Leveraging information

Regulatory investigations and disclosure exercises have become a key element of the workload of the in-house legal department. Frequently lengthy, costly and arduous, both have one thing in common: they require a huge and growing volume of data to be handled.

Masood Ahmed, associate professor at the University of Leicester, specialising in civil procedure, explains that there are a number of reforms in progress which seek to address some of the cost concerns legal departments have with such large-scale investigations. He notes that a key part of the ongoing civil justice reforms is to control the costs of litigation and dispute resolution in order to improve access to justice. ‘I think that access to justice should be seen in the widest possible sense. It’s not just for individuals in the small claims court who may not have a lawyer, but also larger businesses that are becoming increasingly concerned about the amount they’re having to spend on litigation and how to control that.’

In addition, the senior judiciary is trying to control costs through an increasing focus on alternative dispute resolution procedures. ‘You may have seen recent speeches by Sir Geoffrey Vos, who’s a reforming and very active master of the rolls, and who’s increasingly advocating not just digitisation and moving things online in order to control costs, but also integrating ADR within the civil court process.’

'It’s not just for individuals in the small claims court, but also larger businesses that are becoming concerned about the amount they’re having to spend on litigation'

Masood Ahmed, University of Leicester

This includes making ADR a wider part of the dispute resolution process, he adds. Ahmed sits on a Civil Justice Council working group which is conducting an extensive review of pre-action protocols. One of its tasks is assessing whether ADR should be ‘firmly embedded’ from the outset, so that there is ‘better engagement with ADR procedures’.

Anthony Kenny, corporate lawyer at GlaxoSmithKline, notes that requiring ADR at an earlier stage could lose the tactical advantage of disclosure: ‘If you’re litigating over a knotty topic, then under litigation you’ve got more tools in your armoury to go after documents than under mediation.’

Ahmed points out: ‘That’s one of the things we’re looking at with this review of the pre-action protocols... Yes, disclosure and alternatives are going to be linked and the idea is that we have this from the outset. It’s about giving pre-action disclosure and pre-action protocols an enhanced role within the civil court process. But it’s also about introducing sanctions to make sure people actually do engage.’

'If you’re litigating over a knotty topic, then under litigation you’ve got more tools in your armoury to go after documents than under mediation'

Anthony Kenny, GlaxoSmithKline

Data growth

The exponential growth in data produces its own problems, notes Glen Greenland of OpenText, the sponsor of this roundtable discussion. ‘It isn’t just the volume of the data which raises concerns for legal review teams; it’s also the diversity. Human and electronic data-creators are producing more and more data every day, and on new and varied platforms, apps and devices. Information which resides on mobile phones, CCTV, biometric systems, a series of social media and chat platforms, and collaboration and cloud storage platforms, is likely to provide evidence-based information for making better legal decisions inside and outside the organisation.’

These data sources are built for productivity and not for extraction, explains Greenland: ‘This presents several challenges when trying to export the critical information, and present it in a way that is easy to read and review. Until a universal and standardised process can be applied to these data sources, data-handling experts may be required rather than wasting the time, effort and money trying to resolve this problem yourself.’

Smarter systems

Trying to find the right information in this growing mountain of data is similar to finding the proverbial needle in a haystack.

However, here too tech may be providing a shortcut. Says Greenland: ‘Technology has developed significantly in recent years and it has become super-smart. Many of the leading legal review platforms on the market today have a level of power, scale and intelligence which drives efficiency and volume and cost control for every type of legal investigation. As an example, AI and natural language-processing technology, which is built into a few of the industry-leading platforms, will provide a user with the most valuable insights to answer their client’s most critical questions. This is not just keywords, but includes entities, personally identifiable information, concepts, phrases and the type of information which often changes or influences a case or review strategy.’

But is AI or smart tech the solution?

Rebecca St Requier, a derivatives associate at Pictet Asset Management, notes that her experience with AI has been quite worrying: ‘When going through documents and asking it to pull out terms related to [the subject] it would just pull up total nonsense. I’m not yet convinced about it.’

Kenny acknowledges that the ‘human element is really powerful’. He says: ‘There’s a judgement almost instantaneously after a little bit of training, versus a machine which probably needs several more hours of training, albeit once you’ve done that training you can get that cost saving.’

‘There’s a keen desire from policymakers and judiciary to embed AI,’ Ahmed notes. ‘There is a future vision that AI will be embedded in online systems, which will give litigants options on the best way to resolve their disputes. So, the idea is they go online, they have a dispute, they get to a point where the system picks up the particulars of claim, of whatever allegations, and then the system actually says to them, “Well, actually have you thought about early neutral evaluation? Have you thought about going to the ombudsman? Have you thought about mediation?”’

'When going through documents and asking it to pull out terms related to [the subject] it would just pull up total nonsense. I’m not yet convinced about AI'

Rebecca St Requie, Pictet Asset Management

There tends to be more of a willingness to go through disclosure in litigation in most common law countries, says Simon Price, vice president, sales, at OpenText: ‘For example in the UK it’s set out in the Civil Procedure Rules. In ADR such as arbitration, the requirement is less formal; for example under ICC Rules of Arbitration the tribunal has the discretion to determine the disclosure process.

‘Typically parties don’t like to invest in document review earlier than they have to, but they are quite willing to spend a lot more on taking a case forward at a very large hourly rate when, actually, they could have looked at the data early, and got out quicker. So, it’s a question of at what stage do you tackle the data, because if you can tackle it earlier, there’s an argument you can settle quicker or more favourably.’

Kenny agrees that it is worth considering the data early in a dispute: ‘On balance it’s good to invest that money early and get your head around the documents. It’s better to do it before you go too far down the path of a litigation because you know how good the case is. Once I worked on a construction-related litigation and the volume of documents there – it was huge. So you almost have to go through a phase of deciding whether you are going to press ahead. You almost have to say, “Well, OK, let’s understand the data first. How good or bad of a position are we in?”… But then that’s an investment of time and money. It’s about that balance all the time.’

Discovery trail

While platforms such as WhatApp and Teams have become popular alternatives to email, contrary to popular belief, they are just as discoverable and traceable as more traditional methods of communication. ‘There are people that know they’re not doing things by the book, and they therefore try to take conversations away from media that will be discoverable. The reality is that it should all be discoverable,’ explains Price.

Even in the case of a phone that’s been lost, or, as happened in the ‘Wagatha Christie’ case, is dropped into the sea, there is still a huge amount of data that is discoverable thanks to cloud storage systems.

Similarly, when it comes to deleting data there are levels of deletion. ‘Many working professionals do not fully comprehend deleted data, and do not appreciate that deleted data, even when fragmented, can be retrieved,’ Greenland says. ‘When you permanently delete data from a storage area, or if you format your personal hard drive, there are still fragments of information that exist. I have used teams of data forensic experts, with specialised tools, to capture and preserve fragmented data evidence on many of my matters.’

Getting a handle on things

Correct data retention and storage is vital, as is having appropriate policies in place.

‘As an organisation we are pretty good at dealing with that,’ Kenny says. ‘That’s all an organisation can do, set the tone. All our data is extracted into a central repository and everything is deleted from our laptops after [a period]. This, I think, encourages you to think about document retention in an appropriate way.’

Should an internal investigation arise, Anu Kaura, head of legal at Malhotra Group and vice chair of the Law Society’s In-House Division Committee, explains that having instant access to relevant data is crucial: ‘If we need to collate it and disclose it to multiple parties, we’d rather know where that information has been held and what needs to be disclosed and at what point. It can be difficult because you don’t know where a potential investigation is going to end up; so we almost prepare for the fact that it might end up in litigation in all circumstances.’

Kaura explains that she is reluctant to just rely on AI when it comes to extrapolating the correct data. ‘When we were sent a data subject request form, we first asked for the request to be narrowed down, and then sent an email to the stakeholders named in the form and asked them to provide the information. A lot of it was in WhatsApp messages. On the email side we went straight to our IT company and they pulled out all the information and sent it to us in a digital format. We then had to systematically go through it. It was very time consuming and also there’s a risk there that either you’ll end up disclosing something that you shouldn’t be disclosing or you end up omitting something that should be disclosed. So to all intents and purposes it sounds like quite a straightforward exercise but I think there is still a lot of room for human error. I don’t think it is something that you can just do with AI.’

'If we need to collate data and disclose it to multiple parties we’d rather know where that information has been held, and what needs to be disclosed and at what point'

Anu Kaura, Malhotra Group

‘In terms of internal investigations, the duty of care is on the business to ensure that policies are in place,’ adds St Requier. ‘Working in a bank where there’s a lot of sensitive information, we have a lot of processes in place to try and ensure that the regulatory requirements are met, and we get a lot of training around this. Obviously, the reality is that banks get fined for breaches of regulations all the time. They lose a huge amount of money to fines, and they take it very seriously in terms of regulatory breaches.’

If there is a breach, getting external counsel involved early on is advisable, Kenny notes: ‘The whole concept of privilege for internal counsel… I’m not sure if it’s resolved and clear yet, but generally I think it’s good to get external counsel in as soon as possible to make sure you’ve got the protection of privilege. They are also well versed, I think, in terms of what are the steps you need to go through, and they have that objective lens.’

The key is to start an investigation earlier, adds Price. ‘If you look at a set of data pre-disclosure and let the technology help you analyse and drill down into it, the earlier you have an understanding of what’s in there. If you then have to proceed through to the disclosure stage, when you get to negotiating key words you’re armed to the teeth. There’s a whole strategic advantage.’

He acknowledges that, currently, there are very few early investigations in litigation: ‘What’s very interesting is obviously the concept of privilege. If the company has more control and is able to perform the investigation, rather than relying on passing it to the law firm and sending it down a totally different process, they might find all that information a lot quicker. But it’s a question of: how far can they go without the cover of external counsel privilege? That, I think, is an area that a lot of people find a challenge at the moment.’

Evolution of tech

‘The increased push to digitisation and the desire to have procedures online, with ADR integrated within the system, will effect a culture change within the profession, in order to control costs and increase access to justice,’ Ahmed predicts.

He adds that more of a bridge also needs to exist between the private sector and the judiciary. ‘One of the key criticisms from the academic community when it comes to the civil justice reforms is the lack of feedback to test whether these online systems are increasing access to justice; whether they are actually helping the people they are supposed to help, especially litigants. We need data from the system to understand whether they are doing their job.’

In addition, a younger generation of lawyers, more in tune and comfortable with tech, is also likely to pioneer a second and third generation of AI and other legal tools, Kenny suggests.

Price agrees, concluding that this combination of a change in procedures and a younger generation ‘with a different mindset’ is also likely to lead to a shift from disclosure to investigation, with fewer cases going to full trial.

 

Maria Shahid is a freelance journalist

 

• This roundtable was kindly sponsored by OpenText