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26 July 2016
Hot on the heels of its first endorsement of the use of predictive coding in the widely publicised Pyrrho decision in February 2016,(1) the English court recently ordered the use of predictive coding in circumstances where its use was opposed by one party. This judgment, made in David Brown v BCA Trading Limited,(2) is likely to advance the discussion around the use of predictive coding – one of a number of forms of technology-assisted review – which has been one of this year's litigation hot topics following Pyrrho.
A previous update on Pyrrho summarised the reasons for the approval of predictive coding in that case and commented more widely on the principles behind predictive coding technology and the disclosure obligations on parties engaged in English civil litigation (for further details please see "A (bright) green light for predictive coding in disclosure").
Since Pyrrho, technology-assisted review and the effective management of electronic disclosure in English litigation have become prominent topics in the legal industry. One overriding message permeating much of the discussions is that the results achieved by using predictive coding are likely to be as good, if not better, than those achieved by using a standard 'linear' review of documents by humans, while also achieving significant costs and time savings. It stands to reason that, in principle, predictive coding allows decisions on relevance to be led by a senior case expert to a much greater extent than a traditional linear review, where many decisions on relevance are ordinarily left to multiple junior lawyers' or paralegals' subjective, independent assessments (often under time pressure). Lawyers should therefore not be wary of predictive coding or other forms of technology-assisted review; they should be encouraged and excited by the potential benefits.
BCA Trading was an unfair prejudice petition under Section 994 of the Companies Act 2006, under which the petitioner, Mr Brown, sought a buy-out of his minority shareholding in BCA Trading Limited.
In common with the position in Pyrrho, most of the documents that were likely to be relevant to the dispute were held by one party (BCA), with the other parties (including Brown) having comparatively few relevant documents. As such, it is perhaps unsurprising that Brown was keen to ensure that he obtained the widest possible disclosure from BCA in order to prove his case. On the other hand, from BCA's perspective there was a significant imbalance in the likely time and costs burden of conducting disclosure, which it would want to keep under control by employing appropriate techniques to limit the scope of and/or assist the process.
In light of the above, BCA proposed using predictive coding to ease the burden of conducting its disclosure. It estimated that the costs of conducting disclosure using predictive coding would be in the region of £132,000, with such costs increasing significantly to between £250,000 and £338,000 if a more traditional methodology involving key words and manual review were used. Notwithstanding the apparently clear costs benefits, Brown contested the use of predictive coding.
The decision was made at a case management conference at which a number of other issues were also considered. The part of the judgment relating to predictive coding endorses predictive coding in clear, concise and unequivocal terms. The court placed significant weight on the anticipated cost savings and the fact that the disclosing party (BCA) wished to use predictive coding. The court noted that there was no factual or expert evidence before it to contradict the assertions made by BCA.
The court also cited the 10 reasons for endorsing predictive coding recorded in Pyrrho. It noted that while one was neutral, all but one of the others applied in this case (the only reason that did not apply was that the parties had not agreed on the use of predictive coding, as they had in Pyrrho). While the court did not explain in the judgment the basis on which Brown sought to resist the use of predictive coding, it held that "no factors of any weight" pointed against use of predictive coding.
In addition, the court commented on the importance of ensuring that the issues by reference to which the relevance of documents is to be determined for disclosure purposes are, to the extent possible, narrowed and agreed before the disclosure process is conducted. The court noted that the statements of case in the proceedings were cast on a wide basis, and that:
"experience shows that issues will narrow significantly by the time the trial is reached. This can mean that what may have appeared to be necessary disclosure based upon the statements of case at this stage, will turn out to have been unnecessary and indeed to a large degree irrelevant to the way the case will be heard at trial. It can mean that costs will have been incurred which need not have been incurred both during disclosure and when complying with subsequent directions concerning evidence."
In light of this, the judgment confirmed that the court had, as a first stage, proposed a process whereby the parties should seek to identify and narrow down issues by way of schedule before turning to disclosure. While the court did not elaborate on the detail of this proposal, it stressed that it was not an attempt to narrow the disclosure to be given from standard disclosure to issue-based disclosure. Instead, the intention appears to be to encourage a sensible dialogue between the parties at an early stage to make the (standard) disclosure process as targeted, and therefore proportionate, as possible.
The decision is a helpful continuation of the pro-technology-assisted review momentum initiated by Pyrrho. BCA Trading comments on predictive coding in a highly positive manner and there are few (if any) comments casting doubt on the effectiveness or use of the technology. This may signal a continuing shift by the English courts towards a position where predictive coding (or at least some form of technology-assisted review) is no longer the exception, used only in a modest number of the largest cases, but instead becomes the norm for complex litigation.
While the use of predictive coding was contested in this case, it was proposed by the party giving the disclosure in question and was opposed by a party with no involvement in that process and with little disclosure to give of his own. A bigger test will come when the position is reversed and a party seeks to impose the use of predictive coding or another form of technology-assisted review on an unwilling disclosing party. While it is difficult to envisage a situation in which a disclosing party would not wish to avail itself of the potential benefits of using some form of technology-assisted review in suitable cases, there could conceivably be concerns around highly sensitive documents and privilege, which are perhaps more difficult to resolve without employing more rudimentary methods of review to a greater extent. There could also be tactical advantages to a disclosing party with deep pockets by seeking to make the costs generated by all sides during disclosure as high as possible. In any event, if in such circumstances the court follows the overwhelming endorsement of predictive coding given in Pyrrho and BCA Trading, it may well order a disclosing party to use predictive coding or another form of technology-assisted review against its wishes. That would be a further significant step towards making the use of technology-assisted review the norm rather than the exception.
Also of significant interest is the court's willingness in this case to have the parties engage in a collaborative process of identifying and reducing issues before embarking on disclosure. It makes sense for parties to have a clear view of what is actually needed by way of disclosure before embarking on the process of searching for and reviewing documents, rather than the other way around. Significant time and costs savings could result from a greater focus on these matters at an early stage, so long as the discussions are conducted reasonably.
For further information on this topic please contact Daniel Wyatt or Simon Hart at RPC by telephone (+44 20 3060 6000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
(1) Pyrrho Investments Limited v MWB Property Limited  EWHC 256 (Ch).
(2)  EWHC 1464 (Ch).
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