RBS Rights Issue Litigation: considering whether the eDisclosure process had overtaken the purpose

I don’t like these judgments where a good firm of solicitors is seriously mauled by the judge for what are seen retrospectively as project management failures in a vast eDisclosure exercise. It is hard to be kind in cases where a rule has been broken or overlooked, or where solicitors are punished for the aggressive taking of bad points, but one has to sympathise when, in an exercise involving 25 million documents of which 10 million are unique, the judge concludes that “something has gone wrong”. Let those who think they could have done better cast the first stone.

The case is RBS Rights Issue Litigation [2015] EWHC 3433 (Ch) (26 November 2015)
and I am, as so often, obliged to Gordon Exall who not only publishes articles about new cases very promptly in his Civil Litigation Brief, but takes the trouble to draw my attention to those with an eDisclosure element in them.

One’s heart sinks at a judgment beginning “Further to the eighth CMC in this matter…” although (if you can get prompt hearing dates) it makes sense to seek the court’s directions (or indulgence) where there are many issues at stake and much to argue about. Indeed, the ante-penultimate paragraph of the judgment reads:

The problems that have apparently beset and swamped the Defendants might have been attenuated by referring the difficulties being encountered in the disclosure exercise back to Court.

The first part of the judgment, down to Paragraph 64, is about the need for expert evidence i.e. that which is “evidence of any body of expertise” as opposed to “the subjective opinion of the intended witness”. That part of the judgment is interesting and important, but it is off my subject and I leave you to read it if you wish.

The disclosure component begins at Paragraph 65 where the actual issue (that is, the point which the court was asked to decide) is whether to grant the defendants’ application to postpone the trial date. The reason for the application was the defendants’ claim that the disclosure exercise “has vastly exceeded all expectations in terms of scale and the amount of time and resource required”.

Paragraph 65 to 72 set the scene and describe the positions taken by the defendants whose disclosure exercise it was and the claimants who attacked it. The latter criticised in particular the defendants’ claimed need to conduct a “re-review of every single one of the disclosed documents” by “subject specialists” and “analysts”. I take the use of quotation marks around these two terms to indicate disapproval of the use such people. Whether or not the “re-review” was necessary I cannot say, but you won’t find me criticising the use of specialists in what was evidently a highly technical subject, or of “analysts” – disclosure should not simply be a mechanical exercise to comply with the rules but the extraction of information which informs decision-making and, ultimately, helps the court. It is the task which matters not the label attached to the people doing it.

The judgment then recites the applicable rules and principles in Paragraphs 73 to 75. The meat of the judicial analysis starts at Paragraph 76. The judge makes 16 points; reducing them to the bare minimum, the key ones are:

(1) …a complex and large case in which the Defendants…bear the brunt of the difficult task of full and frank disclosure.

(2) I would accept that at the root of the problem that has developed and apparently swamped the Defendants and their advisers has been the enormous disclosure process (revealing, I am told, some 25 million documents, of which some 10 million are classed “unique”). I have no reason to think that the efforts made to collate this documentation have not been assiduous.

(3) However, and although the Claimants may have to share part of the blame in requiring what may have been an excessive number of custodians and search terms….by far the larger part is, in my view, to be attributed to the Defendants. Something has gone wrong.

(4) ….the Defendants’ response to disclosure and in particular the identification of search terms and custodians appears not to have been informed by any sufficient early attempt to grasp what would truly be involved, and their approach to the process of disclosure has, as it seems to me, been diffuse.

(5) …that process has been determined and confused by the use of vast armies without any sufficient focus first, foremost and at all times by the principals in the Defendants, and the “senior members” having the conduct of the matter within the Defendants and within their solicitors on the sources and documents likely to be of real importance…..

(6) ….the delay and difficulty which seems to have been experienced by the Defendants’ legal team in producing a satisfactory organogram to illustrate the committees and departments with primary responsibility … and thereby also the most likely repositories of the most relevant documentation….[H]ad this been ascertained earlier, the Defendants could have undertaken a targeted approach to finding the core documents…

(7) There are also clear signs that the Bank has left the process of identification and collation of its documentation to its solicitors without itself being sufficiently involved in assisting that process, and in particular in explaining exactly how and by whom (and by what departments or committees) the Prospectus was built up and verified, and thus as to what the essential documentation comprises and its whereabouts.

(8) The results have been (a) what appears to be an unfocused disclosure process, which has fanned out exponentially and extravagantly without sufficient control and direction; (b) the commitment of increasing resource to the identification of documents, leaving a diminished resource for their assimilation, without properly taking stock as to whether the process had overtaken the purpose and/or whether a more confined process should be adopted, perhaps with the agreement of the Claimants or the blessing of the Court; and (c) the perceived need now for a process of disclosure analysis at this late stage by these “senior members” (and/or the so called “Subject Specialists” within the Defendants’ legal team) far more extensive than should be necessary by this stage…

(9) In short, too much emphasis, it seems, has been placed by the Defendants on a “bottom up” approach to disclosure, without clear evidence that efforts have been made to apply a “top down” approach also, identifying key documents to be put to witnesses at the outset, which would have sped up the process overall.

(10) …I consider that the Defendants’ evidence to explain all this and what, given the orders made, they could best do now, is less than wholly satisfactory: I agree with the Claimants that more detail should have been provided, especially as to the real need for the “Disclosure Analysis”, and whether it might be streamlined….

(11) Some of the evidence that has been provided by the Defendants has also been both unsettling and less than compelling….Nor does it take into account the fact that the Bank has had to collate documents and evidence both for the purposes of regulatory investigations and in order to plead a Defence verified by a statement of truth.

(12) Even though I accept that, whatever the deficiencies or difficulties in the past, the question now is what time is required to ensure a fair and orderly pre-trial and trial process, Mr Onslow’s submission on behalf of the Claimants to the effect that the Defendants must re-think their approach and strategy and must be able to achieve better progress in the future carries force. I am inclined to view sceptically the Defendants’ gloomier predictions as to how long everything is likely to take.

(13) I accept also that there is prejudice to the Claimants in the very fact of further delay, including that costs rise inexorably with every day that passes before trial.

(14) I take into account also that the trial date has been fixed for some time, and moving it may dislocate other timetables. I have also considered the public interest in trials such as this not being perceived to be delayed unduly, and the incredulity inevitable in some quarters that a trial fixed for more than a year hence in respect of proceedings commenced years ago should have to be adjourned now on the basis that it is “impossible” to complete preparation for it.

(15) However, it is also my obligation to maintain a sense of perspective. A three-month delay in commencing the trial is not great in the context; and the timings I propose should not result in any substantial delay in the final determination of the matter.

(16) I have concluded that, despite my very great reluctance to do so, there is a sufficient risk of unfairness to the Defendants that I should grant a relatively short (and in all ordinary circumstances final) adjournment. I propose a revised start date of 6 March 2017…

Let’s pick one sentence out of all this which distils the judge’s conclusions. It is this one from his Paragraph 8:

….the commitment of increasing resource to the identification of documents, leaving a diminished resource for their assimilation, without properly taking stock as to whether the process had overtaken the purpose and/or whether a more confined process should be adopted, perhaps with the agreement of the Claimants or the blessing of the Court;

Quite apart from the valuable phrase “whether the process had overtaken the purpose”, this sentence neatly illustrates the joint responsibility of everyone involved, including the party making the demand for disclosure and the court. The criticism (in Paragraph 11) of the Defendants’ explanation is also worth bearing in mind.

This responsibility scales down and applies just as well to smaller firms with much less material to deal with.

Yes, “something has gone wrong” as the judge put it. Before you throw stones, consider the glass house in which you live.


About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
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