Disclosure

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By Tom Evans, David Walker, Daniel Smith, Aisling Billington, and Catherine Campbell

The location of the data is not sufficient to avoid a disclosure order.

When it comes to personal devices, people increasingly communicate across multiple platforms, often in an informal and unguarded manner. However, high levels of litigation driven by the COVID-19 pandemic (including insolvency and restructuring litigation), the recent M&A boom (including shareholder disputes and other transactional litigation), and the rise of remote/hybrid work mean that PE firms must remain alert to the risk of personal device communications being disclosed in litigation.

As seen in recent cases, the English courts place value in contemporaneous written evidence, and take a pragmatic and targeted approach to disclosure. While English courts are mindful of the privacy rights of individuals, they recognise that employees conduct work on personal devices and non-proprietary third-party apps.

However, the location of the data is not sufficient to avoid a disclosure order, and PE firms should consider how to best protect themselves.

Two recent English cases illustrate the court’s receptiveness to disclosure orders in relation to informal communications on personal devices.

By Dan Smith and Aisling Billington

In two recent decisions, the English Court has demonstrated a pragmatic and targeted approach to ordering disclosure of material held on personal devices of third parties, and a recognition of the value of informal communications as evidence of disputed factual allegations. The decisions are discussed below.

Regardless of whether disclosure is sought under the existing provisions of the Civil Procedure Rule (CPR), or the Disclosure Pilot Scheme, the Court will apply the principle of proportionality in making or varying an order for disclosure. Notably, while the Court is mindful of the privacy rights of individuals, there is increasing recognition that work is carried out on personal electronic devices (including over more informal channels such as WhatsApp), any mingling of personal and work data will not itself be sufficient to circumvent a disclosure order.

Litigants should take particular care when drafting witness statements to avoid waiving privilege.

By Dan Smith and Aisling Billington

In Guest Supplies Intl Limited v South Place Hotel Limited, D&D London Limited[i], the UK High Court held that a reference in a witness statement to communications with a legal adviser regarding a key contractual document constituted waiver of legal professional privilege in any relevant communications with that legal adviser.

Latham explores the primary legal developments for issuers and their advisers in the year ahead.

By Chris Horton, James Inness, and Connor Cahalane

The regulatory regime and disclosure requirements for listed companies in the UK will continue to evolve in 2020. Issuers and their advisers should be aware of the key legal developments that will occur during this year, including FCA consultations, ESMA guidelines and reports, and measures to increase corporate transparency.

For Latham’s timeline of regulatory regime…

Buyers’ best defence against M&A fraud requires rigorous, pre-closing due diligence — when fraud is suspected, deal teams should seek legal advice and proceed with caution.

Oliver Browne, Richard Butterwick, Alanna Andrew, Frederick Brodie, Connor Cahalane, and Catherine Campbell

Recent high-profile fraud cases gravely illustrate how a failure to detect fraudulent activity can cause lasting damage to corporate value. In January 2019, publicly listed bakery chain Patisserie Valerie collapsed following allegations of a £40 million accounting fraud.

In our view, instances of fraud in the context of acquisitions are more common than is often thought. There can be (or have been) allegations of artificial inflation of reported revenues, revenue growth, and gross margins or other distortions — underlining the high stakes and public nature of M&A fraud allegations.

The best protection against fraud comes from specialist due diligence and an early emphasis on fraud detection pre-closing. Where concerns arise post-closing, English law provides some innate protections, but deal teams should seek legal advice early on to help navigate this complex area without causing further damage.

By Oliver Browne and Hayley Pizzey

In very broad terms, parties to English litigation disclose documents that they or their opponents may want to rely upon — even if the disclosed documents are adverse to the disclosing party. Parties may seek orders for further disclosure in certain circumstances. The rules on disclosure are set out in Part 31 of the Civil Procedure Rules (the CPR) and Practice Directions 31A, 31B, and 31C (the last of which is new and applicable to competition cases only).

A recent decision in Vodafone Group Services Ltd & Ors v Infineon Technologies AG & Ors[i] highlighted some limits of further disclosure orders.

The decision

Certain Vodafone group companies have commenced a damages claim following on from a decision of the European Commission, in which the Commission found that Infineon Technologies and certain other smart card chip manufacturers had participated in a European Economic Area (EEA)-wide cartel involving the supply of smart card chips. Vodafone’s estimated damages are said to be approximately £150 million and the parties were likely to spend around £30 million in total to take the case to trial.

By Stuart Alford QC, Daniel Smith and James Fagan

 “Privilege is a fundamental human right guaranteed by the common law, and a principle which is central to the administration of justice. Once a document is subject to privilege, the privilege is absolute: it cannot be overridden by some countervailing rule of public policy”.

These dicta from Andrews J in her decision in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 are reassuring, but her ruling on the scope of privilege may prove somewhat less so to corporates.

The decision concerned a claim by the Director of the UK Serious Fraud Office (SFO) for a declaration that certain documents generated between 2011 and 2013 during investigations undertaken by solicitors and forensic accountants into the activities of the defendant, Eurasian Natural Resources Corporation Ltd (ENRC) and its subsidiaries were not, as ENRC maintained, subject to legal professional privilege, either legal advice privilege or litigation privilege. The decision is the first to consider the position of legal advice privilege in the context of internal investigation and an SFO investigation.