Bar News - October 21, 2015
Alternative Dispute Resolution: Neutral Evaluation: The Forgotten Option
By: Dennis Ducharme
Neutral Evaluation was available under Superior Court Rule 170 from the inception of New Hampshire’s alternative dispute resolution (ADR) program and continues to be available under our revised Superior Court Rule 30 (b).
Perhaps because our rules have offered little insight into its workings, the process has been mostly ignored, other than during a brief period in the early days of Rule 170 when some judges were inclined to sanction those taking a no-offer position in mediation. It became a no-risk, lowest-common-denominator choice that met the ADR requirement, but led to few settlements.
In some jurisdictions, Early Neutral Evaluation (ENE) has been a frequently used and successful ADR option. The key components of ENE are the submission of case summaries by the opposing parties, presentation of claims and defenses in a joint session, questions from the neutral to the parties and counsel about their positions, and the issuance of an evaluative statement of the strengths and weaknesses of the parties’ relative positions, as well as the potential outcomes at trial.
The United States District Court for The Northern District of California has maintained an active ENE program since the early 1980s. Its local ENE rule is seven pages long and contains significant detail as to how the process works. Its key procedural components include:
- Mandatory attendance by decision makers, including insurance representatives
- The parties’ presentation of their positions; first in written submissions and then in a joint session
- Discussion of areas of agreement and disagreement as well as relative strengths and weakness of liability positions taken
- Discussion of possible ranges of damages that could be awarded
- Verbal evaluation and discussion in the group setting
- Issuance of a written evaluation
- Follow up sessions when appropriate and agreed to by the parties
See, Local Rule 5, United States District Court for The northern District of California.
ENE has been described by some as a hybrid process with some attributes of mediation and some attributes of arbitration. It gives the parties an opportunity to lay out their views of a case, hear the other side’s perspectives, and discuss the relative positions with the input of a neutral facilitating the discussions.
It can be especially useful in cases where the parties have legitimate differences of opinion on evidentiary and legal issues and seek the input of an experienced practitioner who will frankly lay out his or her view on potential outcomes of such issues before needing to brief and argue them to the court. It can also be of great assistance to counsel when a party or parties are so entrenched in the correctness of their position(s) that they need to hear a neutral take on how the case may be viewed at trial.
A successful neutral evaluation requires more than a number assigned by the evaluator or a one-word thumbs up or down on a liability issue. It requires fleshing out the possible outcomes, the likelihood of those outcomes, the ranges of possible verdicts depending on legal and evidentiary rulings affecting both liability and damages and the thinking behind those evaluative comments.
If a case has two or three key liability and damages issues that create risk depending on their outcomes, an evaluation saying “the case is worth $60,000” does nothing to promote thought by the parties. Too often in the days when neutral evaluation was used as a mediation “opt-out” under Rule 170 that was the extent of “evaluation” provided.
On the other hand, a well-thought evaluation saying, “If the contested evidence on future medicals comes in, the case would be worth near $100,000, but if it does not, the case is worth closer to $40,000. Based on the uncontested evidence and the likelihood of success on the future treatment is 50/50…” Reasonable minds might consider settlement in the $70,000 range if they took such comments seriously. The more variables in play affecting outcomes, the more the evaluator would need to assess and explain the array of outcomes in play.
Much the way a mediation session can close the gap in the parties’ positions and lead to a settlement following not long after, neutral evaluation can be a springboard to continued settlement discussions, with or without the involvement of the neutral. It can provide one or both parties with the food for thought they may have needed but not received before conducting the session and receiving the evaluation.
Carefully choosing the right Neutral Evaluator may be even more important than selecting a mediator. Commitment to the neutral evaluation process requires a high degree of confidence in the experience of the neutral. Unlike mediation, subject matter experience and expertise is crucial to the process. Both the local rule for the Northern District of California and the online materials for the American Arbitration Association describing its ENE program speak to the expert qualifications of panel members.
Because neutral evaluation has been so rarely used in New Hampshire, there are no statistics available on either its cost or success rates. There is data available in other jurisdictions. The United States District Court for the District of Vermont publishes detailed annual reports for its ENE program, available at www.vtd.uscourts.gov. Its 2014 report, for example, shows that 63 ENE sessions were held in 2014, with 41 cases, or 65 percent, resulting in settlement.
Engaging in neutralvaluation in New Hampshire would clearly be a departure from the norm. It would require a willingness to try a “new” method of ADR and some trial and error would be involved. Counsel considering Neutral Evaluation need to keep in mind that it is not mutually exclusive with mediation or other settlement tools. It may actually lay the groundwork for a fruitful mediation or successful direct settlement negotiations. While it may not be appropriate for all cases, it can be a useful way to assess many cases and should not be dismissed out of hand.
Dennis Ducharme is the principal of Ducharme Resolutions, which he formed in 2011 after 26 years as a civil trial lawyer. In addition to ADR, he continues to do trial work, and provides litigation consulting and support services to both plaintiffs and defense counsel.