Early Neutral Evaluation (“ENE”) is a form of alternative dispute resolution that is becoming increasingly popular, particularly in disputes involving difficult factual or legal issues. The concept is simple. Before litigating a dispute, the parties agree to hire an impartial expert to provide an objective evaluation of the case. The evaluator’s report is non-binding and confidential, but can serve as a catalyst for resolution. Each dispute is different, but some clients and cases may benefit from this approach. The following are some answers to Frequently Asked Questions about ENE.
Frequently Asked Questions
What is the purpose of ENE?
ENE is a method for the parties to receive an expert’s assessment of the merits of the case at an early stage. The process can be a “reality check” for the parties, and is particularly helpful when the parties are far apart on the merits or value of the case. ENE can identify and clarify the key issues in dispute, and enhance direct communication between the parties about their claims and supporting evidence. If litigation follows, ENE may also assist with discovery and motion planning. Ultimately, the expert’s unbiased opinion can position the dispute for early resolution.
Who serves as a neutral evaluator?
The parties must mutually agree to a neutral evaluator who possesses the required expertise to analyze the dispute. The evaluator should be someone familiar with the industry or businesses and with experience involving similar disputes. For example, in a construction defects case, the evaluator might be an experienced civil engineer, construction lawyer, or general contractor. Dispute resolution services, such as AAA, can help facilitate the identification and selection of an evaluator.
How does ENE work?
The ENE process is more informal than arbitration or trial, and is adaptable to the particular needs of the parties and dispute. Typically, the parties submit initial written statements to the evaluator. An initial statement describes the nature of the dispute, the parties’ views of the critical liability and damage issues, important evidence, and any other information that may be useful to the evaluator.
If more information would be helpful, the evaluator may hold an informal evaluation session. At the session, the parties can present their claims, defenses, and key evidence. The evaluator may hear from key witnesses, review pertinent documents, and observe arguments by the parties. However, the session is informal and the rules of evidence and procedure do not apply.
After receiving all the pertinent information, the evaluator renders a written evaluation of the case. The evaluation consists of an unbiased opinion of the issues presented, including the parties’ respective strengths and weaknesses and a likely outcome. As appropriate, the report may include an estimate of the likelihood of liability and a range of possible damage awards. The parties can then use the evaluation to help negotiate a settlement or dispose of specific issues prior to proceeding with litigation.
Is ENE confidential?
ENE is a confidential process that is off the record. All information and documents received by the evaluator are confidential. The evaluator cannot testify or divulge information at a later trial or hearing. If the dispute is tried or arbitrated, the parties cannot rely on or introduce as evidence any settlement offers, proposals, or admissions made by the other party during ENE.
What are the downsides to ENE?
There are benefits and disadvantages to every dispute resolution method, including ENE. One of the more common drawbacks is the cost associated with ENE. Due to their expertise, an evaluator typically charges more on an hourly basis than a mediator or arbitrator. ENE also requires the parties to expend more time—and money—to prepare their case than is common at an early stage. This effort is not wasted if the case proceeds to litigation or arbitration, but may be a barrier to resolution.
The nature of ENE also informs the other side of your key arguments and facts at an early stage. While the ENE process is confidential, the other side stills learns information that it can use to its advantage during litigation or arbitration. Although the parties may obtain much of this information in litigation through discovery, it is shared at an earlier stage through ENE.
What happens if ENE is unsuccessful?
ENE is not binding on the parties. The evaluator has no power to decide the case or force settlement. The parties preserve their litigation options if they are unable to resolve the case.
I think ENE is a great idea. Can I force the other side to participate?
All parties must agree to ENE. Often agreement occurs before the dispute through the parties’ written contract. However, the parties can agree to the ENE at any stage. So, this provision could be added to an arbitration provision in your existing contracts. Contact our firm if you are interested in including ENE as a dispute resolution option in your business contracts.
Selecting a dispute resolution process is an important decision. As always, the best option depends on the unique facts and circumstances of each case. Contact our firm if you are interested in learning more about Early Neutral Evaluation. We are happy to help.[/vc_column_text][/vc_column][/vc_row]