UK Litigation For U.S. Corporates - Focus: Electronic Discovery

Sunday, October 1, 2006 - 00:00

Electronic discovery has been described as the "Newest Litigation Headache" in a recent survey of U.S. and UK Litigation Trends. That may be a serious understatement for those corporations who are caught up in the fathomless process of locating, retrieving, analysing and disclosing electronic documents from the vast stockpiles of information that now underpin the modern business.

The advent and Court-sponsored governance of widespread electronic discovery is a common feature of the two litigation systems. U.S. corporate counsel will find the position in the UK well regulated, sophisticated and, importantly, more restrictive than currently appears to be the case in the U.S.

"You say tomato, I say tomato" - Key Litigation Differences

Any discussion of the respective litigation systems is often prefaced by a paraphrase of George Bernard Shaw's pithy observation: "England and America are two countries separated by the same language."

Yes, it can be said, both are common-law based, both are adversarial, both involve wide-ranging evidential inquiries, but the similarities end there. The differences include:

No class actions - there are no class actions and mass tort litigation in the UK of the type seen, and often vilified, in the U.S. over the 40 years since the Federal Class Action rules were amended in the U.S.;

No contingency fees - unlike in the U.S., contingency fees are illegal in the UK. The UK allows conditional fee arrangements, giving an uplift in legal fees in the event that a claim is successful, but not a share in the damages. The fact that the loser also generally pays the winner's legal costs in the UK is a major factor when analysing the risk-reward equation in litigation;

No jury trials - all commercial claims in the UK are dealt with by judges, not juries. This makes for dispassionate, objective tribunals and (to the extent that this is ever possible under any litigation system) the promotion of certainty;

No punitive damages - there is no equivalent to the punitive damages that are a feature of U.S. litigation. UK litigation is concerned with determining the liability for and extent to which compensation should be awarded to a plaintiff;

No Plaintiff Bar - as a result of the cumulative effect of the above, there is no Plaintiff's Bar in the UK of the type seen in the U.S.

These are important structural and philosophical differences. In our invariable experience of acting for U.S. clients in UK litigation, they are perceived to stand firmly to the credit of the UK litigation process.

Electronic Discovery - The UK Approach

In addition, there is a more discriminating approach by the English Courts to discovery than would apply in the U.S. This approach derives from a recognition that unconstrained discovery is the single biggest contributor to the increased transaction cost of litigation.

The more restrictive Civil Procedure Rules (CPR) on discovery generally have recently been supplemented by sophisticated and user-friendly guidance to be given to litigants on electronic discovery. These provide a framework for keeping the discovery process manageable.

The English Court will consider the provision of documents by reference to a number of factors identified in the CPR. These include:

"The number of documents involved, the nature and complexity of the proceedings, the ease and expense of retrieval of any particular document , and the significance of any document which is likely to be located during the search [emphasis added]."

[CPR31]

This test imports questions of proportionality not dissimilar to the test laid down in Rule 26(b)(2) of the U.S. Federal Rules of Civil Procedure, in terms of the expense involved relative to the likely benefit of the discovery, as well as technology-driven and functional questions to do with the ability to retrieve documents.

There have been a number of cases in the U.S., most notably the widely reported Zubulake v. UBS Warburg LLC that have explored the basis and extent of a party's obligation to provide electronic discovery. Recently, following the guidelines set forth in Zubulake , a bank successfully resisted criticism of its approach in relation to back-up tapes, ( Quinby v. WestLB AG).

In the English Courts, whilst sophisticated, discretion-based rules have been put in place, there have been few publicised examples of how the Court's discretion will be exercised, or how technology can be deployed most effectively to manage substantial electronic discovery processes.

Simmons & Simmons' Experience - Combining UK Rules And U.S. Technology

Simmons & Simmons were able to address these very issues in the context of a U.S.$300 million litigation claim, defending a major corporate client. Our client was required to respond to a request for a review of archived electronic documents within a very short timeframe.

The starting point for the process was an archive comprising 1,300 gigabytes ("GB") of information - for those of us who inhabit a world outside IT-speak, the rough equivalent of 1,300 pick-up trucks filled with books.

We were able through a de-duplication exercise to reduce this body of material to approximately 40 GB, comprising 450,000 e-mails and attachments. Applying proportionality principles that had been canvassed before the Court, including a Court-approved key word search, we were then able to reduce this material to approximately 43,000 documents, running to 750,000 pages of archived electronic material.

The need at this stage for significant and cutting edge technological assistance was clear. It was also clear that it was available in the U.S. market. Simmons & Simmons used software developed by a leading U.S. software developer specialising in unstructured content analysis and visualisation tools for electronic discovery.

Essentially, the software assembled related documents into clusters based on an analysis of word patterns within the documents. Assisted by the aesthetics of the cluster software, a team was able to review quickly and efficiently the necessary electronic material, ultimately reducing the discoverable documents to a small handful.

Value For Clients - "Where's the beef?"

The use of U.S. electronic discovery technology, operated in the context of the UK litigation procedural framework, was of great value to the client. The numbers speak for themselves.

An old style, manual "20th century" approach would have involved a cost in the range of U.S.$5-10 million and many months of work. Using conventional litigation support software, we estimated that the cost would have been substantially less, but still in the region of U.S.$300,000. The actual cost of the exercise, using state-of-the-art technology, conducted over a timeframe of six to eight weeks, was 50% of this, approximately $150,000.

In a litigation environment on both sides of the Atlantic where cost control is absolutely and understandably critical, and electronic discovery has the potential to blow out any budget, this is an issue that deserves significant focus from corporates and counsel alike. The price of ignoring it is too high.

Jonathan Kelly is a London-based Litigation Partner at Simmons & Simmons and is the Head of the firm's Finance Litigation Group. Simmons & Simmons has over 50 litigation partners, practising in 20 offices across Europe, the Middle East and Asia. Simmons & Simmons acts for numerous U.S. corporate clients worldwide, but does not practice in the U.S. For the purposes of this article, "UK" refers to England and Wales.

Please email the author at jonathan.kelly@simmons-simmons.com with questions about this article.