English Litigation: All Change in Disclosure Rules - Is This The Dawn of a New Era?

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English Litigation: All Change in Disclosure Rules - Is This The Dawn of a New Era?

By Geraldine Elliott and Laura Martin*


Litigating in the English courts


The English courts operate on an adversarial model. The parties to a dispute investigate their own case, call their own evidence and present competing legal arguments to the court. The duty of identifying and presenting the relevant facts and law falls on the parties.


A central principle of the English system is disclosure (similar to discovery in the US system). The purpose of disclosure is to ensure that the parties to the litigation can access all documents that have a bearing on the case. The disclosure principle has long been an attractive aspect of English litigation: 'standard disclosure', as it is known, requires parties not only to produce material on which they rely but also that which adversely affects their own case (or supports that of the opposing party).  


So the parties are litigating with 'cards on the table'. The court carries out an impartial forensic exercise considering the disclosed documents and oral evidence, and hearing legal argument, in order to get to the true facts and determine the dispute.


Where it all began


The current English rules governing disclosure (and the presumption that parties will generally give the standard disclosure) have their roots in the long gone era before electronic communication became the norm with the associated proliferation of communications and documents.


The scope of exercise required to meet the obligations of standard disclosure can be enormous, often starting with collection of hundreds of thousands of documents and in complex cases, running into millions. Whilst key word searches reduce the number of documents that must be reviewed manually the costs of the disclosure exercise is often significant and can become disproportionate.


The court service has previously taken steps to address the issue. New rules relating to electronic documents were introduced in 2010 with a view to making the disclosure process more cost effective.


In 2013, as part of wider reforms designed to reduce the costs of English litigation, a 'menu' of alternative disclosure options was introduced to allow parties to opt out of standard disclosure, in suitable cases. For example, parties could agree (or the court could order) more limited disclosure by reference to specific legal or factual issues. However, these changes were only alternatives to standard disclosure which remained the default option.  In practice parties have tended to take a risk adverse approach and opt for standard disclosure, perhaps concerned that they might otherwise not receive documents that could be damaging to their opponents' case, or miss the opportunity to uncover a 'smoking gun'.


The growth of document review technology, including the use of de-duplication software and email 'threading', has also helped to reduce the number of documents that must be reviewed manually. In 2016, in a case in which RPC acted, the English court approved the use of predictive coding technology for the first time. More recently the court has confirmed that predictive coding can be used without a specific order allowing it.


Despite these changes there has been growing support amongst lawyers, their clients and other interested parties for further reform of the disclosure rules. In 2016 the GC100 (representing in-house counsel of FTSE 100 companies) also suggested that whilst standard disclosure was an attractive feature of English litigation the cost and complexity of the current regime was a significant cause of concern.


Costs do not just relate to preparing disclosure but also reviewing disclosure received from opposing parties, especially where parties use the current regime to engage in the 'dumping' of disclosure material: disclosing large numbers of documents of only tangential relevance in order to obfuscate damaging material.


For all of these reasons, concerns regarding the spiralling costs of standard disclosure have been central to the development of the upcoming reforms.


What will change?


The new rules have been subject to two years of consultation and review and the majority of new claims issued in the English High Court from 1 January 2019 will be subject to them. They will be reviewed in 2021, when further changes may be made.


In contrast to previous reforms the rules have been entirely re-drafted, with the aim of bringing about a cultural change that will avoid the default (and costly) option of standard disclosure being used in every case. However, whilst the procedure will change and different assumptions will apply the underlying substance of the new rules is not significantly different to the current regime.


The key procedural change is that disclosure will now be considered in two separate stages; Initial Disclosure and Extended Disclosure, with no presumption that Extended Disclosure will be given.


Parties will be obliged to give Initial Disclosure when filing their statements of case (pleadings) Initial Disclosure is limited to key documents referred to in the relevant statement of case, or those otherwise required to understand the case. Parties can agree to dispense with this requirement (although the reasons must be recorded and may be reviewed by the court later).  No Initial Disclosure is required if it would be more than 1000 pages (or 200 individual documents). In practice it is likely that Initial Disclosure will not be required in the most complex cases.


After final statements of case the parties will have to confirm in writing whether they will be seeking Extended Disclosure on any particular issue. If any party does want Extended Disclosure a List of Issues for Disclosure must be prepared which the parties should try to agree. The parties will also have to try to agree which model of Extended Disclosure should apply and the likely costs of the proposed model.


The available models will be:


Model A
: Only known adverse documents (documents which a party is actually aware of without undertaking a further search for documents, other than it has already undertaken).


Model B
: Key documents relied on and necessary to know the case to be met.


Model C
: Request-led search-based disclosure of particular or narrow classes of documents based on particular issues (similar to existing models in international arbitration).


Model D
: Reasonable and proportionate search for supportive/adverse documents. Narrative documents (providing only background information) are excluded by default but can be included.


Model E
: Reasonable and proportionate search for supportive/adverse documents or those which may lead to a train of enquiry and identification of further supportive/adverse documents to be disclosed. Narrative documents to be included unless ordered otherwise.


All of the Extended Disclosure models contain an obligation to disclose known adverse documents (and this is a continuing obligation, so if a party becomes aware of adverse documents during the life of the proceedings, they must be disclosed). However, there will be no assumption in favour of Extended Disclosure and the parties will have to justify to the court why any particular order is appropriate (in particular Model D or E, with Model D being the closest to the current approach).


If the parties are unable to agree (and certify to the court that this is so despite real efforts having been made) then a short hearing can take place where the court will guide the discussion.


All of the above is subject to a new explicit obligation to cooperate and engage with other parties, from an early stage, including as to the use of technology, and to avoid the practice of 'dumping' documents with little (or no) relevance to the issues in dispute. There are also more explicit sanctions for parties that fail to co-operate in the manner required.


What can parties expect?


As only the most extensive Model E presumes narrative documents it is likely that in many cases, the volume of disclosed documents will reduce.


It is anticipated that the English courts will take a more proactive role: the current guidance warns that the court will not accept, without question, the disclosure model proposed by the parties.


At present it is unusual for the court to order anything other than standard disclosure if the parties agree to this approach, which most do. The new regime will remove this status quo and require parties to engage with the issue of disclosure in more detail at an early stage in the case, both in terms of providing appropriate Initial Disclosure (where relevant) and then in deciding how to approach Extended Disclosure, which will only be available on an issue by issue basis. It is difficult to envisage a case where lawyers would advise their client not to seek at least some form of Extended Disclosure, certainly in all but the most straightforward of cases.


As different Extended Disclosure models can be selected for individual issues within the proceedings, there will no doubt be debate and disagreement between parties not just on defining the issues at an earlier stage but also the appropriate model. In this sense the new regime will require greater front loading of costs. Although, it is said, this should result in an overall costs saving by removing the assumption of standard disclosure in every case.


Comment


The new rules are only part of the picture. The unknown factor at this stage is how parties will react to the changes. Parties may seek to maintain a de facto status quo by agreeing to dispense with Initial Disclosure and making an agreed joint request to the Court for an Extended Disclosure model that most closely resembles the current standard disclosure approach.  It will be interesting to see how the court will police the new rules and whether the stated intention of not agreeing parties' joint proposals without question will be met.


Conversely, it will important to be aware of parties relying on the more flexible approach to try and avoid giving appropriate levels of disclosure. This will be particularly important in cases where one party is likely to hold the majority of the relevant documents, e.g. large institutions defending investor claims, where an order for no or limited Extended Disclosure would be of clear tactical benefit to the defending party. 


It is undoubtedly a difficult proposition to institute reform in a way that controls costs, allows parties to continue to enjoy the benefits of the existing rigorous system and provides for a flexible approach where appropriate. This is particularly so where the existing disclosure regime is one of the reasons that England is regarded by many as a jurisdiction of choice for dispute resolution.


Ultimately, the new regime will only have the desired effect of reducing costs whilst maintaining the high standards if parties (and their advisers) embrace the new flexibility and engage with the new options on offer, rather than use them to re-create the status quo


In the context of this challenging balancing act the reforms are a sensible way to address the issue of spiralling disclosure costs. It is clear that previous attempts to reform the system have not had the desired impact. By forcing parties to abandon the assumption of standard disclosure the new regime may succeed where previous reforms have not.

 


 

* Geraldine Elliott (Partner) https://www.rpc.co.uk/people/geraldine-elliott/   Laura Martin (Senior Associate) https://www.rpc.co.uk/people/laura-martin/ 

 

Monday, December 10, 2018
Litigation (Civil, Business and Commercial)