This may be heresy but, sometimes, mediation won’t work. The plaintiffs think they have the best case in the world, the best lawyers in the world and they can’t lose. Their lawyers told them that.
The defendants think they have the best defenses in the world, the best lawyers in the world, and the plaintiffs can’t win. Their lawyers told them that. They are all wrong, but neither side will listen to the other. They think mediation is a waste of time and money. They may be right about that.
Arbitration can be a cost-effective way to resolve intelligently and with finality a commercial dispute. Sometimes, however, arbitration may not be the right dispute resolution alternative. You may not be ready yet for a binding determination. Facts and theories are developing. Expert testimony ranges from the unassailable to the unbelievable depending on your viewpoint. Damages, though substantial, may be border-line speculative. Good faith extensions of existing law might not be well-received. Sound legal defenses might fall to compelling facts. You need a reality check at this point, not a decision.
Early Neutral Evaluation (“ENE”) may be the right alternative in these circumstances. It’s the neutral’s let me tell you what I think choice. The neutral listens, a lot, then tells you what’s good about your case, what’s not so much, what it might cost, what could happen, and what he or she thinks is likely to happen.
As detailed in Section 4 of the Alternative Dispute Resolution Policies and Procedures promulgated by the United States District Court for the Western District of Pennsylvania, in ENE the parties and their lawyers, “in a confidential setting, make compact presentations of their claims and defenses, including key evidence as developed at that juncture, and receive a non-binding evaluation by an experienced neutral lawyer selected by the parties.” Written statements are submitted to the neutral but are not filed and must remain inaccessible to the Court. Confidentiality obligations are imposed by rule and law. The parties and their lawyers meet and each side orally and through documents presents its claims and defenses to the neutral. The proceeding “must be informal,” and no rules of evidence apply, nobody will be cross-examined, and nothing is recorded. Most neutrals will be loaded with questions. Most neutrals will probe arguments that are vague and will welcome questions the parties want answered. It is and is designed to be a reality check for everybody in the room so only difficult and candid talk makes it work. Indeed, the Western District defines ENE as a “third party intervention.”
There is no award given and no winner is declared. The neutral will provide an oral evaluation after the presentations have concluded. The parties can decide whether the evaluation is to be joint or separate and, failing agreement, the evaluation will be delivered in separate sessions. If you want a written evaluation, just ask.
Even though I have characterized ENE as the “let me tell you what I think” alternative, neutrals always hope that truth, candor and the accompanying discomfort may lead all parties to rethink settlement positions. If so, follow up mediations or settlement conferences are surely encouraged. If not, some areas of agreement may have been unearthed, discovery may be more focused, and appreciation of each parties’ strengths and weaknesses may have been advanced.
This post was written by Steven Petrikis
Steven Petrikis is certified as a mediator and early neutral evaluator by the United States District Court for the Western District of Pennsylvania. He also conducts both by private agreement.