02 February 2021
Commercial disputes, regulatory investigations and royal commissions have always been complex and difficult at the best of times, but large cases in the modern era take those difficulties to the next level. That’s usually because of the importance to the parties, the complexity of the factual and legal issues, rapidly moving advances in technology and the increasingly large volumes of electronic documents involved.
Holding Redlich has recently run a number of very large, complex commercial litigations, regulatory investigations and commissions of inquiries, including a nine-month Queensland Supreme Court trial and as Solicitors Assisting the Royal Commission into the Management of Police Informants in Victoria which held more than 120 days of public hearings and took nearly two years to conclude.
In this guide, we consider some of the key issues organisations involved in running large disputes and regulatory investigations may face and recommend key strategies to overcome each, including:
Early scoping of the project
Firstly, it is important to properly ‘scope’ the case from the outset, so that plans can be made for the running of the case as efficiently and effectively as possible.
We recommend that you put together a project team which consists of representatives from both the organisation and the legal team who will be involved in handling the case. A core project team of about four to six key people would be ideal. Depending on the size of the case, your core group may be required to flex to rapidly expand or contract, at short notice. Your broader project management team should be as inclusive of all parts of your organisation as possible.
It may be that there is limited information available about the dispute at first, however, the team should make a start on scoping the case based on what is known or can be determined, including key timelines and milestone dates, at an early stage. The plan should then be updated as the case progresses.
Each case is different and will require different considerations, but some items, which we set out below, need to be discussed at the outset.
What are the relevant background cases that led to the parties being in the dispute or the inquiry being called? Who are the key individuals involved, what are the key facts or events and the key documents? Importantly, where are they now? Detailed lists should be recorded. All material should be located and quarantined for ready access when it is required. If it is not in one place, one of the first tasks for the project team is to coordinate the compilation and storage of the key documents, including items such as computer hard drives for later production or interrogation. All electronic backups should be securely stored and not destroyed.
It is helpful to prepare an initial chronology of events which sets out, in date order (from earliest to latest) the relevant events or facts, the individuals and/or organisations involved and the associated documents. The initial chronology will help guide what further investigations will be required to identify other further facts, people and documents.
What is the initial working case theory which can be developed at an early stage and updated as the case progresses? By way of a simple example, if the case involves an alleged breach of contract, what is the working case theory as to the terms of the contract, the nature of breaches that have occurred, who was involved and the loss which has been caused by the breach? Like the chronology, the working case theory will help guide what further work is required, such as what documents should be found and secured, who are the key witnesses to meet with and take statements from, who will be your key experts, and what legal analysis is required? However, it is important to remain flexible because a party’s understanding of the case is likely to change as and when the evidence is collected and the further legal analysis is undertaken.
Perhaps the most important consideration for the organisation is the question of how the dispute or regulatory case can be resolved at the earliest opportunity and in the most favourable way?
In regards to commercial litigation, it may well be very difficult to resolve a case at an early stage when the parties know the least about their case and have not yet been ‘hurt’ by the litigation process and costs. However, it is important to form a working resolution strategy at the earliest possible stage. For example, the project team might decide to try and have executive-level settlement negotiations or an early mediation either before or shortly after the litigation commences. In other cases, there may be ‘too much heat’ or the parties may not know enough about the legal or commercial risks involved to be able to make an informed decision about early resolution.
In thinking about resolution, the project team should focus on the underlying interests of the parties. For example, is this dispute just about money or is it important to try and preserve commercial relationships and avoid adverse publicity? How important is it for the organisation to be seen to be ‘doing the right thing’, and how does that rank in importance to other considerations such as minimising costs or preserving assets? Is it possible to resolve the dispute and the relationship at the same time?
In some instances, such as a royal commission, it may not be possible to resolve the case or to avoid a public hearing. The strategy should be set early and reviewed regularly to ensure it reflects the desired outcomes of the process. In a large royal commission, the minutia of the day-to-day tasks also requires careful strategic review to ensure the overall strategy is not compromised. In the Royal Commission into the Management of Police Informants, for example, strategy meetings were held weekly with all key stakeholders, including the most senior commission staff, where an agenda of all action items was discussed and reviewed. All attendees were consulted and encouraged to speak up and to raise any ways in which proposed actions could impact on their key area. Tasks were discussed and allocated, ensuring that nothing was missed and that the team worked collaboratively to divide the workflow equally.
It may be useful for the project team to identify as many of the organisation’s interests as possible and then rank them from the most important to the least important. Are there one or two things that matter more than all others?
The project team should also consider the possible underlying interests of the other parties to the dispute – what are the issues and outcomes most likely to be of importance to the other parties, and are those outcomes things which the organisation may be able to concede to get a deal done? The project team could also try to list out what they think the other parties’ interests will be and consider whether there’s anything that could be done to try and meet those interests in a way that would be acceptable to the organisation.
For regulatory cases and inquiries, of course, the aim is slightly different, but the fundamentals are the same. A regulatory case or inquiry may not be able to be 'resolved' in the same way as a settlement in litigation, however, the project team should consider the overall objectives of the organisation in dealing with the case. For example, one aim may be to try and avoid adverse outcomes or findings, but if it’s apparent there has been some fault on the part of the organisation, the aim may be to minimise the reputational damage and rectify the wrong-doing for the long-term survival of the company. That objective might then govern the overall approach that is taken to deal with the situation.
Client reporting requirements
It is important that the project team works out what the organisation’s requirements will be in relation to internal and external reporting on the case. For a private company, that may be simple, but for large public companies or government bodies that may be quite complex. Consideration will need to be given about how reporting of legal advice will take place so that legal professional privilege is not waived by inadvertent disclosure or disclosure to non-client bodies or personnel.
In addition, if the importance of the case warrants it, it may be worth appointing a media advisor or communication manager to the core project team to liaise with media and to help protect the reputation of the organisation. Having a representative closely involved with the project team may ensure that potential inadvertent disclosures without consideration of the potential adverse media interest are avoided. If insurers are involved, the insurer will have reporting requirements which need to be determined and taken into account.
We recommend creating a project timeline which incorporates all key dates and to appoint a particular person to manage the timeline. When a key date is entered, an estimate of all of the steps, and timing for each step should be provided, so that the timeline manager can work back from the final date and check-in along the timeline to ensure tasks are not missed or running behind.
What resources will be required to run the case?
Financial and human resources
Litigation, regulatory cases and inquiries can be extremely expensive, not only in terms of actual legal and expert costs, but costs associated with time spent by officers and employees, the consequences of adverse outcomes, bad publicity and loss of commercial relationships. The project team should consider what the range of potential costs might be, how those costs can best be managed and ‘benchmarked’ against the potential benefits of a settlement. A settlement offer may at first seem very unattractive, but when compared with the overall costs involved in running a legal case, it may, in fact, be a very good outcome.
Another matter to consider at the earliest possible stage is whether there are any insurance policy or indemnity available which may apply to the litigation or regulatory case and may cover the legal costs. The policy will require that the insurer be notified of a potential insurable event and agreement on matters such as which lawyers will be engaged and the terms of funding. While each insurance company will have a legal panel, ‘off-panel’ appointments of the organisation’s lawyers of choice are fairly common.
Another increasingly prevalent option is litigation funding for plaintiffs. More litigation funders are coming into the market each year so there is an ever-increasing availability and more satisfactory terms of funding available. The litigation funding market and arrangements are also increasingly the subject of court and government scrutiny and regulation, so those developments should also be monitored and taken into account throughout the life of the proceeding.
Client human resources
It is important that the organisation devotes sufficient human resources to oversee the running of the case and provide instructions to the legal team. The personnel involved should be sufficiently senior, resourceful and competent to be able to liaise with both the legal team and internal stakeholders as and when required. Depending on the size and importance of the case, a dedicated resource may be required.
It is also important to consider whether any of the proposed personnel may be caught up in the case as lay witnesses (an ordinary person who testifies in court based on their personal knowledge). If that’s likely, then their involvement on the project team should be avoided to not ‘contaminate’ their evidence and help maintain legal professional privilege.
In the post-COVID environment, it is important to note the ability to bring groups together more efficiently through the use of online platforms, promoting collaboration but cutting out the inconvenience of trying to find a time that suits all attendees for ‘face-to-face’ meetings. Clients and legal teams will require flexibility and an agile workforce as part of the project management process.
Similarly, the project team should consider what legal resources may be required, including the mix between senior lawyers (partners, special counsel and senior associates) and more junior staff (lawyers, paralegals and support staff) as well as external counsel (senior and junior counsel). For example, while some cases may require (at least initially) a team which consists of a partner and one or two other lawyers, it may be clear at the outset in other cases that a much larger team may be required.
In some larger cases, it might be appropriate to have two partners involved, one for a more high level senior strategic review, being called on for senior strategic input as required, and another more junior partner who works closely with the senior partner, but is more actively involved in ensuring the smooth day-to-day running of the case.
The project team should also consider whether it is possible to split the case into two or more legal teams who will be responsible for the running of separate parts of the case. In that event, consideration will need to be given as to how the teams will communicate and divide the work to make sure that there are no ‘gaps’ in the issues being dealt with in the case and unnecessary duplication is avoided. It is recommended that all of the various groups attend the strategy meetings to ensure all actions, or proposed actions, are in line with the overall strategic vision and can be robustly tested and peer-reviewed.
It is also important to consider which counsel should be engaged and at what point in time they will be briefed in the proceeding. While early engagement of counsel may be an extra cost upfront, there are often cost savings and efficiencies in the long run to ensure the legal team is aligned in terms of strategy, the case theory and what work needs to be performed.
What technology and documents may be required?
Modern litigation is usually characterised by huge numbers of electronic documents and very large files – for example, in mining cases, the geological and mine scheduling models can be hundreds of gigabytes. Therefore, it is important to consider what document management protocols and technology may need to be used and when is the best time to start using those systems.
Most large firms will have ready access to electronic document management systems, such as Ringtail, Relativity or EDT, either through in-house capabilities or by partnering with external providers, so those systems can be employed at an early stage (subject to cost considerations). It is also important to consider how the organisation will identify, collect and retain potentially relevant documents (both electronic and hard copy) for use in the proceeding.
Another common feature is that, although the initial issues in a dispute or coverage of the proceeding may suggest that a relatively small number of categories of documents will need to be obtained, it should be anticipated that the proceedings may expand to include new issues and therefore the project team should think expansively in deciding what documents to look for and where to look. Specially-trained forensic IT services may be required to ensure that potentially relevant documents are found and retained for later use. Again, while it may be an initial upfront cost, cost-savings may ultimately be achieved by getting the job done properly at the outset.
The management of documents and evidence raises a number of sub-issues such as:
Lay witness evidence collection
As part of scoping the case, the project team should make a list of all the potential witnesses and who may be the key witnesses, based on the known or likely issues in dispute or evidence to be led.
A “person list” or “dramatis personae” should be prepared which includes information about each person’s history, roles and relevant dates or events each person was involved in. It can also include other information such as the authorship of important documents.
The legal team should commence undertaking witness conferences and preparing draft witness statements, particularly from the key lay witnesses, at the earliest opportunity. That is because the witness evidence will be crucial to obtaining a better understanding of the strengths and weakness of the case and help to frame the arguments, plus witness memories will fade over time so it’s better to capture recollections as soon as possible.
Another reason to start early is that witnesses may be less inclined to assist at a later time, particularly if a person leaves the organisation, or the person has since become aware of the allegations made against them in greater detail and seek to avoid providing full assistance out of concern for their own personal position.
Like the chronology, both the “person list” and witness statements should be updated as and when further information and documents are obtained throughout the proceeding.
Expert evidence collection
Most large cases and inquiries will involve expert evidence of some variety, so it will be important for the project team to consider what type of expert evidence may be required, who may be suitable experts to brief and when they should be briefed.
Similar to the question of when to brief counsel, it may be appropriate (or perhaps even necessary) to seek expert opinion at an early stage to, for example, help guide any advice on prospects and strategy, consideration of the evidence and the documents that may be required in the proceeding and prepare pleadings. To avoid missing out on a chosen expert, it is recommended this engagement occur at the earliest opportunity. Working closely with an expert from the outset is an important way to test and ensure the strategic plan is correct.
More frequently these days, parties are briefing two sets of experts – (1) independent experts who will prepare expert reports and give evidence in the trial and (2) experts who will not prepare expert reports or give evidence at a trial (sometimes referred to colloquially as “dirty experts”), but who are briefed to assist the legal team in relation to expert matters, such as identifying appropriate fields of expertise and experts, identifying materials to be briefed to the independent experts, assisting with developing the questions or issues which will be the subject of an expert report and reviewing draft reports.
In relation to both “clean” and “dirty experts”, care will need to be taken when briefing the experts to ensure that they remain independent and objective, their evidence is admissible and that legal professional privilege is maintained to the extent possible. It is safest to assume that any communications with experts (even if apparently privileged) may be seen by the court, the arbitrator or the other parties.
Further, all of the courts have rules about the requirements for expert evidence and, in some cases, require the parties to consider briefing a single expert who will be the only expert in the proceeding.
 See, for example, McConnell Dowell Constructors (Aust) Pty Ltd v Santam Ltd & Ors (No 1)  VSC 734 in which Vickery J of the Victorian Supreme Court accepted that “traditional manual discovery of the Plaintiff’s documents is not likely to be either cost-effective or proportionate”.
 See, for example, the decision of Murphy & Ors v Gladstone Ports Corporation Ltd  QSC 12 in which Crow J of the Queensland Supreme Court determined that the duty of disclosure under Rule 212 UCPR (Qld) extended to expert reports, including drafts, which produced by experts who were engaged to assist in the preparation of the plaintiffs’ claim, even though those reports were not to be relied upon in trial.
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.