One of the main differences between the Federal Rules of Civil Procedure and the Civil Procedure Rules of England and Wales is that England and Wales is a costs-shifting jurisdiction by default. That means that the winner can expect to get a significant contribution to litigation costs from the loser. This, theoretically at least, acts as a brake on unnecessary expenditure because all parties have a contingent interest in the others’ costs.
Much of the focus of Lord Justice Jackson’s reforms has been on quantifying and controlling the recoverable costs – parties can spend what they like (as long as they do not run up unnecessary costs for opponents) but are limited in what they can recover if they win. Although the budgetary constraints envisaged by Lord Justice Jackson have been emasculated in part by judges reluctant to sully their hands with questions of costs, eDisclosure costs remain subject to tight control, with parties required to cooperate to limit the scope of disclosure, to agree the tools and techniques to be used and to estimate the costs of managing disclosure (see my recent article Costs management shambles defies parody but case management still has teeth on this).
The US has a more ambivalent approach to costs-shifting, with variations between states and a distinction drawn between lawyer fees and eDiscovery costs. Judge Grimm suggested at Georgetown that we may see moves towards codification of the rules in a way which will put more parties at risk of having to pay their opponents’ costs, including (I assume) eDiscovery costs.
Discussion on the subject received a significant boost in a case called Gabriel Technologies Corp v Qualcomm Inc after which plaintiffs were ordered to pay $12 million in costs to the successful defendants. Of this, more than $2.8 million was for a document review algorithm generated by H5. The court’s displeasure at the manner of running the case was shown by the fact that plaintiffs’ lawyers were sanctioned in a sum exceeding $64,000. H5’s article about it Note to Litigants: When Costs Shift, TAR Costs May Shift with Them is here.
The claim for the algorithm was justified on the logical ground that the money spent on that substantially reduced the lawyer time and cost. The judge found…:
… [the] decision to undertake a more efficient and less time-consuming method of document review to be reasonable under the circumstances. In this case, the nature of Plaintiffs’ claims resulted in significant discovery and document production, and [Defendants’ counsel] seemingly reduced the overall fees and attorney hours required by performing electronic document review at the outset.
The plaintiffs do not seem to have put up much of a fight on the question whether the costs of technology assisted review were properly payable nor on their quantum. Symantec’s Matthew Nelson, in an article called Breaking News: Over $12 million in Attorney Fees Awarded in Patent Case Involving Predictive Coding commented on the apparently high cost of H5’s algorithm, to which H5’s Mike Morneault commented, as one would expect, by reference to the savings.
This exchange between rival suppliers (Symantec too has a technology assisted review solution called Transparent Predictive Coding) emphasises something easily overlooked – that each provider, on each separate engagement, brings different contributions in a mixture of technology and services. If the lawyers – who are the customers in this situation – find this confusing, they should appreciate that this diversity is a strength, allowing them to choose a support team appropriate to the circumstances. Although we know the volumes involved here – 12 million documents to review – we do not know what the plaintiffs’ lawyers would have had to spend on the review if they had not been helped by H5’s algorithm – or by software from Symantec or anyone else. The point is that there are choices.
The case is important not just for the costs-shifting order per se (that is significant enough) but for the light it throws on things whch usually remain between client and lawyer.
Someone did some sums, presumably weighing one course against another, and calculating that the upfront cost of this particular TAR solution was worth spending relative to the objective and to other ways of dealing with the problem. That is what lawyers should be doing anyway, and the new rules in England & Wales will bring that evaluation out into the daylight, as first opponents and then the court get to share the results and to consider what is proportionate.
In the US case, there was (so far as we know) little or no cooperative discussion in advance of the TAR exercise. The UK rules will require that to happen upfront, implicating all parties and the judge in the decision-making.