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New regulations to bring eDisclosure into the 21st century

Managing Director of CYFOR, Joel Tobias outlines the new eDisclosure regulations and how law firms can manage their data on a more secure footing.

On 1 October 2010, new rules regarding the disclosure of digital information finally came into effect – a development that will bring eDisclosure into the 21st Century, helping to speed up the litigation process, and reduce the legal costs involved.

The new Practice Direction 31B (PD31B) was introduced to curb the steep upward spiral in costs associated with eDisclosure by taking proportionality into account – an approach that ensures all efforts and costs involved should be proportionate to the value of the case. This is the first time in five years that regulations regarding eDisclosure have been amended, despite the massive growth of digital data in this time.

Disclosure is the legal process where both sides request information from each other to discover facts pertinent to a particular case, while e-disclosure involves the dissemination of electronically stored information. With the reliance on digital media, eDisclosure is now the norm. However, disclosing information from computers, mobile devices and networks, has brought with it a whole new set of challenges and risks for investigating parties.

New eDisclosure regulations for changing times

Under the new regulations, litigators will be required to complete an electronic documents questionnaire, which is intended to encourage parties to be transparent about their proposed method of eDisclosure and set out exactly what each party expects of the opposition.

An early exchange of information is required and encouraged so that informed discussions can be held and decisions be made about the scope of electronic information. The use of applied technology and techniques to collate information that will help reduce the burden of eDisclosure is also recommended.

PD31B will have far-reaching implications for both legal firms and in-house counsel as well as internal IT departments, as it will provide detailed and practical guidance to help parties reach an agreement on the disclosure of electronic documents in a proportionate and cost-effective manner.

Getting to grips with a new way of storing information

Society’s reliance on digital data over the last ten years has led to a massive change in the way that documents are created, distributed and stored. Where documents were once stored in neat filing systems, up to 90 per cent of business documentation is now in electronic form. This has meant that law firms and large corporations have had to get to grips with a totally new way of conducting the disclosure process.

Properly executed and appropriately regulated data disclosure is essential to the success of legal and regulatory cases. Prior to the new PD31B, it was clear that something had to change – too much time had been spent trying to access relevant information and the costs associated with eDisclosure had become untenable in many cases.

While eDisclosure is now appreciated as a standard business procedure, many firms still need guidance on handling the process, which makes the timing of PD31B well-placed. Much of the guidance on how to approach eDisclosure is based on current best practice and lessons learned from older cases.

In England and Wales, eDisclosure typically accounts for about 30 per cent of the total cost of legal action. Two high-profile cases have recently shown the need for a revision of eDisclosure. In BSkyB’s long-running dispute with Electronic Data Systems, the trial took 110 court days and produced 500,000 documents, with costs in excess of £70 million. At the High Court hearing of Digicel v Cable & Wireless, the judge ordered Cable & Wireless to re-submit digital evidence at an estimated cost of £2m.

In large cases, the costs can be ‘unsustainable’

In extreme cases like these, where hundreds of thousands of documents may be produced, the costs associated with eDisclosure have indeed become unsustainable. Parties who consider the new PD31B at an early stage will not only ensure compliance with disclosure duties but also put a cap on wasted costs, sanctions and the collapse of cases. These new regulations go a long way to regulating the practice.

CYFOR has recently signed an agreement with Clearwell Systems Inc. to become a certified eDisclosure service provider, combining CYFOR’s specialist forensic services with Clearwell’s approved eDisclosure solutions. The agreement should significantly boost CYFOR’s eDisclosure offering and enable clients to use the Clearwell Intelligence Platform to identify, collect, process, analyse and review the information required for litigation, investigations and regulatory demands.

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