**Core Concept**
Hepatic encephalopathy is a neuropsychiatric disorder caused by liver dysfunction, particularly cirrhosis or acute liver failure, leading to the accumulation of toxic substances in the blood, including ammonia. The earliest signs of hepatic encephalopathy are subtle and often overlooked, but they can be critical in making an early diagnosis.

**Why the Correct Answer is Right**
The earliest sign of hepatic encephalopathy is asterixis, also known as flapping tremor. Asterixis is a clinical sign characterized by a flapping or lapping motion of the hands when the wrists are extended. This sign is caused by the accumulation of ammonia in the brain, which disrupts the normal functioning of neurons and leads to a loss of coordination and motor control. The pathophysiology of asterixis involves the inhibition of glutamate dehydrogenase, an enzyme that regulates the metabolism of glutamate, a neurotransmitter involved in motor control.

**Why Each Wrong Option is Incorrect**
* **Option A:** Confusion and disorientation are common symptoms of hepatic encephalopathy, but they are not the earliest sign. Confusion and disorientation occur later in the disease process, when the accumulation of toxins in the brain has progressed further.
* **Option B:** Abnormal liver function tests are not a sign of hepatic encephalopathy, but rather a diagnostic criterion for liver disease. While liver function tests can help diagnose liver disease, they do not directly indicate the presence of hepatic encephalopathy.
* **Option C:** Gait disturbance is a symptom of hepatic encephalopathy, but it is not the earliest sign. Gait disturbance occurs later in the disease process, when the accumulation of toxins in the brain has progressed further and has affected motor control.

**Clinical Pearl / High-Yield Fact**
Asterixis is a critical sign in the diagnosis of hepatic encephalopathy, and it can be detected even before the patient shows overt symptoms of the disease. Early detection of asterixis can help prevent the progression of hepatic encephalopathy and improve patient outcomes.

**Correct Answer:** C.