Disclosure: Important changes to procedure and practice

22nd November 2018

What is changing, and why?

Whilst the full ‘cards on the table’ approach to disclosure in England and Wales may be an important aspect of the litigation process in England and Wales, it can often prove disproportionately expensive. The explosion in the volume of electronic data in recent years is also a significant contributing factor to escalating disclosure costs.

There have been concerns for some time over how to control disclosure costs, particularly in very small and very large cases, to ensure that litigation is conducted as efficiently as possible. A working group set up in 2016 was tasked with identifying the problems with the existing regime and devising a practical solution. The conclusion was that the current section of the Civil Procedure Rules (CPRs) which deals with disclosure, Part 31, is no longer fit for purpose and there is a need for more meaningful engagement between the parties and more robust management from the courts. As from 1 January 2019, therefore, a mandatory two-year disclosure pilot scheme will operate in the Business and Property Courts across England and Wales [1].  That, of course, is the jurisdiction in which many of the more complex cases involving financial institutions will be conducted.  In the words of the working group, the new scheme is intended to bring about a “wholesale cultural change”.

It is therefore vital that in-house lawyers and any other financial services colleagues involved at all in litigation and dispute resolution get to grips with the new scheme.

Disclosure Pilot Scheme

Over many years, parties, lawyers and even the judiciary have got into the habit of feeling that anything that is or could potentially be relevant to the case should be disclosed. That results in huge swathes of documents routinely being disclosed, the vast majority of which often have no real bearing on the issues.  That is not what is actually required by law.  Cases as far back as 2007 [2] have acknowledged that, in fact, the CPRs  sacrifice ‘perfect justice’ for the more pragmatic ‘reasonable search’ rules, which do not require that “no stone be left unturned” when it comes to looking for documents to disclose. Whilst this may mean that a relevant document, even a ‘smoking gun’, is not found, this is justified by considerations of proportionality.

The pilot scheme effectively provides a mandatory procedural framework which codifies those principles. It introduces two stages of disclosure: initial disclosure of key documents with the parties’ statements of case; and, in some cases, extended disclosure later in the litigation.

Importantly, there is no automatic entitlement to extended disclosure. One of the central features of the new scheme is a greater focus on the key issues for which disclosure of documents is really required, as opposed to disclosure of anything and everything which may potentially be relevant to any and every issue pleaded. (For example, ‘issues for disclosure’ may not include issues which are purely questions of law, or issues which need to be decided solely on the basis of, say, witness or expert evidence.) The idea is that disclosure should be no wider than is strictly necessary. In fact, the change of focus means that the court should only make an order for extended disclosure where it is persuaded that it is appropriate to do so in order to fairly resolve one or more of the issues for disclosure.  Fundamentally, the disclosure order made must be reasonable and proportionate having regard to the overriding objective of enabling the court to deal with cases justly and at proportionate cost.

If extended disclosure is ordered, it may be on an issue by issue basis, with one of five possible models for disclosure (ranging from disclosure of known adverse documents only (Model A), through to a wide search-based train of enquiry disclosure (Model E)), applying as appropriate to the particular ‘issues for disclosure’.

The scheme also places a new emphasis on early cooperation between the parties. It requires the parties to jointly complete, before the first Case Management Conference, a Disclosure Review Document (DRD), which sets out the parties’ proposals for the appropriate disclosure model[s].  The DRD is also the method through which the parties share information about how documents, including electronically stored information (including metadata and so-called ‘deleted data’ and the like) [3], are stored and how they might be searched and reviewed. The parties are also required to discuss and seek to agree on the use of software or analytical tools, including technology assisted review software and techniques, with a view to reducing the burden and costs of the disclosure exercise. The DRD also requires the parties to give their best estimates of the likely costs involved in the disclosure exercise, to enable the court to make an informed decision as to the nature of the extended disclosure order to be made in the case – if any.

Another key feature of the new scheme is that it expressly sets out new duties which are placed on parties and their legal advisers, which are more onerous that those set out in Part 31 and existing Practice Directions, in relation to the preservation of potentially disclosable documents and to disclosure. The duties are backed up by sanctions for non-compliance.

Practical advice

In-house lawyers and any financial services colleagues involved in litigation and dispute resolution should familiarise themselves with the new disclosure pilot Practice Direction and associated documents, and ensure that their internal processes and procedures reflect the requirements of the scheme. In particular, staff training as to new legal and procedural duties and requirements, and as to the principles underlying both disclosure and legal privilege (which can allow otherwise disclosable documents to be withheld from the opposing party and from the court in certain circumstances), will be vital.

If you would like any further information or advice, of if you would like any assistance with training or with reviewing your firm’s internal dispute resolution processes, please do not hesitate to contact Louise Power who will be very happy to help.

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[1] The scheme is set out in new Practice Direction 51U
[2] Nichia Corp v Argos [2007]; Digicel (St Lucia) v Cable & Wireless [2008]; Shah v HSBC Private Bank [2011]
[3] For more information about disclosure and edisclosure, please see the Chambers Global Guide to Ediscovery and Disclosure and the chapter on Disclosure and Inspection from Walker Morris’ Little Green Book of Dispute Resolution