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The Disclosure Pilot cleared for take off

Following a lengthy consultation process, the Disclosure Pilot was recently published as Practice Direction 51U to the Civil Procedure Rules. The two-year pilot scheme is set to launch in the Business and Property Courts on 1 January 2019, imposing additional duties on parties and their legal representatives, and a cultural change in the way parties and their legal representatives approach disclosure.

Reasons for reform

In May 2016, the Disclosure Working Group ('DWG'), chaired by Lady Justice Gloster, was established "in response to widespread concerns expressed by court users and the profession regarding the perceived excessive costs, scale and complexity of disclosure."

The DWG identified key defects in the current disclosure regime, including that the existing CPR provisions, while amended, are conceptually based on paper disclosure and not fit for purpose for electronic disclosure. Standard disclosure continues to be the default order: searches are far wider than necessary and there is insufficient focus on the issues in the case.  Furthermore, parties are often failing to properly engage prior to the first CMC in relation to disclosure.

Consequently, it was agreed that Part 31 of the Civil Procedure Rules should be re-written to require greater focus on the key issues in litigation, more cooperation between the parties, greater use of technology and increased case management by the Courts.

Key Changes

The changes to the current regime are extensive and careful consideration should be given to the new Practice Direction. Some of the main changes which the Disclosure Pilot introduces include:

  • Key documents which a party relies upon, or are necessary for the other parties to understand the case, are to be disclosed with the statements of case. This stage replaces the automatic entitlement to search based disclosure and is known as Initial Disclosure;

  • The Electronic Disclosure Questionnaire will be replaced by a Disclosure Review Document, jointly completed by the parties prior to the first case management conference;

  • Standard disclosure will no longer be the default order for disclosure;

  • At the CMC, the Court will consider which of five Extended Disclosure models (A to E) will apply to each/all of the issues;

  • The parties may, in certain circumstances, seek a Disclosure Guidance Hearing from the Court either before or after the CMC;

  • In relation to costs, the disclosure section of Form H may not need to be completed until after an order for disclosure is made; but parties must estimate costs in advance of the first CMC;

  • Parties must sign and serve a Disclosure Certificate recording that all known adverse documents have been disclosed.

Duties to the court

The Disclosure Pilot also introduces a number of duties on both the parties and their legal representatives, which are owed to the Court until the conclusion of proceedings. The duties are expressly set out at paragraph 3 of the Practice Direction. It is essential that lawyers who practise litigation familiarise themselves with these provisions.

The duties on legal representatives who have conduct of litigation on behalf of a party to proceedings include: a duty to preserve documents within their control that may be relevant to any issue in the proceedings; and a duty to ensure that any claim for privilege from disclosing documents is properly made and the reasons for the claim sufficiently explained.  

Failure by a party to comply with its obligations and duties may result in the Court imposing sanctions on that party, including an adverse costs order.

Considerations for litigation lawyers and PI insurers

Lawyers who deal with litigation in the Business and Property Courts will need to familiarise themselves with the new Practice Direction prior to 1 January 2019. If necessary, training should be given to employees, particularly as to the duties set out in paragraph 3, and internal policies and procedures should be updated accordingly. 

PI insurers of solicitors who conduct litigation in the Business and Property Courts should be prepared for a possible increase in notifications relating to a failure to advise clients on their disclosure obligations and duties under the pilot, particularly if firms are inadequately prepared for the reforms. It remains to be seen whether the Courts will adopt a robust stance on imposing sanctions on parties who are in default of their disclosure obligations.

There are also costs implications for PI insurers of all professions, when instructing solicitors to defend professional negligence claims. The requirements to preserve documents and provide Initial Disclosure with statements of case will likely increase costs at the start of litigation, but potentially facilitate earlier resolution of litigated claims, or reduce later disclosure costs. The Disclosure Pilot scheme also aims to avoid excessive costs in litigation by narrowing the issues on which Extended Disclosure is required. It is to be hoped that more 'tailored' disclosure orders will reduce the frequency of costly specific disclosure applications and the need for lengthy disclosure reviews.  On the other hand, increased judicial involvement at the CMC and the possibility of disclosure guidance hearings could increase costs.  From 1 January 2019, PI insurers and their legal advisors will need to be mindful of the application of the pilot scheme when determining case strategies and reserves.

Contact

For more information please contact Sarah McKay, Associate Sarah.McKay@dwf.law or Danielle Greenley, Trainee Solicitor, Danielle.Greenley@dwf.law

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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