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Articles in this Series Disclosure for litigation or regulator
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Disclosure, Litigation Readiness and Document RetentionThe Pyramid of Preparedness
Å This is one of a series
of five linked articles on this subject
Æ 1. Introduction Until recently, disclosing documents in litigation was a fairly self-contained exercise. To the clients it meant packing up some papers and (more recently) some disks or other electronic media and sending them to the lawyers. To the lawyers it was a standard part of a finite process – you sorted out the documents, applied tests of relevance and privilege and listed what was left. The scale varied with the case, and questions sometimes arose as to the scope of the relevance and privilege tests, but the exercise began with the issue of proceedings and ended with inspection of the documents. The lessons, if there were any, were pretty superficial. The clients learnt that a hefty chunk of fees went not just on brilliant forensic dissection by the best brains at the Bar but on routine plodding through piles of paper and typing up lists. The lawyer learnt how to face simultaneously a client complaining that the fees were too high and a financial controller demonstrating that the job was actually run at a loss having regard to the time and resources applied to it. What has changed? Actual Disclosure must now be seen as the tip of a pyramid of functions and procedures. This article looks the layers below the delivery of documents to the lawyers and the reasons why they have become necessary – that is, why businesses and their lawyers should apply themselves not just to this litigation happening now but to prospective litigation generally, and to other reasons for getting – and keeping – one's documentary house in order against the possibility that a selection of them will be needed in a hurry. The context is a US case, Zubulake v UBS Warburg, famous not for the issues in the employment case itself, but for the huge sanctions against the defendant for the state of its discovery. The central issue was a party's duty to preserve evidence "when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to further litigation." I will not here go through the multiple findings in Zubulake nor (save to a limited extent below) into the effects of the new Federal Rules of Civil Procedure which have come into effect since. What matters in the immediate context is that the effect of the two combined is to raise the obligations and shorten the timescales in which you must produce your documents. No-one likely to be involved in US proceedings can ignore this. It would be a mistake to think that something similar will not happen here. The time to get ready is now. It may not be you Let us immediately qualify the mandatory tone. If your business is low-risk in terms of possible litigation, and lightly regulated, then it may make sound business sense to decide that you will wait for litigation to hit you and face the cost and trouble of sorting out your documents if you have to. If the risk is high or long term, and / or you are subject to close regulation, then the need to address the problem is correspondingly greater. Add in to the mix the possibility of claims from the US, other multi-jurisdictional elements, issues over privacy and data protection, widening definitions of a "document" and more exacting meanings of "relevant" and "privileged", Take account of increased quantities of documents, shortened timescales, and legacy systems. Lastly, remember that Arthur Andersen was eventually found not to be seriously at fault over Enron – but had collapsed before it was cleared, its name shot to pieces in the fall-out. Balancing risk and cost What we are looking at is a set of business decisions in which risk and cost are to be weighed and where the day-to-day aspects of running the business profitably and reputably are at least as important as being ready for the next big case. There is a sliding scale of preparedness, with some absolutes and many grey areas. Not every business needs to embark on a comprehensive anticipatory exercise. Every business needs to assess whether it should do so. There are a host of interlocking and overlapping subjects here, each meriting examination on its own. There are also potential conflicts where compliance with one set of rules involves potential breach of others. This article tries to stick to the main routes and avoid the by-ways, whilst remaining aware that the by-way from the perspective of one business is the main issue from another's. The pyramid of preparedness This article looks at three tiers of preparedness in which the task broadens as you get further back from the sharp end of actual litigation. The tiers are: Litigation Common to all of them is the concept of a "litigation hold", the ability not just to freeze any destruction programme but to show that you have done so. The key premise here is that you have a mechanism for achieving this.
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