E-disclosure: open questions
15 July 2013
11 November 2013
9 December 2013
7 October 2013
28 October 2013
30 June 2014
E-disclosure is slowly gaining acceptance, but how big a difference will civil litigation reforms make?
Q: The SFO has chosen to use its own team of junior barristers for the e-disclosure exercise in the Tchenguiz case, arguing the issues are too complex for an LPO provider. Do you think LPOs will ever be able to grapple with complex litigation in the same way as bespoke/in-house teams?
Caroline Hunter-Yeats, partner, Simmons & Simmons: I don’t think LPOs will ever be able to simply take the whole e-disclosure process away and bring back the documents required. They have a role to play in a well-managed case, but for some things they are not the best option. A lot depends on the type of documentation that needs reviewing and whether that review can be split into sections.
Using an LPO brings its own challenges and you need to have the experience to know what tasks they are suited to and how to instruct them and oversee their work. Where the stakes are high and some fine judgements will be required you’re going to need to keep some or all of it in-house. However, for the right tasks an LPO can still offer a cost-effective solution.
Laurence Lieberman, partner, Taylor Wessing: The problem with large, complex disclosure exercises will always be that it can be difficult to break the issues down effectively so organisations such as LPO providers can provide a consistent service. This is exacerbated in the tension between throwing the net wide enough to capture relevant material and complying with the emphasis on the scope of disclosure being narrowed where possible. Sometimes disclosure can take on an ‘if in doubt, include it’ character, which is at odds with many of the new disclosure options, and which LPO providers making judgement calls can struggle with.
Mark Molyneux, partner, Addleshaw Goddard: The key to an efficient e-disclosure review is understanding the population of documents and devising a defensible strategy that allows you to identify the documents that need to be disclosed.
In most cases a first-pass review by a well-trained and well-managed team of paralegals working to clear instructions with proper oversight and quality control by senior lawyers would be suitable, and many clients would feel this was more cost-efficient than a team of more qualified lawyers. If the junior barristers are already immersed in the case and will continue to work on it, efficiencies may be more obvious.
Geraldine Elliott, partner, RPC: LPOs have a place in the disclosure process but as part of a review process that is ultimately managed by the legal team. We would not outsource the entire disclosure process. The use of third-party providers can, however, be a cost-effective tool and technology increasingly plays a part in making sure the review process is efficient.
In particular, the use of predictive coding and software that can rank documents by relevance allows less relevant documents to be outsourced to LPO providers for initial review, while the core legal team can concentrate on the most relevant documents.
Q: How is your firm seeking to keep costs down in e-disclosure? Is this an area you have served, or are planning to serve, through the use of a ‘nearshoring’ office?
Hunter-Yeats: Nearshoring brings with it some of the same challenges as outsourcing in my view, as you still have a team that is physically separate from the main case team. Our experience is that while it can be cost-effective to outsource elements of e-disclosure, that has to be part of a flexible approach based on the individual case.
We have an internal team of trained paralegals as well as trusted external suppliers and we have closely examined the quality, speed and price of each. We know that sometimes – particularly where there will be numerous judgement calls requiring more understanding of the case – it can be quicker and cheaper to use our in-house team.
The other key to keeping costs down is to have the expertise to understand what can be done to analyse documents without substantial manual input.
Lieberman: Using the right litigation support provider with the right technology, service, practicality and understanding of dispute resolution is an important first step. We have built strong relationships with a small number of such providers so working with them on new assignments is smooth and efficient. Agreeing the parameters of e-disclosure early on is also key to cost control, and then translating that into ‘documents by issue’ that disclosure teams can use to review documents efficiently. We also work closely with our counsel teams on e-disclosure as it provides a much more efficient process down the line for creating lists of issues for trial and witness statements.
We have not used nearshoring on e-disclosure to date, although the benefits of such an approach are under constant review. We tend instead to use carefully filtered, high-quality paralegals managed by a team leader who understands our business and approach to disputes.
Molyneux: In the past two years we have completely re-engineered our approach to e-disclosure, resulting in efficiencies and cost savings for clients while maintaining a high-quality output. We have completed a process mapping exercise which, together with our Transaction Service Team, is a key part of our approach to becoming a different legal business.
Disclosure was the first litigation process we re-engineered. Managing this in-house ensures we can provide our clients with a cost-effective service while avoiding some of the pitfalls that have affected some outsourced e-disclosure reviews.
The mapping of the processes and the ability to allocate resources to each part of that allows us to estimate the likely costs of a given review more accurately. This helps us to ensure our clients’ budgets are accurate, maximising their chances of recovering their costs.
Elliott: Part of the solution to keeping costs down comes from ensuring the disclosure exercise is fully thought through and scoped out from the outset to ensure it targets only the documents necessary
and that time and costs are not wasted on irrelevant custodians or databases.
Again, technology can be a real benefit in helping to identify the key areas to focus on. Nearshoring is not part of our model, but we will make use of third parties with additional reviewer resources for larger exercises. Clients do not generally wish for the disclosure process to be taken completely out of our office.
Q: Since the implementation of the Jackson reforms in April, has there been any significant difference in the use of e-disclosure and the way exercises are managed?
Hunter-Yeats: The Jackson approach to disclosure essentially adopts the approach in the e-disclosure practice direction and applies it to the whole of disclosure – in other words, establish the potential scope of the exercise early, consider different ways of carrying out disclosure with a view to making it proportionate to what is at stake, discuss the issues with your opponent and seek to agree as much as possible.
So it hasn’t changed the way we approach e-disclosure but it has increased the importance of getting to grips with it early, as the judiciary are more receptive to debate about the scope of searches.
When it comes to the first case management conference, the more information you have about the data landscape, and the potential cost of different approaches to disclosure, the more likely it is that you can avoid a disproportionate and costly exercise that doesn’t really change the outcome of the case. It is still subject to the individual judge’s level of interest in and knowledge of e-disclosure, but the emphasis the Jackson reforms put on this should increase the number of judges willing to get to grips with it.
Lieberman: It is too early to draw any conclusions on the impact of the Jackson reforms on e-disclosure. Cases involving substantial e-disclosure exercises that fall within the Jackson reforms will probably not have completed disclosure yet.
It is clear that cost control in e-disclosure will be an important
issue post-Jackson. Good use of technology will remain key in getting to the important documents in a world where the amount of data produced is increasing enormously.
Molyneux: Disclosure has always been one of the most expensive stages of litigation. In recent years we have undertaken major disclosure exercises in litigation and regulatory investigations. Much of this involved the use of technology, conferring with the other side at an early stage and attempting to narrow the scope of disclosure to make it manageable.
These concepts are now embedded in the rules but for the most part this reflects what we have considered best practice for some time. For some parties who are less familiar with these issues the transition to the new regime has meant more significant changes to their working practices. So far, we have noticed a shift towards issue-based disclosure and suspect this may become the norm for the majority of cases.
Elliott: It’s too early to discern any changes. Looking ahead, the fact that standard disclosure will no longer be automatically ordered is likely to have an impact on the conduct of reviews, as disclosure exercises will need to be clearly defined and targeted. To a large extent, however, that is simply a refinement of the process that already has to be carried out.
It will be interesting to see to what extent judges make use of the new options on disclosure. There is now a requirement on parties to discuss and seek to agree proposals for the exercise in advance of the first case management conference but – again – that is really an extension of best practice that existed beforehand. Overall, we do not see the changes having a major impact on how we approach the way disclosure exercises are carried out.
Q: E-disclosure – can it make or break a case?
Hunter-Yeats: It is rare for e-disclosure to make or break a case but it can change things. Getting an appropriate order for e-disclosure can have a big impact. In most cases, the burden of disclosure falls more heavily on one side than the other and if one party is faced with a lengthy and expensive process with only the distant prospect of recovering a proportion of the cost if they win, that can change their appetite to continue litigation and the dynamic in any settlement discussions.
The way you go about e-disclosure can also have implications for the outcome of the case. If you get the approach wrong and your opponent is able to persuade the judge that what you have done falls short you may face costs sanctions or even an order to start again. That kind of procedural setback can again affect the parties’ appetite to continue and change the negotiating position.
Lieberman: There will always be cases where getting to the right documents quickly and effectively can put one party at a significant advantage. On the other hand, e-disclosure failures can be embarrassing for both clients and lawyers, and can put a party at a disadvantage if, for example, key documents are missed or discovered at a late stage.
Having said that, this isn’t really different from the days of hard copy disclosure; the difference now is the volume of data, the difficulty in identifying the key documents and the use of technology to achieve that.
Molyneux: It’s easy to be tempted into thinking that the latest piece of technology or software will find a smoking gun and crack the case. In some cases a well-managed process can achieve a breakthrough but in the majority of cases that reach the disclosure stage the position is far more subtle.
E-disclosure will often affect litigation in relation to cost. There are a few cases which give salutary
lessons as to the consequences when e-disclosure goes wrong, but often the daunting potential cost of e-disclosure can affect the conduct of litigation.
Unless properly managed, the cost of a big disclosure exercise can materially affect the cost-benefit analysis for a claimant considering bringing a claim, and can be a factor in defendants settling claims they might otherwise fight. These costs can be mitigated and managed with a combination of good document retention policies and efficient use of technology, and access to lawyers and other experts with an understanding of how to manage an e-disclosure project.
Elliott: If not make or break, it can certainly have a profound impact. The sheer volume of electronic documents now involved in a disclosure process is undoubtedly an issue that brings with it certain challenges.
If a party fails to ensure it fully understands and doesn’t map out its IT infrastructure, and design a disclosure exercise adapted to that infrastructure from the outset, there is a risk that key documents could be missed. This can be uncomfortable for the disclosing party when the other side becomes aware of deficiencies.
Where the disclosing party provides inadequate disclosure initially it is always one step behind – not only can it create a certain impression in the mind of the judge, logistically trying to re-run or provide supplemental disclosure while running the rest of the case can be extremely challenging.
Geraldine Elliott was assisted in her answers by senior associate Chris Ross
Sponsor’s comment: when e-discovery becomes a perfect e-storm
By Mike Brown director, legal technologies, Emea at Control Risks
Data capture and the movement of data across borders have hit the headlines recently and shown that, at many levels (and in many countries), e-discovery is caught in the eye of a perfect storm.
The gathering elements to create this storm include: a new era of whistleblowing; greater stakeholder interest in corporate integrity; conflicting data privacy laws between countries; and national governments’ pursuit of wrongdoers. Accessing data is one issue, transferring it across international borders while remaining compliant with legislation is another.
Moving data across borders against this backdrop is a growing challenge and using the cloud does not lessen the risks. Corporations need to know where their data centres are located. Their data could be moved to multiple locations without their knowledge, raising many legal issues. For example, in China, state secret laws are invoked whenever data is moved from the mainland – so even moving it to a Hong Kong data centre can create problems.
It is usually lack of planning, lack of knowledge or insufficient training that lead to violations of data protection laws and generally it happens long before any investigations begin in earnest. The cost of these actions can result in substantial fines or sanctions.
The first few hours after an incident is triggered are the most important for data collection and, to put the company in the best position, the investigation has to be done quickly. But, key to the success of an investigation is the swift assembly of a multi-disciplinary team who have experience with both the local and international data protection laws. More often than not, the team – not the technology – makes or breaks an investigation.
While electronic discovery software has reached maturity it should be viewed as part of the service, not a complete out-of-the-box solution. Although predictive coding and other analytical capabilities can make fast work of investigations, the data is still protected and has to be handled sensitively.
Also, in any multi-jurisdictional enquiry, local knowledge is paramount. It is impossible to collate a workable defence without local experience and understanding of the nuances of language, customs, practices and laws. In-country reviews and on-the-ground forensics work best when there is an in-country data centre which will save time, money and further litigation.
We have entered a new era of cross-border investigations. Organisations that fail to anticipate the unexpected with proactive, sophisticated approaches may find themselves dangerously exposed to a number of risks that could cost them greatly not just in terms of fiscal penalties, but reputational damage too.