Group has executed their brief of testing and formulating new graduated models of disclosure, and preparing a new e-disclosure protocol that takes into account the impact of developments in technology impacting document disclosure and production. Following public consultation on a working draft of the Pilot that was released in November 2017, a substantially revised and improved version has now been approved by the Civil Procedure Rules Committee.
The Pilot Scheme in outline
Disclosure under the Pilot Scheme can be broken down usefully into four, broad stages. At every point, the process is underpinned by disclosure related duties that variously bind parties, and those legal representatives instructed with a view to the conduct of active or potential litigation on their behalf. Those duties include requirements to co-operate with opposing parties, and to assist the court, so the scope of disclosure can be settled as efficiently as possible (to the end that it is no wider than is reasonable and proportionate in order to fairly resolve the issues in the proceedings).
Furthermore, running through the entire Pilot Scheme is the requirement that, once proceedings are commenced by or against a party, and in accordance with the provisions of the Pilot Scheme, it will be required to disclose, regardless of any order for disclosure made, known adverse documents (subject to privilege).
Turning to the first broad stage, parties and their legal representatives now operate under codified duties requiring them to take reasonable steps to preserve documents in their control that might be relevant to any issues in the proceedings. Those duties are engaged at an early stage – for a party, when it “know[s] that it may become a party to proceedings”. Furthermore, the duties are prescriptive and extend to procuring the suspension of document deletion or destruction processes; identifying steps that have to be taken to provide current and former employees with written notices instructing them not to delete or destroy (and to take reasonable steps to preserve) documents or classes of documents; and requiring them to take reasonable steps to see to it that agents or third parties who may hold documents on a party’s behalf, relevant to an issue in the proceedings, do not delete or destroy them.
Second, in many cases, parties will engage in “Initial Disclosure”. This is a process where parties will provide with their statements of case copies of key documents they rely on in support of their case (and that are otherwise necessary for opposing parties to understand the case they have to meet). With that Initial Disclosure, parties will provide a supporting list of the documents so disclosed. Initial Disclosure is not intended to be overly burdensome and the process will not necessarily be adopted in every case. In addition to certain limited situations where it will not apply in at all, parties may agree (or the court may direct) that it will not be followed and it will not apply where one or more parties concludes in good faith, and confirms in writing, that Initial Disclosure would involve the circulation of more than (the greater of) 1,000 pages or 200 documents by itself or another party. As such, it may well be that Initial Disclosure will not be adopted in a number of complex commercial, financial, construction and other disputes.
Where any party seeks disclosure in addition to, or as an alternative to Initial Disclosure,
then following the circulation of the final statement of case it will request so called “Extended Disclosure” in line with one or more of a number of identified disclosure “Models”. This engages a process culminating in a determination by the court (principally at the first case management conference) whether or not to order any Extended Disclosure, and if so in connection to which particular issues. The process continues with the parties seeking to agree between themselves “Issues for Disclosure”. Not extending to every issue in dispute between them, these Issues are those that the parties consider will need to be determined by the court with some reference to contemporaneous documents, for there to be a fair resolution of proceedings. It is against this list of Issues for Disclosure that parties will propose, and the court will consider, various Models for disclosure. In tandem with this, and thereafter, parties are required to run through a programme of critically appraising the sources, nature and likely number of documents within their control; and the nature and scope of any searches they would propose to carry out, for potentially relevant documents. This process, by which it is intended that parties will identify, discuss and seek to agree the scope of any Extended Disclosure sought is guided by the “Disclosure Review Document”, in which key information relating to disclosure is also stored. It is noteworthy that parties are required to consider the use of technology, including the use of analytics and technology or computer assisted review tools (of a type commonly termed “predictive coding”) as a means of expediting document reviews. Furthermore, where they have decided against the use of such tools (and in particular where the documents for review exceed 50,000) they will have to justify why that decision has been taken.
Different Models may be ordered for different Issues for Disclosure (and, in fact, the court may order that different parties provide disclosure under a different Model on a given Issue for Disclosure). There are five Models A through E, with Models C to E being search based disclosure. In outline, Model A takes disclosure no further forward, save for the reiteration of the parties’ continuing duty to disclose known adverse documents. Model B, which does not require parties to undertake a search for documents, requires parties to disclose documents of the type falling within Initial Disclosure (without a limit on quantity). Model C is a form of request-led disclosure, where parties will ask another for the disclosure of particular documents or narrow classes of documents (by reference to requests set out in the Disclosure Review Document). Inspired by document production regimes encountered in international arbitration (and drawing from a similar model set out as an option in the current CPR), Model C looks set to be adopted frequently. Notably, the Pilot Scheme indicates at various junctures that the court will pay particular attention to whether any search based disclosure ordered should be constrained to Model C as opposed to the wider ranging Models D and E discussed below, and will require parties to justify why that should not be the case. Model D echoes the current Standard Disclosure, and demands the conduct of a reasonable and proportionate search for documents which are likely to support or adversely affect a party’s case, and the disclosure of the same. Finally, Model E described as “wide search-based disclosure” is the most expansive form. Stated to be ordered “only in an exceptional case”, Model E is bounded by a requirement only to undertake a reasonable and proportionate search, however it extends beyond Model D disclosure to documents which may lead to a chain of inquiry which may then result in the identification of other documents for disclosure that fall within the parameters of Model D.
Critical Review by the courts
Fourth, typically at a case management conference, the court will review an updated and amalgamated version of the Disclosure Review Document; moderate disputes that have arisen, and then assess the disclosure Model(s) to be applied for each Issue for Disclosure. Within the Disclosure Review Document, the parties will have provided their estimates of the cost of collection, processing, searching, reviewing and producing documents under the various disclosure Model(s) proposed. Where it concludes that any search based disclosure is appropriate, the court will work to scrutinise proposals for, and introduce as necessary, sensible provisions to reduce the burden and cost of the disclosure exercise (for example by limiting the number of data sources to be searched, and the technology to be deployed to facilitate document reviews). At a separate juncture, before or after such a case management conference, parties can apply for a brief and informal Disclosure Guidance Hearing. Provided they have made real efforts to resolve the disputes between them, parties can attend a 30 minute hearing where the court will provide guidance and any necessary orders on questions of the scope or performance, as relevant, of Extended Disclosure in the case.
Prepare yourselves: it is LATER than you think
As matters stand, the Scheme launches soon. Parties and their advisors are well advised to build on any existing disclosure related strategies, in readiness. Sensible steps to take might include the following. To meet the increased document preservation requirements, companies and organisations should have in place:
- protocols to assist in the rapid identification of the sources of potentially relevant documents in the event that litigation is intimated; and
- detailed litigation hold correspondence which can be edited and circulated to key present – and former – employees and agents, notifying them of document preservation requirements.
Further, as the duty to preserve documents extends to the meta-data within them, parties will need to consider whether they have the know-how to ensure that meta-data can be preserved unscathed (and, if not, forging links with third parties such as eDisclosure consultants who can assist and advise as needs be to do so). To best comply with disclosure duties relating to known adverse documents, companies and organisations should have procedures in place so that, as soon as practicable, they can designate a party or parties to assume authority over (and maintain knowledge of) any disclosure exercise who can work to identify parties to whom relevant knowledge extends for the purposes of the Pilot Scheme (which is developed in a little more detail therein). Finally, given the renewed onus that lies on parties to consider with care the forms of technology that could assist with expediting any search based document reviews, parties should ensure they are familiar with the range of data-analytics and technology/computer assisted review processes that are available.
This article was first published Butterworths Journal of International Banking and Financial Law – LexisNexis