Neutral Evaluation Mediation Agreements

Often parties select a mediator with deep knowledge of the subject matter in dispute, only to conclude that the typical mediation format does not afford them the best use of the mediator’s expertise. As an alternative, in the right case, neutral evaluation may be exactly what parties need to position their controversy for resolution. This hybrid technique combines neutral analysis with a mediator’s proposal.

This process is intended to be used when the parties have come to a seemingly unshakeable impasse during traditional mediation of a complex case, such as a construction dispute in which each party charges the other with material breach of contract, resulting in respective damages calculations millions of dollars apart. The mediator should be experienced and respected in the area of law at issue and knowledgeable about how to conduct this type of dispute resolution. Rather than declare an impasse, the neutral continues as mediator, but in that role, assumes responsibility to “hear” and analyze the facts of the case and provide an informed, nonbinding evaluation and settlement recommendation as to the issues defined by the parties.

The mediator is provided with each party’s evidentiary presentation in an informal, mini-trial format, over a one to two-day hearing, structured by the parties however each side thinks will best present the essence of its case in the time allotted. Experts may be hot-tubbed; evidence may be provided via summaries, narratives or power point presentations; and post-hearing argument may be oral or written.

At the close of the mini-trial, the parties decide whether to go back to mediation or confirm that the mediator issue a written analysis and settlement recommendation. Assuming the parties want a neutral assessment, the mediator then issues a nonbinding, confidential analysis of the issues submitted for evaluation and a settlement recommendation based on that analysis.

Then, if the parties do not accept the mediator’s settlement recommendation, the parties may declare an impasse. Or the parties and the mediator go back to mediation, assuming the agreement and any necessary waivers by the parties under the applicable ethical rules allow the mediator to continue in that role after disclosing his or her opinions on the issues in dispute and settlement.

This approach has proven remarkably successful in providing parties the information they need to settle matters in which they were previously far apart or in deep disagreement as to likely outcome. It allows parties to obtain a non-binding, independent, but well-informed opinion of the case. This may be especially useful if party decision makers- such as public entities or the parties’ insurers - do not attend mediation or require strong support for settlement in ranges not previously authorized.

This strategy for neutral dispute resolution may raise concerns under the applicable ethical rules, including those requiring mediator neutrality. However, these concerns often may be allayed, in the right circumstances, with appropriate disclosures and consents.

Author's Note: With recognition to Ken Gibbs, JAMS, whose writings and practice define the best in mediation-evaluation.

Author Patricia H. Thompson, Esq., FCIArb, is  a full-time neutral at JAMS, with experience conducting virtual and in-person mediations, arbitrations and other ADR proceedings in construction and other complex commercial disputes.