Disclosure Pilot Scheme

The question of legal costs in dealing with disclosure of documents in court proceedings has been a bone of contention for many years with various amendments to the court rules over the last 20 years or so with a view to attempting to reduce costs.  All have failed so as we now see the introduction of yet another new pilot scheme, I review the scheme and consider the extent to which I think it will achieve it’s main objectives, namely to reduce costs.

The difficulty with disclosure has always been assessing the relevance and degree of relevance of a document.  Parties have been able to understand that a long chain of emails does not necessarily mean that they are all relevant and should be disclosed but at what point do you break the chain?  Your interpretation of the importance of a particular email (or indeed any other document) may well be different from another and the risk of potential prejudice to your claim if you fail to disclose a crucial relevant document is often such that parties would rather disclose a document than not.

The new disclosure pilot scheme attempts to prevent this and seeks to focus parties’ attention on the crucial documents only, known as key and narrative documents together with adverse documents.

The applicability of the new pilot scheme

The pilot scheme came into effect on 1 January 2019.  It applies to all new claims issued after this date in the Business & Property Courts of England and Wales and to any existing claims already issued in those courts if disclosure has not yet taken place.  It will operate as a pilot scheme for a two year period.

To date, although the courts have had the ability to make various orders when it comes to the question of disclosure, it has generally tended to make an order for standard disclosure with both parties providing a list of all “relevant” documents in their possession with inspection facilities then being granted to each party to view the other’s documents, usually in hard copy format.

Preservation of documents

The pilot places a burden on all parties where litigation is contemplated to give consideration to the preservation of documents at an early point.  Such is the importance of making sure that documents are preserved with, for example, any destruction policies being halted, the pilot introduces sanctions for failure to do so.  The preservation of documents also extends to the need for any party to inform not only existing employees but also former employees of the need to preserve any documents that they may have custody and control over.

Initial disclosure

Once proceedings have been issued, the pilot introduces a two stage disclosure process.  First, is the question of initial disclosure.  This is a process whereby parties must provide copies of any key documents upon the filing of a statement of case, whether that be particulars of claim to commence proceedings or a defence to defend proceedings.  If the size of the documents to be disclosed is beyond a certain stated limit then there will be no need to provide initial disclosure and it can also be avoided by way of agreement between the parties or court order in some circumstances.

Extended disclosure

For any party who then wishes to seek further disclosure of documents beyond those provided by way of initial disclosure, the pilot provides for extended disclosure and brings in a menu of options which may be ordered by reference to a list of issues agreed between the parties, the options (or models as they are referred to in the pilot) being:

Model A – Disclosure of known adverse documents only.

Model B – Similar to initial disclosure but without the size limitations.

Model C – Request led search based disclosure of particular documents or narrow classes of documents.

Model D – Narrow search based disclosure of documents which are likely to support or adversely affect a party’s claim or defence or that of another party in relation to one or more issues of disclosure.

Model E – Wide search based disclosure of documents falling within Model D as well as documents which may lead to a train of enquiry which may result in the identification of other documents for disclosure and narrative documents.

Model D is similar in format to the current standard disclosure order.  When drafting the new pilot scheme the rules committee recognised there may be a tendency for parties to simply agree that a Model D order should be obtained.  Unlike the current rules therefore where the parties can seek standard disclosure and the court will usually grant it, under the pilot scheme if parties wish to seek an order for Model D they will be required to explain why Model C is not sufficient.

The models also have varying degrees of search requirements with some models just requiring parties to disclose documents of which they are aware with no requirement to search for other documents.

Potential pitfalls with the pilot scheme

Whilst on the one hand, it is good to see the courts trying to move away from the current “default” position of standard disclosure with a view to endeavouring to reduce the number of documents actually disclosed, I do question whether this will see a reduction in costs as well.  Firstly, the whole scheme is operated subject to parties agreeing a list of issues.  Even where parties are legally represented it is not unusual that a list of issues cannot be agreed but with the increasing number of litigants in person now handling their own cases, I can foresee potential difficulties with this with protracted correspondence having to take place in an attempt to agree the list.  In addition, of course, if the list cannot be agreed under the scheme the parties will be compelled to have the matter determined by the court which will likely result in a court hearing, not only increasing costs for the parties in the litigation but also taking up yet more valuable court time.

It is also likely that the question of disclosure will need to be more front loaded in order that consideration can be given not only to the question of a list of issues but also what will comprise key and narrative documents as well as adverse documents (documents which can adversely affect your case or that of another party).  Whilst this may lead to more focussed settlement considerations it could also mean that parties are unnecessarily incurring legal costs in dealing with the question of disclosure when, if considered at a later stage as is the case under the existing rules, the work and attributable costs would not have been necessary.

This is demonstrated in practice by the new rules in relation to preservation of documents.  Whilst the parties always had these obligations, the scope of the new preservation rules and the potential sanctions for failure to comply with the same are bound to mean that parties will seek legal advice at a much earlier stage as regards disclosure and in many cases in circumstances where proceedings may well not be issued and matters resolved in a relatively straight forward manner with disclosure being limited to key documents only.

Also what about the scope of the actual disclosure?  Whereas under the current rules parties have a tendency to include a document whether it is relevant or not and/or material to any of the issues to be determined within the proceedings, there is a concern that the pilot may allow parties to avoid disclosing documents that are in fact relevant and material to the issues.  What is not yet clear (and it is likely that further case law and/or guidance will be required from the court on this) is what, if anything, parties can do to seek additional orders if they consider an opponent has not complied fully with its disclosure obligations.

Conclusion

The pilot scheme has for the most part received a positive response.  It encourages parties to engage and co-operate on the question of disclosure at an earlier stage in proceedings which may well result in more cases settling earlier than would otherwise be the case under the existing rules.  However, there remain many “grey areas” with the pilot including, in particular, the parties’ inability to agree either a list of issues or which disclosure model should apply, not to mention alleged failures by parties to comply with their disclosure obligations.  Only time will tell therefore if it’s main objectives of reducing the size and scope of disclosure together with a reduction in legal costs will be achieved.

Document retention policies

In the meantime, parties would be well advised to review their current document retention policies so as to ensure that they do not fall foul of the pilot in any future litigation process.  In this respect, it should be borne in mind that in most contract claims parties have six years within which to bring a claim.  Often businesses’ document retention policies are such that documents are destroyed well before this time limit and in circumstances where there is no known potential or actual dispute.  Destroying documents before the expiry of the six year limitation period could have a prejudicial effect on any future litigation.  Parties would be well advised therefore to ensure that documents are retained in accordance with statutory limitation periods.