Peer Panel: e-disclosure
26 November 2012
E-disclosure is here to stay and gathering pace, so lawyers need to get up to speed to help their clients through the new electronic battleground. In association with
How useful do you think clients are finding e-disclosure?
Julian Copeman, partner, Herbert Smith Freehills: Clients appreciate that, while the identification, preservation and collection of e-disclosure material can be burdensome, having a sound e-disclosure strategy in place is essential in identifying the data or categories of data that need to be reviewed and/or disclosed, and managing the costs of the exercise.
E-disclosure, in modern disputes parlance, means much more than simply the disclosure of electronic rather than paper documentation. It now encompasses a range of tools and techniques, from disclosure management and processing software to innovative document review solutions.
Our experience is that clients appreciate having a range of e-disclosure solutions at their disposal.
Dorian Drew, partner, Norton Rose: On the whole, clients seem to be finding the use of e-disclosure beneficial and, in many cases, essential. In a lot of instances it allows them to pull together and sort a large volume of data, sometimes dating back a few years and relating to people no longer employed by the company. The disadvantage is that clients may be swamped with data.
Usefulness is linked to the quality of advice clients receive relating to the appropriate keyword searches, date ranges and filters that are essential in targeting information.
Toby Robinson, partner, Travers Smith:
Some clients find it useful to access the document database and carry out their own searches for documents - it certainly helps that the lawyers and the clients can review material in the same format at the same time, and share comments on the documents easily.
Some companies, particularly larger organisations, are working with third-party e-disclosure providers to get the right document collection processes in place even before external lawyers have been instructed and litigation has become a realistic possibility.
What advice should firms be giving clients when entering an e-disclosure process? Should other advisers (such as accountancy firms or consultants) be involved?
Copeman: Law firms need to work closely with their clients to ensure data is collected in a forensically sound manner. This is one area where law firms and their clients should think carefully about whether an independent third-party forensics expert should be involved, particularly in cases concerning allegations of fraud or where there is a danger that key client data may be inadvertently altered between identification and collection
Drew: In terms of practical advice, the important thing is for clients to engage fully with the e-disclosure process. In the first instance, this will require the early involvement of a client’s internal IT department to establish the format and location of the relevant data, as well as its safekeeping. Many clients benefit from the use of external consultants when they do not have access to sophisticated document management software, where data is stored across multiple jurisdictions or is stored on back-up servers that need reconstructing.
Robinson: Clients should be advised that, where necessary, an e-disclosure provider should be brought on board at an early stage to assist with the initial phases of securing potentially relevant documents. There might be an increase in costs earlier than expected, but costs are bound to be saved in the long run.
Clients should provide the legal team with all potentially relevant material and let the lawyers decide what can or should be disclosed - clients should not try to second-guess the disclosure process. They should also be encouraged to engage their own IT personnel and senior management at an early stage. IT personnel are most likely to know where electronic documents are held, while senior management should give - and be seen to be giving - support.
Are clients aware of the benefits of e-disclosure?
Copeman: Generally, clients are aware of the costs and risks of e-disclosure processes, and therefore of the benefits of a professionally run process. So, while clients are aware that e-disclosure can be burdensome in terms of time, costs and logistics, they are also aware that having a sound e-disclosure strategy in place and an experienced law firm to advise throughout can bring huge benefits to how a dispute is conducted.
Drew: Although those less experienced in litigation are sometimes anxious about the thought of handing over potentially large amounts of data to external advisers, clients generally appreciate its benefits.
If used properly, e-disclosure tools can assist in an early assessment of a client’s position and help inform the approach and strategy to be taken in a case. The thinking that needs to go into preparing for e-disclosure, including agreeing the scope with an opponent, can also help clarify and narrow down the issues in a case.
Robinson: Clients can find it difficult to buy into the idea that they should co-operate with the other side at a relatively early stage in proceedings to agree on the approach to e-disclosure in circumstances where the litigation is at a particularly contentious stage, with no party conceding anything. From a logistical point of view, clients understand the cost and time benefits, although it can be perceived as an additional unwelcome cost at an early stage in proceedings.
How much training should clients give their staff in terms of considering what they write in electronic formats, including on social media platforms?
Copeman: Social media aside, it would be hard to stop employees committing things to email, since email is now effectively the primary means of communication for many businesses.
Accordingly, there is benefit in employees being trained in the use of electronic communications in general. At the very least, once a dispute is under way clients should ensure that employees understand the implications of creating potentially disclosable and harmful documents, as well as the risks of waiving privilege over confidential communications.
Drew: While staff should never destroy documents relevant to a potential dispute or litigation, clients need to advise their staff to exercise caution over creating documents, not least because they may subsequently need to be disclosed in proceedings and could be damaging to a client’s position. This is particularly important in the more relaxed context in which emails and social media posts can be used. Ultimately, staff need to take a common sense view.
Robinson: A policy to remind people of the risks of email communication is recommended. Clearly, emails are a vital part of the day-to-day operations within an organisation and fear of disclosure should not discourage employees from communicating in the ordinary course of business. However, if something goes wrong - for example, a relationship with a third party breaks down or a regulatory issue arises - employees need to think long and hard before creating documents (including emails) relating to the issue in question. Throwaway remarks could subsequently undermine the firm’s position. Ultimately, it is a matter of common sense.
Do you expect e-disclosure to be more widely used in future?
Copeman: As electronic documentation continues to dominate communications, so e-disclosure will continue to grow in importance in any disclosure process. Innovations such as staged disclosure and the proposed ‘menu’ approach in High Court litigation will change the way firms and clients view disclosure.
In addition, the use of innovative technologies such as concept searching, intelligent filtering and predictive coding will become more mainstream as clients and firms look for ways to control costs.
Drew: Advances in technology will make e-disclosure a more prominent feature of English litigation. Indeed, the increased role of e-disclosure is most clearly recognised by the requirement in Practice Direction to Part 31 of the Civil Procedure Rules (CPR) that parties to a dispute and their legal representatives must discuss the use of technology in the management of electronic documents with a view to agreeing how to proceed in a proportionate and cost-effective way.
Robinson: Changes in the disclosure rules under the CPR and recent cases dealing with a party’s failure to provide adequate electronic disclosure have confirmed that e-disclosure obligations on parties to litigation are here to stay and must be taken seriously by clients and lawyers alike.
Having said that, e-disclosure will not be necessary in every case, for example in smaller claims and claims that are not fact-intensive.
The in-house view
Ketan Shah, senior legal counsel, RBS Litigation
When undertaking disclosure, the parties are not obliged to conduct an exhaustive search for documents but rather a reasonable and proportionate search for the appropriate classes of relevant documents. Given the different media in which electronic data may be held, it is important that potential sources of electronic data are identified, located and preserved as soon as litigation is contemplated.
The efficient use of technology, particularly in complex litigation involving potentially large volumes of documents, is critical not only in ensuring that a reasonable review is undertaken but also that costs and time remain proportionate. Technology that enables documents to be filtered by custodian, date, key words, file types and size is key to determining search criteria. This will enable the parties to reach agreement on the scope of the disclosure exercise.
Grant McCaig, in-house solicitor, The Phoenix Group
The Phoenix Group has about £71bn in assets under management, serving over 6 million policyholders. Given the size of our business, the complexity of arrangements in the group and our contractual relationship with our outsourcers, efficient management of electronically stored information (ESI) is integral to a successful litigation, regulatory inquiry or investigation.
When a contentious matter arises, we need to be able to identify and locate relevant ESI and then get access to it quickly. It’s essential that we have an IT system with seamless integration together with secure document-sharing portals that allow the legal team to search across the business for ESI that may be relevant to a dispute and then gain access for review. The time we save by having quick access to relevant documents is time we can apply to assessing the merits of a dispute. If an e-disclosure exercise is required, by having immediate access to all ESI across the business we ensure the effect on business operations is negligible, while the time and cost of employing a third-party e-discovery provider is also minimised.
As part of our legal risk management, we also have to identify areas where we can reduce the risks of litigation. Employee intranets and internal information portals ensure we can provide guidance to staff on processes and behaviours that assist in the resolution of disputes before they become litigious.
Michael Mayhew-Arnold is former group GC of the Ansbacher Banking Group of Companies and is now managing director of RISC Management
In my experience as GC and from a commercial standpoint, retrieval of ‘documents’ for e-disclosure purposes, though imperative, is of immense value in any litigation providing it is managed correctly. If not, it can be very costly both in terms of fees and reputational risk.
In order to determine what is and isn’t relevant for disclosure purposes, a complete picture of the case at the earliest stage is required. Protecting the data and stopping contamination of it by immediately securing it in a safe environment is key to any e-disclosure exercise and mitigation of the legal risk.
It is best not to use the in-house IT team but rather experts in the field. This will extend to all data held on or offsite, including hand-held, portable or even social media data; copying the retrieved data and metadata and recreating documents as they originally were by means of specialised systems. This will also include (but is not limited to) ‘string’ documents, deleted and possibly data ‘migrated’ from one system to another and the use of keyword search.
Timing and relevant expertise have always been crucial to reducing legal and reputational risk, but e-disclosure leaves little room for any margin of error.
The provider’s view
Organisations should select efficient and cost-effective technology to better address disclosure. Litigation is inexorably moving in a direction that will likely require organisations and law firms to have a more efficient and cost-effective process in place for disclosure. That point was made abundantly clear last month when Lord Dyson, the new Master of the Rolls, confirmed that new Civil Procedure Rule 31.5 and other procedural reforms will become effective in April 2013. In particular, these rule changes emphasise the importance of using technology to accomplish early and efficient disclosure.
For example, new Rule 31.5 requires that each party serve a report two weeks before the first case management conference (CMC) that describes existing documents relevant to the matters at issue. That report must also specify the location of such documents and cost estimates for standard disclosure. Parties must then meet a week prior to the CMC to reach an agreed plan for disclosure that satisfies the overriding objective.
Significantly, such requirements are equally applicable to electronic documents. This is accomplished by having new Rule 31.5 operate in conjunction with Practice Direction 31B. As Lord Justice Jackson explained last year, these two provisions “fit neatly together” so as to ensure that disclosure of electronic documents meets the overriding objective.
Beyond the rule changes, the courts are also spotlighting the importance of using technology in disclosure. Indeed, in its landmark ruling in Earles v Barclays Bank plc (8 October 2009), the High Court urged organisations to have “an efficient and effective information management system in place to provide identification, preservation, collection, processing, review analysis and production of its ESI in the disclosure process in litigation and regulation”. Such a message was again highlighted last spring by the wasted costs order in West African Gas Pipeline Company Limited v Willbros Global Holdings Inc (27 February 2012). In that case, the High Court implored organisations and firms to deploy the right tools to meet the challenges of disclosure.
With both the courts and the rules-makers driving this issue, lawyers certainly need to understand how to undertake disclosure in an efficient and cost-effective way. This means getting educated on the technology options available for corporate legal departments and firms.
One such option includes search and analysis tools that can quickly identify materials and thereby reduce the electronic data that must be reviewed prior to disclosure. These tools include traditional technologies such as keyword search, concept search, email threading and data clustering. They also now include predictive coding, a recent innovation that has the potential to significantly reduce document review costs and related legal fees.
In summary, the rules-makers and the courts are pushing organisations and firms to rely more heavily on technology to accomplish disclosure. Corporate and firm lawyers that keep pace with this trend by deploying the right package of tools will likely do so more efficiently and cost effectively.