From a lawyer’s perspective, there’s a lot that clients can do to save time and money.  We’ll look at some key strategies in this series of posts.

Today, let’s look at the legal process of ‘discovery’, and why it needn’t add a small fortune to the bill.

What’s ‘discovery’ ?

At a certain point in a court case, there’s often a requirement that the parties ‘make discovery’ of documents.

That means they have to file with the court, and give to the other side, a complete list of all documents (relevant to the case) that they hold, or can get their hands on (e.g. held by their accountant) or that they used to hold, or were able to get their hands on.

That’s called ‘making discovery of’ or ‘discovering’ the documents.

There’s no choice about what you ‘discover’

Sometimes a court will order that discovery is limited to certain issues or kinds of document.  Save for those limitations, there are no exceptions to what must be discovered.

• If it’s relevant, you must discover it.
• If it harms your case, you must discover it.
• If it helps the other side, you must discover it.
• It it’s a ‘privileged’ document (e.g. legal advice from your lawyer), you must discover it.  (You can’t be compelled to let the other side see it, but you must discover it.)
• If you used to have it, but don’t have it any more, you must discover it.
• If it’s a computer file, you must discover it.

What happens after ‘discovery’ ?

Each side is entitled to inspect the other’s discovered documents, except for any that are privileged.

What makes discovery expensive ?

Frankly, many clients make it much harder and more drawn out than it needs to be.

• They use expensive lawyers as paperwork clerks.
• They drop off massive quantities of disorganised documents.
• They forget that they became familiar with the documents one by one over weeks, months or years.  The lawyer is seeing most of them for the first time, at once, in a huge mass.
• They let the lawyer figure out what everything is, instead of telling them.
• They dribble documents to the lawyer over days, weeks or months.
• They say unhelpful things like ‘you already have a lot of it’, when that involves the lawyer trawling through volumes of stuff that the client really could isolate into a single box if they wanted to.
• They omit things without explanation.
• They omit things that must obviously exist (e.g. emails that are referenced and partly quoted in other emails).
• They provide undated materials and let the lawyer spend hours trying to figure out when it might fit in.
• They assure the lawyer the documents are complete, and as soon as they are asked a single further question they say ‘Ah, yeah.  Then there’s all that other stuff.’
• They don’t pay attention when the lawyer explains exactly what’s required.
• They forward hundreds of emails to the lawyer, and let them make sense of what they are.
• They email attached documents with meaningless file names like ‘scan9848Ax.pdf’ instead of ‘Contract of Sale of Shares.pdf’.

Not all clients do this.  Just most of them

What if you don’t discover all relevant documents ?

• If your lawyer picks it up, they’ll have to spend more time chasing – at your expense.
• If the other side picks it up they can apply to the court for orders that you do it again.  If the court agrees, it normally makes you pay the other side’s costs of that application.  (Add a few thousand dollars extra to your expenses.)
• If you later want to show an undiscovered document to the court to assist your case, it can say ‘Nope.  Won’t look at it.  Should have been included in the discovered documents list.’  That can lose you the case.
• You might look dodgy, if the omissions seem deliberate.  That might lose you the case.

In really tough fights, one of the standard tactics for hurting the other side is to pick holes in their discovery and punch them up over it in court applications.  More delay, more cost, more gloom.

Best solution:  get discovery right the first time.

So how can clients help ?

• First, listen to what’s being asked for.  Your lawyer will often suggest certain documents or kinds of document that they know / expect to be relevant.  Re-read this article as you go through the process.
• Second, think hard and look hard.  Identify and locate every relevant document that is (or has been) in your possession or under your power or control.  (That means that you don’t actually have it but you could get it by asking.  A good example might be your tax return.  If it’s relevant but you don’t have a copy, you’d be expected to ask the ATO to supply one.)
• Third, prepare a duplicate set of all available documents.  (Use paper, unless you have some brilliant system for using soft copies.  A library of complete, clearly named PDFs is good.  But if you can’t produce a clear, simple software ‘library’, stick to paper.)  Keep the originals very safe.  Keep them ordered and easily available.  But don’t give the originals to the lawyer until they ask.
• Fourth, put the duplicates in the most sensible order you can.  It helps a lot.
• Fifth, number them for identification.
• Sixth, fill in a Discovery List like this one.  Lots of (relevant) info is good.  Do your best.  Often dates are uncertain and things aren’t cut and dried.  Give the best information and explanations you can.  It’s not a ‘photographic memory’ competition.
• Seventh, deliver the table and a complete set of numbered duplicates to the lawyer.
• Eighth, be sure to ask the lawyer (after they’ve had a look) whether you can do anything more.  Otherwise, they’ll assume that they are expected to work out any confusions and gaps (‘cos that’s how clients normally do it).
• Ninth, if you find yourself thinking ‘This is such a load of **** !  Surely the lawyers can just do it for me’ – remember … yes, we can.  We certainly can.  It’s only a matter of time and money.

If you can get all this done really well and thoroughly, you’ll shave a big amount from your bill.

The process is often tedious, painful, frustrating and time consuming.  But it’s ‘free’ when you do it and pricey when we do it.

We still have work to do

The data and documents you provide need to be considered, including whether privilege applies.  It would be rare for a client to get the process perfectly right.  And the list of ‘discovered’ documents needs to be turned into a format that’s required by the courts.

So there’s still work for the lawyers to do on discovery, but not nearly as much.

ACCC’s new guide to the component pricing law shows how easy it is to slip up in advertising. 

Click on the sample advert to enlarge it, and you’ll find that – despite ACCC encouragement – the advertiser shouldn’t advertise a total price of $2,240.  We’re all human, even the regulator.

That’s good, but not good enough.  The really red hot misrepresentation has been removed from the document but it’s still likely to mislead consumers.  It’s a good example of misleading by what you don’t say.

The two statements compared

Here’s the original misrepresentation:

21.3 If your mobile is no longer under warranty and you are not covered by insurance you will need to pay for the cost of the repairs.

That’s a ‘legal lie’.  We’ve explained why, and so has ACCC.

Here’s the latest version of clause 21.3, together with the clauses that precede it.

21. Warranty

21.1 Early Life Failure (ELF)

The Elf warranty covers mobile phones in the first 14 days of use. If the mobile phone fails during this time, this warranty provides for a replacement mobile. Please check the warranty documentation that came with your mobile phone to see if it’s within the ELF period. If you are eligible to make a claim, please contact the place of purchase immediately.

21.2 Manufacturer’s warranty

The equipment we supply is covered under the Manufacturers warranty. Details of the warranty are included with your mobile phone. (Most mobile phones come with a 12 month warranty and a 6 month warranty for batteries.)

Please note warranties do not cover physical, liquid or sun damage or unlocking or programming. Additionally they do not cover loss or theft.

If your mobile phone is older than the ELF period, check the warranty documentation for information on the standard manufacturers warranty and for their recommended local service centres. Remember to take a copy of your Proof of Purchase to the service centre and remove your SIM card and /or accessories.

21.3 For information on your local service centres recommended by the mobile phone manufacturer, please see the documentation that came with your mobile phone, alternatively refer to your local directory for more information.

So TPG has replaced the legal lie with very different wording, that seems more reasonable.  But let’s consider the overall effect of clause 21 as it now stands.

The new clause 21

The problem with clause 21 is that it reads as though it is an exhaustive statement of the customer’s warranty rights.  It doesn’t say in black & white that the ELF warranty and the manufacturer’s warranty are the only warranty rights a customer has, but that’s the natural impression it conveys.

How many Mums, Dads and teenagers are going to read clause 21 and say to themselves, ‘Oh but I am also aware of my non-excludable consumer warranty rights pursuant to the Trade Practices Act, and I therefore note that my provider’s warranty clause can legally only enlarge those rights and cannot be taken to limit them’ ? 

No, average folks are quite likely to take clause 21 as a full statement of their rights.  And it isn’t.

The impression reinforced

Note the way that clause 21 is worded to disassociate TPG from the handsets it supplies. 

The law says that a customer who gets a phone from TPG can require TPG to take it and repair / replace it if it turns out to be sub-standard.  Sure, TPG might ask you to drop it in to a third party service centre, and you might be happy to do so.

But TPG can’t say or imply that ‘If your handset is sub-standard, it’s between you and the manufacturer.’  Yet that’s the clear implication of the new clause 21.3, especially when read together with clause 21.2.

ACCC is concerned about this kind of misrepresentation

TPG’s original clause 21.3 was a howler.  The amended version is not as outrageous but it is still likely to mislead.

Less than a month ago, ACCC took action against electrical goods importer GAF for exactly this kind of thing.  In that case, Chairman Graeme Samuel made ACCC’s attitude clear:

The ACCC was concerned that in purporting to describe consumers’ express warranty rights, GAF had produced a card which could potentially lead a consumer to erroneously believe they had no other rights – most importantly the statutory rights implied by the Act into consumer transactions.

Although suppliers of products can provide their own express warranties that enlarge a consumers’ warranty rights, they must not exclude or restrict consumers’ statutory rights, or mislead consumers about their statutory rights.  If they do, they risk breaking the law and being exposed to a criminal action.

Take a look at the Naked DSL advert in the top left hand corner of Dodo’s home page as at 4 June 2009.  In a few square inches, there are three TPA breaches. 

We’ll explain what they are.

The home page

The main message

Always start a TPA advertising analysis with the question:  ‘What’s the main message of the advert ?’

Here, the eye-catching points are:

• Naked DSL from $29.99 a month
• No phone line needed

What a bargain !  Where do we sign ?

The full facts

Look just to the right of the highlighted $29.99 per month text … that’s not a dead pixel on your monitor.  It’s a footnote number.  A tiny little feint number ’1′.

It references some small, dull text at the bottom of the page that grudgingly reveals that to get the $29.99 price, you must bundle the DSL service with a Dodo mobile service.

What’s wrong with that ?

Nothing, if it was prominently explained in a way that formed part of the main message.

But in this case:

• It isn’t prominent, and doesn’t form part of the main message.  In fact, it significantly changes the main message.  The main message gives no clue that the buyer has to buy a second service to get the low price.

Breach of section 52 of the Trade Practices Act

• There’s a real problem in claiming that a customer won’t need a phone line, but requiring them to take a mobile service.  The value proposition of naked is that you can factor out the cost of a phone service if all you want is DSL.  To tie in an alternative phone service in the small print makes a lie, for practical purposes, of the ‘no phone line’ claim.  It’s literally true but it’s still misleading.

Breach of section 52 of the Trade Practices Act

• The total price of the plan isn’t stated prominently, and the total price of the bundle isn’t stated at all. 

Breach of section 53C of the Trade Practices Act

But when it communicates with those same ordinary people, ACCC can forget all about the power of the main message and descend into baffling lawyer-speak.

ACCC should engage a marketing expert to offer input into its recall notices and consumer notifications.  If it wants to communicate important messages, it should use the skills of a communicator.

We’ll look at a couple of examples and analyse what goes wrong.

Example 1:  Enclosed court orders

In one recent case, complicated court orders running to many pages were made as a result of ACCC consumer protection action.  They were, as you’d expect, in highly formal language that only lawyers are comfortable with.

For reasons known only to ACCC, it wanted a full copy of the actual orders delivered (with other documents, providing some explanation) to a large number of potentially affected consumers from a generally educationally disadvantaged background.

It was a bizarre exercise.  Some of these recipients, receiving a wad of paper and pulling Federal court documents from an envelope would have been terrified.  (So would many highly educated people.  Court documents in your mailbox are scary things.)  Few, if any, of them would have gained any value from this alarming, confusing missive.  Only a lawyer could conceive otherwise.

A communications expert would have said:  ‘This is not a document to send to ordinary people.  If there’s something within it they need to know, let’s translate it into a simple, clear document with a main message.’

Example 2:  Product safety recall

In an important product safety recall, ACCC required a retailer to write to purchasers of the unsafe product.  The resulting ACCC-approved draft was highly officialese.  The need was to tell parents that their kiddies could die but this key message only dimly made it through the verbiage. 

When we saw the final ACCC-approved letter, we commented to a colleague that most readers would probably read three lines and throw it in the bin, saying, ‘I’ve already voted.’

Why ?  Documents like this are conceived and generated by lawyers.  Not the first people you’d go to for clear communication.

And when the PR team does the job, they show how

In an interesting contrast to the product recall letter above, that almost buried the critical message, here’s a powerful quote from an ACCC media release in another product safety matter:

‘Children have died from hanging and strangulation after their heads have become trapped in gaps in bunk beds that did not meet the requirements set out in the mandatory product safety standard,’ ACCC Deputy Chair, Mr Peter Kell, said today.

 ’Children have also suffered serious head injuries and fractures after falling from bunk beds that did not have the prescribed guard rails.’

We imagine that this powerful message was designed by media and communications staff at ACCC.  It is far more direct and striking than anything that was sent to a population of parents who were actually known to have children at risk. 

If Deputy Chair Kell’s words were crafted by the legal team, they should hold that thought when communicating with ordinary people.

Presumably there’s nobody to make this point inside ACCC

When a consumer case is running, it’s lawyers’ business, right ?  There are ACCC lawyers and external lawyers and judges (who are lawyers too).  So how would a communications specialist ever get a chance to have input ?  This is lawyers’ work … move aside !!

This is serious

If some of the ACCC-approved documents we have seen are the best that its present processes can do to inform ordinary people of important matters, the system must change. 

Documents aimed at the general public need to be very, very clear.  Clarity is a skill, and not one that lawyers or public servants specialise in.

If these messages really do matter, use an expert.

The computer department featured signs urging purchasers to invest in extended warranties, to spare themselves the heavy repair bills that apply if their equipment fails out of standard warranty.   

As ACCC has told traders and customers time and again, a retailer can’t impose an arbitrary time limit on its own obligation to repair goods that fail.  In fact, ACCC generally views extended warranties as a rip off.

It’s a great example of the need for business-wide, ongoing trade practices training.  These signs looked like they were printed at that store, rather than head office.  Our guess is that a local manager had the bright idea … not realising that they were sailing so close to the legal wind, and that ACCC has only recently dealt with electrical importer GAF for misrepresenting warranty rights.

The problem

We’ve explained this issue in detail before.  When you sell consumer goods, they come with a statutory warranty that they’ll be of reasonable quality.  If that implies that they should last (for instance) at least three years before starting to fall apart, then that’s how long the manufacturer needs to repair or replace them in case of failure … at its cost.

Leading consumers to believe otherwise is a breach of section 53(g) of the Trade Practices Act, and a criminal offence.

ACCC can’t be any clearer

ACCC has talked about this issue frequently.  It has even published a special booklet to clarify the law.  And it has said that extended warranties are a rip off where they don’t really add any value to the customer’s ordinary legal rights.  As ACCC Deputy Chair Peter Kell recently said:

“The ACCC holds increasing concerns that too many businesses are not well versed in their obligations to consumers and are too quick to equate consumer rights with those provided in express or voluntary warranties rather than the statutory protections afforded by the TPA. This appears to be a particular problem with high-end electrical products, an area in which consumer complaints are growing.”

Way back in December 2008, we highlighted a seriously misleading statement in TPG’s Mobile Fair Go policy.

Five months later, it’s still there, and still breaching section 53(g) of the Trade Practices Act 1974.

The difference is that, since last December, TPG has given a court-enforceable undertaking not to engage in misleading or deceptive conduct.  It’s playing double-or-nothing by maintaining this untrue statement on its web site.

The misleading statement

 Here’s what TPG’s Fair Go policy continues to say as at the date of this post:

21.3 If your mobile is no longer under warranty and you are not covered by insurance you will need to pay for the cost of the repairs.

As we’ve explained at length before – as has ACCC – that simply isn’t correct.  And mis-stating consumer remedies is a big no-no under the anti-misleading conduct rules of the Trade Practices Act.

ACCC has made Dodo Australia give a Court enforceable undertaking to issue refunds customers and discount monthly plans, as a result of misleading statements.

According to ACCC, Dodo advertised misleading ‘free’ offer plans between October 2008 and March 2009 on both the television and its website.
 
ACCC’s concerns

ACCC said:

The ACCC was concerned consumers were likely to have been misled or deceived by the advertisements which represented consumers would receive either of an Asus Eee PC, a fuel card or a cash payment (to their nominated account) for free or at no cost when they signed up to any one of the Free Offer Plans.

An investigation by the ACCC revealed Dodo offered other cheaper mobile cap plans (that did not include the free goods or cash) that were comparable (in included value and services) with the Free Offer Plans.  In some cases the monthly fee for those comparable mobile cap plans was up to $30 per month lower.

Who was affected

Customers on the following plans may have been affected, and ultimately may be eligible for discounts or refunds:

1. ‘FREE $29.90 Mobility Cap Plan’,

2. ‘FREE Fuel’ and

3. ‘Cash Offer’ 24 month mobile cap plan offers

It’s not the first time …

Dodo is not new to controversy – we have previously reported on:

• Dodo Advert’s pushing the limit and
• Dodo stung hard for DNCR Act breaches

among others.

Hopefully this time Dodo will learn their lesson from the ACCC investigation, but based on past events this may not be the last time we hear of ‘run ins’ with the law.

ACCC Chairman Graeme Samuel can’t be much clearer than this:

‘It is highly unsatisfactory, if not illegal, for companies to make strong headline claims about their product and then seek to improperly qualify those claims in an avalanche of fine print … The ACCC has drawn a line in the sand in relation to the poor advertising practices of telecommunications companies.  The industry is squarely on notice .’

Yet one of TPG’s front page offers remains very unclear about what you get for your money.

TPG’s headline

Here’s one of the flash media offers that greets visitors to TPG online:

OK, what do I take away from that ?  An offer of $300 worth of calls, text and data for $19.99 a month.  Sure, there are some exclusions, but they won’t seriously change the basic deal … will they ?

The click through page

Hmmm … here’s what we find when we click the first screen:

So, the $49 Cap Saver Plan offers ‘included data’ – which sounds like what we read on the front page – but no ‘free data download’.  Hmmm, what’s the difference between ‘included data’ and ‘free data download’ anyway ?  To make it even more obscure, the same page advises:

We recommend using 3G handsets with the Premium and Executive Mobile Cap Saver plans to take advantage of included Free data.

So now, in addition to ‘free data’ and ‘included data’ we have ‘included free data’.  And the plan doesn’t include the first but does include the second, and who knows about the third ???

But if the ‘included data’ isn’t free, then what does it cost ? Certainly nothing on the page containing the table throws any light on the question.

So on we pushed

On we went to the Call Rates page.  No luck there either.  Maybe in the standard terms ?  Nope.

Look, there may be an answer somewhere, expressed somehow, on the site.  But remember we started this search because we were attracted by an advert that flashed out:

If data chews through that $300 allowance at, say, $8/GB, it’s a great deal.  If the rate is $1,000/GB it’s a terrible deal.  And despite looking carefully, we haven’t been able to discover what rate does apply.

That’s why CSP marketing staff need to listen up when the ACCC Chairman says:

‘I made it very clear when I addressed the Australian Telecommunications Users Group on 13 March 2009 that the ACCC has drawn a line in the sand in relation to the poor advertising practices of telecommunications companies.’

It seems that Optus pumped out 20,000 messages promoting its OptusZoo entertainment service, but didn’t identify itself as the responsible sender.  Instead, it just quoted sender identification ‘966’.  Recipients were apparently expected to work out that this meant ‘Zoo’ in keypad speak.  Of course, it could also mean ‘Yom’, ‘Zom’ or ‘Xon’.

According to ACMA, Optus has paid the penalty and advised that new compliance measures have been implemented that will ensure accurate sender identification is included in all future commercial electronic messages.

More comment soon.