A relatively recent issue that businesses involved in a dispute need to consider is dealing with electronically stored information, and the serious practical problems associated with their disclosure.

As many businesses communicate predominantly by email and create the majority of their documents through computers and other electronic devices, the volume of electronically stored information in even small organisations is immense. However, unlike paper documents, electronically stored information can exist in many different forms and locations, and most businesses will not know how much electronically stored information that they have or where it is. Furthermore, even deleted documents can be held to be disclosable as they can often, though not easily, be retrieved. As electronic documents are not readily accessible, it can be difficult to collect them without the incurring of significant costs, sometimes completely out of proportion with the amounts in dispute.

Furthermore, people will often speak in a more unguarded fashion over email, text message or through social networking websites such as Facebook or Twitter than they would in a letter. What many people fail to realise is that all of this communication may have to be disclosed if your case relies on the evidence this creates, or if it affects or supports the case of the other party.

Consequently, it is often difficult for businesses to know how to gauge the scope of a reasonable search that should be carried out. Parties also need to be careful when collecting electronically stored information not to affect the information’s metadata, i.e. information about when the document was created, when it was modified and by whom. If the metadata is changed, this can have a detrimental effect on the document’s evidential integrity.

On 1 October 2010, Practice Direction 31B came into force to encourage parties to deal with electronic documents in a “ proportionate and cost-effective manner.” Whilst this should help to manage the costs associated with the disclosure of electronic documents, failure to comply with the practice direction could lead to courts imposing sanctions on legal costs even if you win the case.

As soon as a business realises that there is a possibility of litigation, it must take steps to ensure that relevant electronic documents are preserved, particularly those that would otherwise be deleted automatically through the business’ document retention policy.

It is a requirement for the parties to discuss disclosure of documents before the first case management conference. It may, however, be sensible to begin discussions with the other party much earlier to try and reach agreement about the scope of a reasonable and proportionate search for an electronic document.

The discussions need to consider the computers, electronic devices and other media where relevant documents may be held, the limits on the disclosure of documents or certain categories of documents to particular date ranges, the keywords to be used in keyword searches, the software tools and methods to be used to identify privileged or duplicate documents, and the formats in which electronic documents are to be provided for inspection. It is very important that businesses obtain cost estimates from IT consultants for searches as soon as possible, and monitor costs of disclosure throughout the litigation to prevent them from becoming excessive.

If an agreement cannot be reached, the parties should seek directions from the court at “the earliest practical date”. It is important that parties do not undertake searches unilaterally as in one recent case, Digicel v Cable & Wireless [2008], the disclosing party was forced to carry out a search again at an additional cost of £2m. If a disclosing party is concerned about the extent and cost of the search being requested, it is worth suggesting that the costs of the search are shared between the parties, or whether the search should be paid by the party requesting it.

As businesses becomes ever more dependent on new technology, it is increasingly important for them to consider the practical implications of disclosing electronic documents as soon as litigation is contemplated.