The High Court has described the cost savings that can be achieved by using predictive coding for disclosure rather than a standard keyword search as “extremely significant”.
In the first reported decision on predictive coding following a contested application, Mr Registrar Jones said the cost of predictive coding in the case before him was “in the region of £132,000”, compared with “at least £250,000” for a keyword search or £338,000 in a “worst case scenario”.
City law firm Berwin Leighton Paisner (BLP) claimed victory on the issue in May, acting for the respondents in Brown v BCA Trading  EWHC 1464 (Ch), but the full ruling has now been published.
The court heard that David Brown claimed over £20m from the respondents through an unfair prejudice petition brought under Section 994 of the Companies Act 2006.
Mr Registrar Jones said the respondents sought electronic disclosure using predictive coding, rather than the “more traditional” keyword approach.
He said the “majority of the documents” were in the hands of the respondents, which did not “determine the outcome”, but was “relevant to take into account when their lawyers identify the favourable difference in cost which they expect to incur if predictive coding is used instead of keyword searching”.
The registrar said there was no “factual or expert evidence” to contradict the respondent’s assertions about the “favourable difference” in cost.
He said this was “relevant and persuasive” only to the extent that predictive coding would be effective and achieve the disclosure required.
“When the size of potential disclosure is significant both in terms of quantity of documents and the time required to be spent on the disclosure process, it is particularly important for the lawyers to identify by reference to the true issues, the anticipated categories of documents and to enter into discussions to seek to minimise the work required and therefore the costs.”
The registrar went on: “The statements of case from both sides within this section 994 Companies Act 2006 petition present extremely broad issues of factual dispute.
“Realistically, however, experience shows that issues will narrow significantly by the time the trial is reached. This can mean that what may have appeared to be necessary disclosure based upon the statements of case at this stage, will turn out to have been unnecessary and indeed to a large degree irrelevant to the way the case will be heard at trial.”
The registrar said it may be difficult for solicitors to foresee the outcome, but they should make a “reasonable attempt” at doing so.
“A successful outcome from the use of predictive coding must, at least to some extent, depend upon the success of the parties having been able first to narrow down the issues and therefore the categories/types of documents relevant to the disclosure process.”
The registrar referred to Pyrrho Investments v MWB Property  EWHC 256 (Ch), the first ruling endorsing predictive coding in England and Wales, but that was a case where the parties agreed to its use.
Mr Registrar Jones said all of the 10 factors cited in Pyrrho by Master Matthews applied to the case, apart from the one referring to agreement by the parties. He said an additional factor, that there were “no factors of any weight pointing in the opposite direction”, did apply.
The registrar concluded that it was right to make an order for predictive coding disclosure. “There is nothing, as yet, to suggest that predictive coding will not be able to identify the documents which would otherwise be identified through, for example, keyword search and, more importantly, with the full cost of employees/agents having to carry out extensive investigations as to whether documents should be disclosed or not.”