When working to meet disclosure obligations in civil litigation, electronically stored information (ESI) now presents a major challenge to businesses and law firms alike. The amount of time spent and the cost of legal document reviews in litigation cases is on the rise, whilst the capabilities of conventional search techniques are being increasingly outstripped by the sheer volume and variety of data generated in the workplace. The potential penalties for failure and delay in dealing effectively with such disclosure obligations are considerable – in legal costs, damages and fines, business disruption and reputational harm. This was exemplified in a recent High Court of Justice Chancery Division decision and serves as a reminder to those carrying out disclosure exercises in large litigious disputes of the significance of proper organisation of the disclosure from the very beginning.

The High Court recently made the decision to adjourn a first trial for three months, after the Defendant conceded that the disclosure process involved had exceeded their expectations and had made it impossible for them to produce witness statements in time for trial. In the case of The RBS Rights Issue Litigation [2015] EWHC 3433 (Ch) the Court were critical of the Defendant’s approach to disclosure, expressing numerous concerns regarding their “unfocused” and “less than compelling” manner in which they had dealt with this process.

The case revolves around the Defendant bank who sold shares in a rights issue. This consequently resulted in a loss for current and previous shareholders when the bank nearly collapsed. The Claimants contend that the prospectus on which the rights issue was based had been misleading. Five separate groups make up the Claimants and the litigation is accordingly complex.

The Court acknowledged that the Defendant bore the brunt of "the difficult task of full and frank disclosure" in consideration of the application to adjourn the trial date. It was also noted that the Defendant’s size as an institution might make disclosure difficult to organise. It was only during the disclosure process that the Defendant was exposed to the enormity of the task at hand, comprising 25 million documents with 10 million documents being classed as “unique”. Nonetheless, the Court criticised the Defendant for failing to comprehend what was involved from the outset and their approach to the disclosure exercise was described as being “unfocused”. Whilst the Claimants were deemed as being partly to blame for the Defendant’s difficulties as they had insisted on an excessive number of custodians and search terms, the Defendant was still seen as the main contributor to the delays. With “great reluctance” the Court granted the Defendant’s application for a three month adjournment stating that the Court would run the risk of considerable unfairness arising if this application was not granted to the Defendant. 

The Court’s criticism in this case serves as intimation reminder that proper planning and organisation is paramount when it comes to the commissioning of disclosure exercises, particularly in large litigious disputes. Practitioners are reminded that the Court should remain informed regarding the status and progress of the disclosure exercise, especially if difficulties are being encountered.

Taking expert legal advice in anticipation of or at the very commencement of any litigation proceedings will mitigate the risk of a similar situation happening to you or your business. Shepherd and Wedderburn have a depth of experience in collaborating with e-discovery technology providers and could assist you or your company in putting in place an effective procedure to prevent such an occurrence.  If you would like any further information, or if we can help with any of the issues raised, please contact John MacKenzie, Guy Harvey or Nicola Perry. 

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