E-disclosure: 2014 and Beyond

In a change from our normal predictions style, Tracey Stretton, Mark Surguy and Orion Wisness offer a team effort on e-disclosure predictions for the coming year.

As we begin to set the table for the end of year review we often reflect on those invited in past years. In the world of e-disclosure we have had an ever expanding cloud, big data, Technology Assisted Review, social media and others present. This year, however, is unusual in that we have an unanticipated guest who reminds us that, while forecasting trends is an important and perhaps scientific process, we are never prepared for and cannot always predict everything. There is of course the black swan effect which as we know comes as a surprise and has a major effect.

Please take a seat Mr. Snowden.

Data security

It is unclear exactly what effects Mr. Snowden's revelations in May this year about mass surveillance by the National Security Agency will have in the long run. In a climate where widespread eavesdropping is causing a lot of concern, there is distrust and even paranoia about who is looking at your data. Companies in Europe that need to process data to comply with discovery obligations want to keep data out of the hands of agencies such as the NSA and increasingly demand that their data is hosted in local data centres in their own countries instead of being transferred to the UK for processing and hosting.

Global networks and the explosion of cloud storage have always raised security concerns but they have rarely been highlighted on such a massive scale. Companies involved in litigation and investigations are re- thinking where data is stored, how it is collected, and where it is processed, as well as how to manage review teams that may be scattered across the globe.

A year ago shipping a fully-formed e-disclosure processing engine and document review system, independent storage, and an entire legal review team to a company's premises would have been unimaginable given the logistical and financial implications. Yet since Spring, when some of the major revelations from Snowden's materials surfaced, such solutions are become a reality.

While it is premature and reactionary to say good-bye to 'the cloud', an increase in local data centres and on- premise e-disclosure solutions may end up being one of the biggest trends of the coming years.

Impact of the rule changes on costs management and flexible disclosure

In the UK, the focus this year has been on amendments to the Civil Procedure Rules designed to keep litigation costs in check in line with the reforms suggested by Lord Justice Jackson. On 1 April 2013, the overriding objective of the rules was amended to include a reference to the need to deal with cases at a 'proportionate cost' and new cost management rules were introduced in an effort to keep the costs of litigation under control.[1]

Budgeting for litigation costs is required so early now that some will argue that the case strategy, disclosure scope, and timelines have barely been contemplated. However, getting to the heart of a matter quickly and assessing the likely costs early, will allow clients to understand the prospects of success and make the right commercial decisions about settlement or further investment in the litigation process. It is likely that these rules will apply to all cases in the future and not just those in certain courts and beneath the current £2 million threshold.

The devil will be in the detail that is likely to emerge as the rules are applied in practice. For example, the costs budget may induce lawyers into thinking that a case falls neatly into the ten designated phases. In practice this is never the case. Can costs budgeted for one phase be transferred to another? At this stage there are probably more questions than answers.

The single biggest change the Jackson reforms will drive will be a tailor-made approach to disclosure. It is now open to litigants in the UK to reduce the scope of disclosure by agreeing to no disclosure at all, disclosure limited to specific issues or reliance based disclosure.[2] In 2014, perhaps we will see bolder moves by lawyers to embrace the changing standard fuelled by necessity as data volumes continue to explode and by the voice of corporate counsel who are lobbying globally for a narrower discovery scope. The new flexibility does allow each case to be assessed on its individual project management requirements. The catch is that this will have to be done in collaboration with an opponent in a contentious environment.  Whilst tactical manoeuvres such as dumping documents on opponents at some strategic point in a case are less prevalent in English litigation, they are not non-existent.  We can perhaps expect to see some shenanigans taking place in litigation around scoping and the real risk of e-disclosure disputes springing up.

It is still rather early to get a clear picture of how the courts are reacting to the rule changes. But maybe not too early; the strong early indications are that a much tougher approach to deadline management is being taken. The Court of Appeal's support for the hard line taken in Mitchell (Mitchell v News Group Newspapers Limited [2013] EWCA Civ 1537) shows this and this was confirmed in Durrant v Avon & Somerset Constabulary [2013] EWCA Civ 1624.

Regular litigators such as banks and pharmaceutical companies are changing their practices, embracing technology (often in-house) and requiring their panel law firms to buy into a new approach to disclosure. Companies who do not litigate regularly are not, however, aware of the need to change their practices and are the ones set to be caught out by the new rules on costs and disclosure. 

Impact of technology on business and data

The one certainty on the horizon is that corporate data volumes will continue to rise exponentially and corporate IT systems will become even more complex. Companies are grappling with 'big data', the explosion of cloud storage and a new stream of data from an endless array of mobile devices and social sites like LinkedIn, Twitter, and internal chat facilities.

This is likely to drive litigious corporations to buy in-house technology so that they can control the disclosure and litigation costs in-house, delivering highly relevant data sets to outside counsel. This could lead to more litigation being conducted in-house and it will inevitably mean that in-house and external counsel will clash over the methodology used to determine the culled and filtered data set. Under current professional practice rules and case law, it is the ultimate responsibility of external counsel to ensure the data set is relevant. A new level of co-operation between in-house and external counsel will be required. This will mean that outside counsel will need to offer a consultancy-led approach to the overall management of the data sets for litigation.

The new commercial reality

In the UK many companies rely on their law firms to buy e-disclosure services for them. In the US more companies take ownership of the e-disclosure process, conduct beauty parades to select their providers and enter into master services agreements to secure favourable commercial terms and a more consistent approach to the handling of their various projects. We may see more strategic buying of e-disclosure services in the UK in the future in order to keep costs under control.

Some corporate clients are seizing on the fresh focus on inter-partes costs (the focus of the costs budgets) and seeking to confine legal fees paid to one's own lawyer to those in the budget. Litigation rarely delivers a full indemnity in respect of the costs incurred. This trend (if indeed it is one) will transfer the risk of overruns or irrecoverable costs from clients to lawyers, a sure ground for tension. The costs of litigation are not only the responsibility of external lawyers. Poor data management and lack of expertise in-house, especially where litigation is a rare event for the corporation, increase the litigation costs far more than is often appreciated.

We are likely to see new costs models for legal and e-disclosure services emerging and these are unlikely to be based on hourly rates. The goals of law firms and e-disclosure providers are often at odds with a company's needs. Companies want fewer hours worked on a project producing as little data as possible. Law firms and e-disclosure providers are currently compensated for more working hours and handling more data which essentially is rewarding inefficiency. Cost models that put more skin in the game for both the law firm and e-disclosure providers are going to be key determinants for successful and profitable practice.

More predictable and affordable e-disclosure pricing models are already developing. This year we have already seen the emergence of an e-disclosure portfolio subscription model. This introduces the new concept of reusable capacity, which allows corporations and law firms with an expected level of e-disclosure activity to purchase a fixed amount of e-disclosure capacity, which can be reused by the customer as business needs arise. As additional projects come online, e-disclosure costs remain the same.

Smart new legal technologies

Artificial intelligence has already entered the dispute resolution field in the form of 'predictive coding. This is machine-learning technology that learns from the decisions human reviewers make on documents as to their relevance or other criteria (whether they are privileged or relate to specific issues), and automatically applies that learning to the analysis of other documents. In the future, the use of advanced technologies like this is going to dominate the legal battle ground. Protocols for its use will be developed and will perhaps be adjudicated upon by the courts as has happened in the USA. The UK's new cost management regime is likely to be a real catalyst driving change in the UK. We are likely to see smaller litigation teams relying on intelligent technology driven by senior lawyers with expert knowledge of the case.

We are also now seeing the emergence of review tools that allow companies to control data volume and costs through the different stages of document review. These dynamic solutions allow lawyers to conduct early data assessment, analysis, review and production within a single platform without the disruption and cost associated with shuttling data between different tools. The ability to archive data no longer needed mid-stream and retrieve it back again on demand is a development that makes for lean databases, speeds up review time and controls data storage or hosting costs.

Transformation

A new philosophy emerging is to view e-disclosure as a science – something that is repeatable, predictable, and efficient, with higher quality results and not an art or something that is recreated with every project.  Underpinning the transformation is the use of intelligent new technologies that partially automate and reduce the burden of disclosure and which give lawyers and their clients real financial control over their portfolio of cases.

At the moment, corporations are choosing not to litigate at all if they can help it, as part of risk management strategies. This may mean that pre-action mediation may experience resurgence. If law firms can demonstrate an ability to litigate commercially and cost-effectively, using smart technology and maintaining collaborative relations with opponent lawyers, they will pick up additional instructions in a very competitive market place.

Tracey Stretton is a Legal Consultant at Kroll Ontrack.

Mark Surguy is a Partner at Eversheds.

Orion Wisness is a Disclosure Services Consultant at Kroll Ontrack UK.



[1] CPR, rr 3.12 to 3.18 and Practice Direction 3E

[2] CPR, r 31.5(7).

Published: 2013-12-18T11:42:02

    0 comments

      Please wait...