Neutral Evaluation: Another Tool in the ADR Toolbox

AuthorBy Andrew D. Ness
Published in The Construction Lawyer, Volume 40, Number 4, Fall 2020. © 2020 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Neutral Evaluation: Another Tool in the
ADR Toolbox
By Andrew D. Ness
Andrew D. Ness is a full-time neutral at JAMS in
Washington, D.C., and a past chair of the ABA Forum
on Construction Law.
For almost thirty years, medi-
ation has been the dominant
alternative dispute resolution
technique for settling con-
struction disputes, and for
good reason. It seems every
signicant construction case
goes to mediation at some
point in the dispute’s life cycle,
and often it works. Mediation
continues to be a powerful
and effective tool for settling
a wide variety of cases in a
cost-effective manner. But, of course, not all mediations
result in a settlement.
Mediations fail for a wide variety of reasons. One com-
mon situation where mediation is not productive is where
both sides feel strongly and sincerely that they have a very
strong case. This mutual high degree of condence in the
merits of their case prevents the parties from making the
kind of concessions needed to get to a mutually accept-
able settlement gure. But, of course, they cannot both
be right. One party or the other, and often both parties to
some degree, is misreading the actual strength of its case.
If the case goes to trial or arbitration hearing, one side
is going to be very disappointed, while the other will be
proven to have been closer to the mark in its case evalua
tion. But which party is off the mark?
In multiparty cases, the same problems occur but are
often more complex. The various parties often have a wide
range of views, not just on the basic strength of the major
claims, but also on the relative strength of the various
claims, the damages, and the jurisdictional or procedural
hurdles to recovery. Mediators are skilled at nding a con-
sensus that is sufcient to drive a resolution, but this does
not always work—the views may be too disparate to nd
any common ground in dollars and cents.
Coming out of an unsuccessful mediation involving
this situation of rmly held but widely divergent views
of the strengths of their cases, counsel will generally have
learned from the mediator that one, both, or multiple
sides are entrenched due to their high level of condence
in their positions. The reaction traditionally has been
along the lines of, “well, some cases just need to go to
trial.” And there haven’t been many obvious alternatives
to doing just that.
Is there a better alternative besides proceeding to trial or
an arbitration hearing in these situations? Both trials and
hearings involve a full airing of the issues, as the witnesses
with knowledge are heard from at length and the key doc-
uments are reviewed, interpreted, and argued over, often
repeatedly. Most of the time this results in a reasonable
decision on the merits and assessment of the damages, but
this is a very time-and-resource-intensive process. A great
deal of effort and expense must be expended to answer
the basic question that precluded settlement: Which party
is being overly optimistic about the strength of its case?
At its essence, neutral evaluation is a tool for obtain
ing the answer to that key question in a much faster and
more cost-effective manner than a trial or hearing. A
well-designed neutral evaluation process will yield highly
practical, realistic feedback respecting the relative strength
of both sides’ positions and arguments at a small fraction
of the cost of a trial or arbitration hearing. If the views of
the neutral evaluator are set out clearly and persuasively,
and are well grounded in the facts and law applicable to
the dispute, then the chances are very good that both sides
will be substantially inuenced by the evaluation. The path
to settlement becomes much clearer and easier. Sometimes
a resumed mediation is needed to close the deal, but in
many instances the evaluation alone will be sufcient to
enable the parties to reach an agreement, often largely if
not entirely along the lines of the evaluation.
Structuring a Neutral Evaluation
The hallmark of neutral evaluation is its almost unlimited
exibility—the process can be shaped to meet the needs
of a very wide variety of construction disputes, from very
simple to extremely complex, and from modest in size to
very large claims. The three common elements, however,
are selecting an agreed evaluator (discussed further in
the next section), agreeing on an efcient process to get
the relevant facts and positions before the evaluator, and
then agreeing on what the desired evaluation will address
and look like. In all but the most straightforward situa-
tions, the three elements should be set out in an agreed
document, often called an evaluation agreement, signed
by all parties participating. Such agreements need not
be lengthy—most are only a page or two long—but they
establish the parties’ agreed mutual expectation for the
process. They also serve to guide the evaluator in pro-
ducing an evaluation that best meets the parties’ needs.
Andrew D. Ness

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