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.

Before You Litigate Your Construction Case, Test It!

Construction litigation is expensive. Why? Because construction cases usually involve complextechnical issues with lots of documents. Knowing that, it only makes sense for a party facing litigation or arbitration to try to settle the case by negotiation and mediation. If that is not possible, that party should thoroughly and candidly evaluate the prospects of achieving a good result at trial or in arbitration.

Even the most competent and experienced construction lawyers have great difficulty putting their biases aside when trying to determine how an independent and impartial decision-maker would decide the case. So, assuming that settlement is not likely, how does a party go about trying to assess the prospects of winning or losing—before going to trial?

Neutral Analysis

Neutral Analysis refers to a group of ADR techniques, including pre-file evaluations, brief-based case evaluations, second opinions and mock exercises, which help counsel assess their likelihood of success or failure before walking into a courtroom or arbitral tribunal.

Attorneys and their clients may have many questions pre-filing: which of your claims are likely to be successful and which are not? How will the trier of fact likely react to your fact witnesses and experts? Would a dispositive motion likely be successful? What are the chances that the construction contract limitation of liability or notice provisions will be strictly enforced?

Pre-File/Brief-based Case Evaluations

Putting these questions to an independent party who has similar expertise and experience as the trier of fact can be immensely useful to a party contemplating suit. The evaluator can be engaged on a number of levels:  she may review the complaint pre-filing and act as a sounding board to help develop counsel’s theory of the case; she might also help reassess settlement options, or manage client expectations about the likelihood of success.

Mock Arbitration

Similarly, a mock arbitration involves presenting a summary of a party’s case to one or more independent persons who have similar expertise and experience as do the actual arbitrators. The key difference is that this can be done before going to the actual hearing. The mock arbitrator(s) will hear the case presentation, which includes a summary of the opposing party’s positions as well, and offer their candid views on a confidential basis of how your case strategy would appear to an experienced, neutral third party.

If the case relies on documents, which documents are likely to be critical to the outcome? Having critical and honest feedback on issues like these—from persons who have no stake in the outcome— will allow you to adjust your case presentation strategy and tactics before it’s too late. Or, perhaps, after the mock arbitration, you may decide to settle on less favorable terms or even to abandon the case.

Perhaps the most important aspect of any mock is that the opposing party’s positions and arguments are presented credibly and persuasively, and this is typically done by having another lawyer in the appointing party’s law firm make that presentation. The standard practice is that each side’s position will be presented in the form of a general background statement—much like an opening statement in a trial—perhaps followed by presentations by expert witnesses, and with the use of PowerPoint demonstrations of documentary evidence. The typical case presentation will take one day or less, but in some complex cases, mock arbitration presentations can last several days.

Confidentiality

Of course, it is critical that the neutral evaluation process be kept strictly confidential. Therefore, an agreement should be made with the neutral that any and all confidential documents and other information that they receive, or any comments or advice given during the course of the evaluation, will be maintained in strict confidence with the appointing party.

Summary

Certainly, a mock exercise will add to the case preparation costs, but the expense of a mock is usually a small fraction of the total cost of preparing for and putting on the actual case. What is more sobering is the prospect of expending the considerable time and cost of going through the actual matter with a weak or less-than-persuasive case presentation. Because the cost of mocks and other neutral evaluations can be managed to fit the party’s needs, using them will usually be cost-effective. It is almost always the case that a party will make productive adjustments in its case based on feedback from the evaluation and will agree that the overall benefit of the exercise was worth the additional cost.

John W. Hinchey, Esq. is a panelist with JAMS based in Washington, D.C. He is recognized in the United States and internationally as a leader in resolving significant engineering, infrastructure and energy-related disputes as an arbitrator and mediator. He can be reached at jhinchey@jamsadr.com.