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The Alternative Dispute Resolution Case Evaluator's Role in Contemplated and Pending Litigation

The Alternative Dispute Resolution Case Evaluator's Role in Contemplated and Pending Litigation

Source: Bloomberg BNA
Date: January 30, 2015

Hon. Allan van Gestel (Ret.)

Resolution Centers


Reproduced with permission from CorporateAccountability Report, 13 CARE 05, 01/30/2015. Copyright  2015 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com LITIGATION The Alternative Dispute Resolution Case Evaluator’s Role in Contemplated and Pending Litigation BY THE HON.ALLAN VAN GESTEL A s the use of alternative dispute resolution has in- creased over the past several decades, so have the options available to parties. One of the more fre- quently used processes now available is an evaluation ofpotentialorpendingcasesbyaneutralindividualex- perienced with adjudicating similar disputes. This ar- ticle explores the many benefits of early neutral evaluation. What Lies Ahead Disputes between entities and parties in business transactions are well suited for the kind of early analy- sis, or second opinion, that a neutral evaluator can pro- vide.Businesseshaveastheirprimaryfunctionearning a profit for their shareholders and owners. Much more thaninotherdisputes,itisthebottomlineonthefinan- cial sheet that counts most, not the personal emotion, the righteousness of the cause or the actual pain in- volved. The hallmark of a well-run business when it comes to litigation is the careful assessment of the pos- sible outcome before proceeding with a lawsuit. Modernlitigationwithitsextensiveandintrusivepre- trial discovery, particularly eDiscovery, is both expen- sive and fraught with uncertainties. Before a business startsdownthelitigationhighway,itshouldconsiderall aspects of what lies ahead. This includes the likelihood ofsuccessonthemeritsofthecase,theamountofmon- etaryand/orinjunctivereliefthatmaybeexpected,how long the process will last, what the legal and other fees may involve, how much interruption to the day-to-day operations can be expected, the strength of the other side’s potential for a successful counterclaim, and what othernon-litigationissuesmaybeinvolvedsuchaspub- lic or private financing or future business opportunities with the target entity. It is when making the business judgments on these issues that a properly qualified neutral evaluator can provide significant assistance. There is also the poten- tial for significant savings in both time and cost. The Process From a potential plaintiff’s point of view, the assess- ment of the contemplated lawsuit can occur before the complaint is even filed. But for the timing, a defendant can similarly obtain an early private assessment of the case brought against it and any counterclaims or re- sponses that may be available to it. Such evaluations alsocanbeofassistanceatotherstagesofthelitigation process, such as in anticipation of mediation or arbitra- tion.Neitherthepotentialplaintiffnortheactualdefen- danthasanyobligationtoadvisetheothersidethatitis seeking the evaluation or what the results of that pro- cess are. One important word of caution. Counsel should con- sider whether the assignment should be established by The Hon. Allan van Gestel (Ret.) is a full-time mediator and arbitrator with JAMS in Bos- ton. He has more than 53 years of experience as a lawyer and judge handling complex civil litigation matters and is an expert at resolving business and commercial disputes. He served as the founding and presiding Justice of the innovative Business Litigation Session of the Massachusetts Superior Court. He may be reached at (617) 228-0200. COPYRIGHT  2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. ISSN 2330-6300 Corporate Law & Accountability Report ™a written agreement that will protect the process, the conversations in the process and the results of the pro- cess from discovery by the other side. To ensure this, it would be prudent to have a retention agreement en- teredintobetweentheoutsidetrialcounselforthecom- panyandtheindependentneutralevaluatorsuchthatit is the lawyer who is engaging the neutral to consult withandadvisehisorherclientinevaluatingaclaimor potential claim in which the client is, or is about to be- come, involved. The engagement agreement should spell out the confidentiality of the arrangement and the factthatwhatisbeingsoughtwillbeincludedaspartof the attorney’s work product. This provides protection against the forced disclosure in discovery of the mental impressions, conclusions, opinions or legal theories of both the attorney and the neutral evaluator engaged by the attorney concerning the litigation. Such an agree- mentcanmakeclearthattheworkoftheneutralevalu- atorhasbeenaccomplished,preparedandpresentedto counsel and the client in relation to litigation, pending orprospective.Also,forthesamereason,itisadvisable to have counsel present whenever there is substantive communication with the client and to have counsel transmit instructions and information to the neutral evaluator. Once the neutral evaluator is engaged, he or she will then be provided with materials and information that is useful and necessary to the evaluation. This often in- cludes key documents in the transaction, such as any contract or amendment; significant communications and reports relating to the matter at hand; information about who did what and what problems arose during the process; position papers on charges of breaches of contract or tortious acts; legal memoranda; and some- timesevenadraftcomplaint.Inaddition,itisoftenuse- ful for the neutral evaluator to have an opportunity to speak with key individuals involved at the company, as well as counsel. When the assessment is completed, there will be a meeting with counsel and key company decisionmak- ers, at which the neutral evaluator presents his or her conclusions, and fields and discusses questions and is- sues that come up. Further, in some instances, the neutral—with counsel—may be asked to appear before theboardofdirectorsorothermanagementteamtofur- ther explain the evaluation and respond to additional questions. The whole process can vary depending on the com- plexityoftheissuesathandandtheamountofinforma- tiontobedigested.Exceptinparticularlycomplexmat- ters, however, this is a process that may take only two to three weeks and amount to a cost for the evaluator’s work of approximately 10 to 20 hours. Such an effort is money well spent when compared with the economic burden of imprudently rushing to court with a case that may be weak or fighting on with a defense that has no legs. It also provides a degree of protection for the entity’s officers’ and directors’ busi- ness judgment to proceed in the event of later criticism by shareholders in a derivative lawsuit. Conclusion Engaging a third-party neutral evaluator, specifically an individual with significant experience adjudicating similar cases, offers many benefits to both defendants and plaintiffs. It provides an unbiased view of the strengths and weaknesses of a particular case, and an assessment of the possibility of success. In litigation, information is power, and early neutral evaluationprovidesexactlytheinformationthatparties needbeforeembarkingonacostlyandtime-consuming effort. 2 1-30-15 COPYRIGHT  2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. CARE ISSN 2330-6300

As the use of alternative dispute resolution has increased
over the past several decades, so have the
options available to parties. One of the more frequently
used processes now available is an evaluation
of potential or pending cases by a neutral individual experienced
with adjudicating similar disputes. This article
explores the many benefits of early neutral
evaluation.
What Lies Ahead
Disputes between entities and parties in business
transactions are well suited for the kind of early analysis,
or second opinion, that a neutral evaluator can provide.
Businesses have as their primary function earning
a profit for their shareholders and owners.