Wasted Costs Order for E-disclosure Failures

Deborah Blaxell looks at a scary High Court judgment affecting e-disclosure

Litigants have received two timely reminders from a recent High Court judgment. First, that the courts will not tolerate sub standard e-disclosure practices leading to errors and, ultimately, increasing the costs of the overall litigation. Secondly, that it is imperative that law firms and in-house counsel provide third-party vendors with comprehensive instructions and continue to work with vendors collaboratively throughout the course of an e-disclosure project in order to minimize the risk of mistakes.

 In the recent case of West African Gas Pipeline Co Limited v Willbros Global Holdings Inc [2012] EWHC 396 (TCC), the defendant successfully brought a claim for a wasted costs order against the claimant and was awarded £135,000 as a result of a number of failures and inefficiencies when dealing with electronic disclosure which rendered the claimant's disclosure 'wholly inadequate' (at [35]). The case relates to the claimant's failure to provide proper disclosure, which the defendant claimed resulted in increased costs of £1.8m in a claim for damages of £274m, on grounds including the following:

1.      Errors by outsourced reviewers: A litigation support company, whose staff were supervised by lawyers from the claimant's solicitors, failed to adequately review certain documents so that 'a significant number of documents disclosed …should have been disclosed at an earlier stage'. A number of documents were mistakenly marked as not being disclosable during the review process. This led to a duplication of effort as documents had to be re-reviewed in order to check initial work.

2.      Inadequate de-duplication and redaction: The claimant's data processing provider failed to identify a large number of duplicated documents due to problems encountered by the provider's personnel. The judge found that this had 'led to wasted time and costs in reviewing a number of copies of the same document'. The judge further confirmed his view that 'if appropriate software is properly applied it can remove multiple copies of the same or similar documents'.

3.       Inadequate identification, preservation and collection of appropriate electronic documentation: The judge found that the failure to harvest a complete set of electronic documentation for the purposes of electronic disclosure at the outset was a serious mistake, resulting in an inadequate initial review and collection of a complete set of documents.

 

E-disclosure can be complex - particularly in cases where there are large numbers of custodians, data is held on multiple systems and formats, and multiple jurisdictions are involved. It requires careful, early planning and on-going project management if the correct documents are to be identified, preserved, collected, de-duplicated and redacted as required. Moreover, outsourced document review requires the implementation of efficient workflow processes, meaningful communication between lawyers and the provider and the application of defensible validation criteria throughout the review.

As data volumes increase and corporate budgets shrink, savvy law firms and their clients are sensibly exploring alternative means of searching and reviewing their information and incorporating more cost-effective methods, including legal process outsourcing, into their working practices. However, the above case highlights the fact that this will only be beneficial if litigants engage effectively with process driven, experienced, professional and technically proficient providers. If they do not, the result will be an increase in costs for the corporate client and reputational damage and embarrassment for the law firm.

Deborah Blaxell is a Legal Consultant with Epiq Systems: www.epiqsystems.com

 

Published: 2012-03-29T14:30:03

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