Legal Business Blogs

Reforms attempt to curb Rolls-Royce disclosure as litigation costs spiral upwards

Pretty much everyone agrees that the current state of disclosure has grown into an unworkable and extortionate mess… but getting consensus for change has been elusive in recent years. Braving the debate between the supporters of Rolls-Royce disclosure and its critics, reforms are currently being pushed through to substantially scale back document-hunting in most commercial disputes.

The reforms, which were drafted by a group of lawyers, judges and clients called the Disclosure Working Group, will scrap the standard regime in favour of ‘basic’ and ‘extended’ approaches. The system will default to the ‘basic’ disclosure, which will see parties produce only the key documents necessary to the case. Both parties will then be obliged to discuss the manner of extended disclosure, with the court making the final decision to widen the process. The group was chaired by Lady Justice Gloster and included Simmons & Simmons partner Ed Crosse (pictured), Vodafone law chief Rosemary Martin and RPC partner Tim Brown.

The plans will be run as part of a mandatory two-year pilot across the Business and Property Courts in the Rolls Building, subject to approval from the Civil Procedure Rules Committee, which is expected to be sought by April 2018.

The London Solicitors Litigation Association (LSLA) conducted a survey of 280 UK litigators in July this year, with 72% responding that the current disclosure regime is ‘not fit for purpose’. Disclosure costs have exploded in recent years, while the Jackson reforms of 2013, which ushered in a broad menu of disclosure options, have had little impact.

A briefing note on the new pilot states: ‘Wholesale cultural change is required and that can only be achieved by the widespread promulgation of a completely new rule and guidelines. There will need to be a change in professional attitudes and a shift towards more pro-active case-management by judges.’

But how well the shake-up – one of the most significant overhauls of dispute procedure in England and Wales for years – will be received is uncertain, with some litigators arguing the English courts’ tradition of expansive disclosure attracts many cases to London.

Stewarts Law head of commercial litigation Clive Zietman notes: ‘If you are going to limit disclosure in the ways that are being suggested, this becomes a less attractive forum.’ However, Zietman conceded that disclosure reform is a ‘balancing act’, and cited the £125m in costs racked up by Herbert Smith Freehills in representing RBS in the shareholder action. ‘But you don’t want to throw the baby out with the bath water,’ he warned.

Crosse, one of the reform’s authors, told Legal Business: ‘In the new rules there is an express duty on parties to disclose documents it knows to be adverse to its claim. That was in response to feedback from numerous associations. Parties should not be able to hide a smoking gun.’

Crosse added: ‘This whole initiative was started because clients thought disclosure has got out of hand and far too expensive. The 2013 rule change did not make adequate changes. I do expect there to be some initial resistance to this because frankly it was only four years ago since the Jackson reforms. Law firms and clients are to going to have to invest time in thinking about how the rules work. But there has been clear feedback that the current system is not working.’

Ted Greeno, a partner at Quinn Emanuel Urquhart & Sullivan, said the risk is that the reforms will increase costs for clients overall, noting: ‘The problem with more refined disclosure – such as disclosure by issue –  is that it requires a lot more senior lawyer input, which can add to costs rather than reduce them.  It is a good thing that there is to be a pilot so that the risk of unintended consequences can be evaluated.’

Clifford Chance litigation partner Simon Davis was more sympathetic: ‘A further attempt at reducing the burden of disclosure is most welcome. While it’s easy to say what the problems are, it’s not easy to say how it’s solved. It’s hard to come up with a better alternative.’

For more on overhauling disclosure and reforming the civil courts see this year’s Commercial Litigation Summit (£)