Litigation in the courts or before arbitrators is costly. The legal costs of the parties can exceed the sums in dispute. Even if they do not, costs may become so significant that concerns over the outcome of the initial claims may be increased or overtaken by the issue of which party is going to end up paying the costs. In disputes arising from very large projects which have resulted in numerous factual, technical and legal issues, the costs can run into millions.
The litigation of software, outsourcing and other IT disputes often involves numerous issues of fact, significant disclosure, and expert evidence, and can be amongst the most expensive. If costs are to be kept to a minimum without compromising the prospects of success, both clients and lawyers need to focus on cost-saving from the earliest stages of a dispute. This article highlights and suggests1 10 ways of minimising costs.
1) Prepare for the Worst
Suppose that during the project there is an issue about functionality or performance. The parties may agree to move forward on a “Without Prejudice” basis, leaving the issue of responsibility to be decided later. Or else an employer may sack a developer and engage another. Or there may be an issue as to the state of the system at a particular milestone. Take copies of the system in its disputed state and before any changes are made. Place the copies in the safe-keeping of solicitors or some independent third party to avoid later contentions that they have been subsequently altered. If this is not done, it may be impossible or extremely costly to establish the state of the system at the relevant time. Repeat the exercise if there are issues as to the state of the system at different times or different milestones. If a system must be reconstituted to reflect an earlier state, try to agree a methodology with the other party before undertaking the work of reconstruction.
2) Go Straight to the Horse’s Mouth
Instructions as to what happened should come from the project managers and others directly involved in the project, including subordinate staff – there is no substitute for going to see potential witnesses and taking statements from those with direct knowledge of the facts. Working from documents alone is likely to increase costs. The knowledge of the individuals who were involved, their e-mails, and their knowledge of the documents should be utilised to get a fast-track understanding of the case and to assemble the key documents. Identify the key witnesses and obtain their home contact details – they may have moved on or be about to move on.
3) Preservation of Documents
Identify and isolate key documents early and ensure that they are preserved: eg, complete sets of minutes for all internal and external meetings such as monthly steering group meetings and weekly progress meetings. Identify and take copies of key contract and other documents as early as possible – the candidates to be in the core bundle at trial.
4) Limit Correspondence
Limit correspondence to that which is essential. Aggressive, posturing, and hectoring letters provoke similar responses and rack up costs. Consider seeking to agree with the other party whether it is really necessary or sensible to go through the hoops of the Pre-Action Protocol2 or whether they can be dispensed with or diluted.
5) E-mail Circulation
Where there are big teams of lawyers, client personnel, experts and so on, ensure that e-mails, letters, and other documents are sent only to those who need to know of them – there is no point in circulating everything to everyone, risking charges from individuals for reading documents that they do not need to read. Also make it clear in the subject line or at the beginning of the e-mail for precisely whose information an e-mail is sent.
6) Involve Experts at an Early Stage
Instruct experts to identify the expert issues and seek to agree them with the experts instructed by the other party at an early stage. Help the expert to understand the broader issues in order to understand the context of the expert issues. Do not give the expert thousands of documents and tell them to read the lot. Limit the reading which the experts are expected to do as far as is practicable.
7) Pleadings
Keep them as short as possible and plead only facts – not evidence.3 Assess the prospects of success in relation to a particular point before pleading it. There is a cost overhead and, should the point fail, potential cost liability, to every point which is pleaded. Remember that pleadings define the issues and hence they affect the scope of disclosure, of witness evidence, and of the entire trial or arbitration, including its length.
8) Appropriate Directions
Once pleadings have closed it should be possible to identify the most cost-effective way to proceed and to seek appropriate directions from the court or arbitrator:
- Might it be sensible to try mediation or some other form of ADR for all or some of the issues, and to allow time for doing so either before or after disclosure of documents?
- Is there an issue (or issues) which, if dealt with as a preliminary issue, might dispose of the entire case or assist settlement, or would it be advantageous to have separate trials of liability and quantum, or of other issues?
- Limit the number of witnesses on each side and avoid duplication.
- Apart from the basic disclosure of key/core documents and relevant (not all) minutes,
– seek by agreement or by formal direction, to limit the search to particular categories of documents created and/or sent or received by key individuals;
– understand which individual is relevant to which issue and seek by agreement or formal direction to establish date ranges and key words for electronic searches in respect of each individual – there is no point in searching for and reviewing six years’ of emails if the issue with which the individual is concerned is specific to a much shorter time period;
– use the questionnaire attached to the draft e-disclosure practice direction4. and consider using a collaborative “Redfern”-type schedule;5
– do not let document-handling companies make the important decisions on disclosure;
- Provide for experts to meet and identify what they can and cannot agree before their reports are finalised and exchanged.
- Consider whether the trial can be shortened if the expert evidence is given in a “hot-tubbing” procedure.6
- Provide for the agreement of a time-table for the trial, limiting the time permitted for cross-examination and re-examination of witnesses, and for submissions.
- Provide for the early preparation of draft trial bundles, paginated in pencil or some other temporary form, so that whoever will be conducting the hearing has time to identify what documents can be omitted and what documents need to be added. When the bundles have been finalised they can be re-paginated, before photocopying, in final form.
9) Witness Statements
These need to be kept as short as possible7, and should avoid duplication. Witness A can read the statement of witness B and either confirm any passage to which A could also testify, or limit his evidence to the respects in which his recollection differs from that of witness B or to any aspects of B’s statement which A can amplify.
10) Transcripts
A daily transcript may expedite the taking of evidence at the trial, but such transcripts are expensive and there is a cost element in reading them. Consider whether such a transcript is really merited, and identify the individuals who should be asked to read them. Identify the passages relevant to the experts and only ask an expert witness to read the passages which are relevant to that expert’s evidence.
Future Context
If, as seems likely, the Pilot Scheme for Cost Management in Mercantile Courts and Construction Courts8 becomes the norm, it will be essential for practitioners to have a good grasp by the first CMC of the costs implications of every step in the litigation process. To avoid the risk of being unable to justify later departures from its costs budget, each party will be constrained to provide a costs budget which is likely to be acceptable to the Court without major revision. This will inevitably exert a downward pressure on costs. Parties will be obliged to make provision not only for each of the conventional steps in the litigation but also for contingencies. Parties will also be required to assess the costs related to those matters at a level that provides adequate protection without exceeding what the court regards as the appropriate tariff. This will oblige parties to be well informed about the nature and content of their cases at a very early stage, and will frontload some of the preparation costs.
David Blunt QC and Terence Bergin are barristers at 4 Pump Court: www.4pumpcourt.com
Endnote.
1. This article assumes that other, perhaps more cost effective, forms of dispute resolution (eg, Expert Determination or a consensual Adjudication) are unsuitable or cannot be agreed and cannot be insisted upon unilaterally by one party.
2. For the Pre-Action Protocol in the Technology and Construction Court (“TCC”) see White Book C5-001 or The Technology and Construction Court Guide, Section 2 or:
http://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_ced
3. CPR 16.4(1)(a) specifically requires that the Particulars of Claim should include only “a concise statement of the facts on which the claimant relies”.
4. See CPD 31B.15.
5. A Redfern schedule is a collaborative document, to which the parties and the tribunal all contribute. The schedule consists of different columns calculated to create a clear record of requests for disclosure, the parties’ respective arguments on those requests , and the tribunal’s decision(s).
6. “Hot-tubbing” is a term used to describe a procedure in which experts of the same discipline give evidence at the same time, effectively in discussion with the judge or arbitrator, with each other, and the parties’ advocates.
7. The Technology and Construction Court Guide, Section 12.1.3 (d) specifically provides “A witness statement should be no longer than necessary and should not be argumentative.”
8. Practice Direction 51G.
