EARLY NEUTRAL EVALUATION

By Robert A. Goodin

Early neutral evaluation is a technique used in American litigation to provide early focus to complex commercial litigation, and based on that focus, to provide a basis for sensible case management or offer resolution of the entire case, in the every early stages. The central goal of early neutral evaluation is to get the central participants in litigation—that is the decision-makers on behalf of the clients, and their principal trial lawyers—intensively involved in the legal and factual merits of the case in the very beginning of the litigation, as opposed to the traditional American litigation pattern, which has such intense involvement only after lengthy periods of very expensive fact-finding called discovery.

The central process by which early neutral evaluation accomplishes this goal is the early neutral evaluation session. This session is presided over by a highly seasoned trial attorney in the subject area involved in the litigation (the “evaluator”). Prior to the session, attorneys for each side to the dispute provide to the evaluator in a written brief summarizing the legal arguments and authorities in support of that party’s position, and providing the evaluator with whatever documentary evidence that party believes the evaluator ought to have as background for the evaluation session. The session itself is attended by the evaluator, by the principal trial attorney for each party, and by the principal client decision-makers of each party. To achieve maximum effectiveness, it is essential that the actual decision-makers on behalf of each client—that is the people who will be ultimately responsible for the payment of legal fees, and who have final authority for settlement or judgment—be present at the session to observe firsthand the arguments and the evaluation. Further, to be effective, the session should be held in the first three to six months of the pendency of the case.

At the session, the attorney for each party makes a concise, but thorough, oral presentation of the parties’ position, including both the evidentiary support for that position, and the legal authorities which underlie it. The presentations are followed by questions from the evaluator directed not only to the attorneys, but also the representatives of the parties. The questions are designed to fully explore the parties’ positions, and to refine the areas of factual dispute. At the conclusion of the joint session a break is taken and the evaluator retires to prepare an outline of what he or she believes are the central issues in the case, and what, based on the presentations, he or she believes the likely outcome on each will be. The evaluator also estimates the likely cost in legal fees to each side if the matter is fully litigated. That evaluation is then shared with the parties either at a joint session, or, more typically, in private sessions or caucuses. The reason for the latter is that sharing the evaluation in private caucuses allows somewhat more candor, and also frequently leads to a mediation effort where the evaluator will “shuttle” from caucus to caucus in an attempt to help the parties settle the case based on the evaluation session.

In the event that settlement is not possible, or the parties do not desire to attempt it, the evaluation session becomes the basis for a case management planning effort. The goal is to use the opportunity that the session affords for a very focused look at the legal and factual merits of the case, and to do a rational job of planning the fact-finding which must be done in order to prepare the case for binding resolution by either trial or arbitration. Because ENE almost invariably results in a much better understanding by both parties of what the central and decisive issues in the case are, at the end of the session the parties are in a position to actively and rationally plan the case development process thus making it much less expensive, and less time consuming. At the conclusion of the case management effort, the evaluator assists the parties in documenting the results in the form of a written case management plan.

It is important to understand that the ENE session and all of the communications made in connection therewith are confidential and are not admissible in the litigation itself. Furthermore, the evaluator’s evaluation is not transmitted in any fashion to the judge before whom the case is being heard. Early neutral evaluation is a proven technique which was developed in the U.S. Federal Court in San Francisco, California, and has spread to numerous other federal courts throughout the United States. It has received an overwhelming endorsement of effectiveness from the attorneys and parties who have experienced the process.