Disclosure Pilot proposals can reduce litigation costs for businesses

It is likely that the Civil Procedure Rules Committee (CPRC) will formally approve changes this autumn, which include streamlining the process by which parties discuss issues and models for disclosure, measures to reduce scope for disagreement over the list of issues for disclosure, and greater flexibility in the pilot rules to account for the different dynamics of low value disputes and complex multi-party proceedings.

However, there is no need for businesses to wait for the changes to be ratified. Parties to litigation should consider the proposed changes and their potential benefits now as they can be applied by agreement, with court permission, even before they are approved and brought into force. 

Background to the planned reforms

The Disclosure Pilot has been operating in the Business and Property Courts in England and Wales since the beginning of 2019. 

The pilot is aimed at making disclosure in litigation more tailored to the issues in dispute between the parties and the available documents necessary to resolve them, and therefore more proportionate. However, it has been criticised by some lawyers and parties as increasing rather than decreasing costs. Following enhancements made to the Practice Direction which sets out the Pilot rules in April this year, the Disclosure Working Group (DWG) responsible for the pilot has continued actively to seek further feedback. This is now reflected in a series of further proposed amendments to the Practice Direction. 

An extension of the pilot to the end of 2022 has also been approved, to allow the reforms and amendments to bed in. The latest amendments have been approved in principle by the CPRC but are expected to be considered further in September and are likely to be formally approved at that stage.

Whether the various changes will go far enough for critics of the Pilot, and indeed the long-term fate of the pilot generally, remain to be seen. However, a wholesale return to the pre-pilot disclosure rules seems unlikely, and so the commitment shown by the DWG to continually refining the Pilot’s operation is something which litigating parties and their legal representatives should welcome and with which they should engage.

There are a number of proposed changes litigants should note in particular.

Initial disclosure

Initial disclosure, a key innovation of the pilot, involves early disclosure of the key documents on which each party relies or which are necessary for the other side to understand the case it has to meet. It is given at the same time as statements of case are served. This is often a useful and not unduly onerous exercise. However, some aspects of it do involve costs, and so changes were made in April to remove some unnecessary burdens. The changes included removing the need to list out documents which have already, perhaps during pre-action correspondence, been given to the other side.

The latest proposed amendments suggest also removing the requirement in the Practice Direction to describe any searches for documents undertaken before giving initial disclosure. This requirement is considered by many to be unnecessary and intrusive in circumstances where the rules do not actually mandate that any searches be carried out at this stage.

Identifying the issues and models for disclosure 

The pilot introduced a standard requirement for parties to agree a list of issues for disclosure, setting out the key issues which the court will need to determine by reference to contemporaneous documents in order to resolve the dispute. It envisages that once that list has been agreed, the parties exchange proposals about which of five models of disclosure – Models A to E, from very narrow to very wide – should be given by each party against each issue. To the extent these proposals cannot be agreed, the court will determine the appropriate scope of disclosure at the first case management hearing (CMC).

In our experience, agreeing lists of issues for disclosure has been one of the most contentious and time-consuming aspects of the pilot process, with disagreements often arising between parties as to the appropriate number and granularity of issues. Compounding this problem, if the process of identifying which model(s) should apply to each issue does not even begin until after the list of issues for disclosure has been finalised, the process leading up to the CMC can become very protracted.

The proposed amendments seek to address this in several ways.  In particular, the amendments would:

• make express that lists of issues for disclosure should be as short and concise as possible. The amendments expressly mention, as an example of a situation in which a party may wish to seek guidance from the court, another party proposing too complex a list of issues. This should help to deter parties from seeking to make lists of issues too full or detailed;
• emphasise that the list of issues for disclosure is not binding on the parties at trial – a concern which can cause some parties to take entrenched positions on how issues should be framed; and
• streamline the process so that, rather than the parties trying to agree the list of issues for disclosure first, and only after that moving on to proposing disclosure models, these phases would be rolled together. A claimant would indicate, at the same time as serving a draft list of issues for disclosure on the other parties, which model of disclosure the claimant proposes each party should give against each issue. This would include how any ‘Model C’ requests for documents the claimant might wish to make should be defined: Model C involves disclosure of particular documents or narrow classes of documents. The defendants would then respond to all the claimant’s proposals, both as to the issues for disclosure and proposed models, at the same time.

Model C disclosure

Some parties have used Model C disclosure in an insufficiently targeted way, making ill-defined or over-broad requests for documents. This can create practical difficulties and excess costs for those seeking to respond to them.

The proposed amendments reiterate that Model C categories should be limited in number, focused in scope and concise, so that the responding party may be clear as to the particular document(s) or narrow classes of document relating to a particular issue for disclosure for which it is being asked to undertake searches. While this should already have been clear to parties under the existing Practice Direction and case law, the additional clarity and emphasis should hopefully help to deter any ongoing unfocussed or tactical use of the Model C approach.

Giving disclosure – ‘narrative documents’

One aspect of the pilot which has caused concern has been its treatment of ‘narrative documents’ – documents which are not directly relevant to the issues for disclosure but provide background or context to material facts or events.

In an effort to reduce the volumes of disclosure recipients have to review, the pilot established a default position that parties giving Model D disclosure – search-based disclosure of supportive or unsupportive relevant documents, similar to the old ‘standard disclosure’ – should exclude narrative documents from their production. However, in practice the exercise, for a disclosing party’s review team, of identifying and removing documents which are only ‘narrative’ before giving disclosure often proves time-consuming and costly. This can outweigh any costs advantages arising from the exclusion of such material.  

In light of this concern, the amendments propose softening the wording in the Practice Direction about narrative documents so that the default position would be that parties are only “encouraged” to take “reasonable steps” to exclude such documents “where reasonable and proportionate”. 

It remains to be seen, however, how closely parties will follow this encouragement. This is particularly the case given recent changes to the rules on the preparation and content of trial witness statements in the Business and Property Courts, which place significant restrictions on the extent to which a witness statement can be used to ‘tell the story’ behind a dispute. As a result, where it is important for the court to understand the factual matrix, parties may be keen to include narrative documents in disclosure so that these will be available to the trial judge.

Court guidance on disclosure 

The pilot introduced the concept of disclosure guidance hearings (DGHs). These are short hearings for which a party can apply if intractable issues arise between the parties as to some aspect of the approach to disclosure. At a DGH, the court will generally give the parties guidance to assist them in resolving the point.  

DGHs have been little used, despite encouragement from judges in the case law. Problems have included the potentially irrecoverable costs they incur – the costs of such a hearing are generally ‘in the case’, meaning that they can only be recovered at the end of the matter by the overall winning party – and the shortness of the 30-minute maximum hearing time currently set out in the Practice Direction.

The proposed amendments should help to encourage more parties to seek guidance from the court, for example by emphasising that this need not necessarily involve a hearing, as the court may give guidance on the papers; and by extending the standard maximum length of any hearing to a more realistic 60 minutes.

Lower value cases 

The pilot applies to cases of any size in the Business and Property Courts, subject to some exempted categories of case. This ‘one size fits all’ approach has been criticised. 

At one end of the spectrum, those conducting smaller, less complex disputes have particularly felt that the administrative burden and frontloading of costs which the pilot entails can quickly become disproportionate to any benefits it may bring. 

The proposed amendments therefore propose a simplified regime for “less complex claims”. “Less complex claims” are generally those worth less than £500,000, but there is flexibility in the rules to allow such claims to be subject to the standard pilot procedure if, despite their lower value, the issues involved are complex; higher value claims may also be treated as less complex claims if the issues are simple. Proposed new appendices to the Practice Direction set out a simplified procedure which, amongst other things: limits the number of models of disclosure from which the parties may select; provides a simplified and shortened form of disclosure review document (DRD); and gives guidance that the issues for disclosure in these cases should be particularly brief and high level, rarely exceeding five in number. 

Overall, these proposals are likely to be welcomed by those litigating lower value cases, although there is potential for the question whether a case should be treated as a “less complex claim” to be a further area of dispute between parties. The proposed new rules set out a process for any such dispute to be resolved, where possible without a hearing, but it will be important for parties to take a sensible approach to avoid unnecessary costs being incurred on this point.

Multi-party cases

At the other extreme, some aspects of the pilot are not well designed for complex multi-party cases. For example, the issues for disclosure may be different as between different parties, and the DRD form does not readily cater for this. As a result, in multi-party cases it is often necessary to set up a spreadsheet of issues for disclosure and models to capture the different parties’ positions. The process of trying to agree on these issues is also often more time-consuming where multiple parties are involved, necessitating a bespoke timetable.

The proposed amendments to the pilot expressly recognise that a bespoke procedure may be needed in multi-party cases and that parties should apply for such a procedure at an early stage. Particular points regarding multi-party cases are also picked up, such as the even greater risk of undue complexity in lists of issues for disclosure, and the need for parties to try to agree whether a disclosing party’s documents should be given to all or only some of the other parties. The proposed amendments make clear that court guidance on these issues may be needed.

While the proposals in relation to multi-party disputes do little more than put into writing the approach many parties and courts have already been taking in multi-party litigation, additional clarity in this area can only be a good thing.

Richard Dickman was a member of the Disclosure Working Group which developed the Pilot.