SM&B in Landmark Ruling: UK court approves the use of predictive coding in Pyrrho Investments v. MWB Property

Pyrhho Investments v MWB Property looks set to enter the case law books as “a landmark decision ushering in the use of advanced analytics for eDisclosure”. Simons Muirhead & Burton are acting for the Second Defendant in this matter.

The case is the first English court decision to consider and approve the use of Predictive Coding in e disclosure. Disclosure is an expensive and time consuming part of any piece of litigation, and in this case, the files were contained in electronic format amounting to more than 17.6 million documents; even after de-duplication, this overwhelming number was only whittled down to 3.1 million documents.

It was further expressed in court that beyond the CPR rules, “there is not a great deal by way of guidance, and nothing by way of authority, on the use of such software as part of the disclosure process”.

Following months of correspondence, the parties settled on a case management agreement, subject to the approval of the court, providing for the use of keywords and Predictive Coding. This type of agreement is common in US jurisprudence followingMoore v Publicis Groupe [2012]. It was also recently approved by the Irish High Court in Irish Bank Resolution Corporation Limited and others v Sean Quinn and others [2015].

Master Matthews listed ten reasons that Predictive Coding was beneficial and found “no factors of any weight pointing in the opposite direction.” The factors are:

1. “Experience in other jurisdictions, whilst so far limited, has been that predictive coding software can be useful in appropriate cases”.

2. “There is no evidence to show that the use of predictive coding software leads to less accurate disclosure being given than, say, manual review alone or keyword searches and manual review combined, and indeed there is some evidence (referred to in the US and Irish cases referred to above) to the contrary”.

3. “There will be greater consistency in using the computer to apply the approach of a senior lawyer towards the initial sample (as refined) to the whole document set, than in using dozens, perhaps hundreds, of lower-grade fee-earners, each seeking independently to apply the relevant criteria in relation to individual documents”.

4. “There is nothing in the CPR or Practice Directions to prohibit the use of such software”.

5. “The number of electronic documents which must be considered for relevance and possible disclosure in the present case is huge, over 3 million”.

6. “The cost of manually searching these documents would be enormous, amounting to several million pounds at least. In my judgment, therefore, a full manual review of each document would be ‘unreasonable’ within paragraph 25 of Practice Direction B to Part 31, at least where a suitable automated alternative exists at a lower cost”.

7. “The costs of using predictive coding software would depend on various factors, including importantly whether the number of documents is reduced by keyword searches, but the estimates given in this case vary between £181,988 plus monthly hosting costs of £15,717, to £469,049 plus monthly hosting costs of £20,820. This is obviously far less expensive than the full manual alternative, though of course there may be additional costs if manual reviews still need to be carried out when the software has done its best”.

8. “The ‘value’ of the claims made in this litigation is in the tens of millions of pounds. In my judgment the estimated costs of using the software are proportionate”. (Note the correlation to FRCP 26(b)’s proportionality standard)

9. “The trial in the present case is not until June 2017, so there would be plenty of time to consider other disclosure methods if for any reason the predictive software route turned out to be unsatisfactory”.

10. “The parties have agreed on the use of the software, and also how to use it, subject only to the approval of the Court”.

This decision will make practitioners more aware of the technology, opening the door to the various ways in which Predictive Coding can be defensibly deployed and used advantageously.

Overall, the decision was largely influenced as a result of the Jackson reforms, which means the focus is much more on cost management. It is a matter of proportionality. Predictive coding is the much more cost effective and time efficient approach in dealing with such a vast case involving millions of documents, and the use of the technology looks to become more frequent following this decision.