Early Neutral Evaluation: An Underused Tool in Private Wealth Disputes

Everyone in the legal or commercial world is very familiar with the concepts of arbitration and mediation as tools of alternative dispute resolution. Early neutral evaluation, or “ENE”, is less well-known, except in the English divorce courts where it has been compulsory in disputes about finance or children for the last 25 years. 

ENE is a tool for channeling simmering disputes into settlement, or less extensive litigation, by trying to inject an appreciation of realism into the situation. It is especially useful where the dispute is emotionally highly-charged, as is often the case in family matters, or where the positions of the disputing parties are very far apart, as in some commercial and property situations. In such cases, the strength of feeling may easily lead to the dispute becoming blown up as a “matter of principle”, or with obstinately entrenched positions. Litigation can then all too easily become bogged down with mounting legal costs, and in the worst cases, even become unsettleable, because the parties’ attitudes to compromise become more rigid as the imperative of recovering costs starts to override a sensible appraisal of the relative merits of the dispute itself. ENE provides a route by which this “lose-lose” position for all the parties can be forestalled. 

ENE is a simple process which, like mediation and arbitration, is consensual, private and confidential.   It is also conducted on a “without prejudice” basis, so that parties can be frank, without concern.  It involves the parties agreeing on a neutral expert lawyer, someone entirely independent of the disputed matter, to act as an “evaluator”, and appraise their respective positions at an early stage in the proceedings, before costs have mounted too far. In the paradigm case, once the dispute has been sufficiently identified, the chosen evaluator will receive position papers, and basic materials in support from each side, in order to prepare. There will then be a day for an informal hearing, at which each side, with its lawyers, and in the presence of the other, presents its case, in front of the evaluator. The evaluator may ask questions, but the parties are free to decide any details of the process by agreement. When each side has presented its case the evaluator will then give his or her opinion as to the likely outcome of the case, or a range within which such likely outcome would likely fall, or the way in which he or she thinks particular issues would strike the court, if the case were to proceed to a trial on the basis of the materials then presented. Brief reasons will be given, so as to enable the parties to understand the evaluator’s opinion and gain assistance from it. The parties then retire, to think further. 

Obviously, ENE does not, of itself, produce a settlement of the case. Its merit lies in the fact that parties, and their lawyers, are faced, at an early stage, with an expert, objective assessment of the strength, or weakness, of their respective positions, which they can then take away, consider, and use to inform their attitude to pursuing the litigation. It can assist greatly in situations where a legal adviser finds difficulties in giving unwelcome advice to a client. It can also help facilitate the streamlining of disputes, if they do go to trial, to accept to concentrate on fewer, most relevant issues, thus saving costs. As has been emphasised, the process is private, confidential, and conducted “without prejudice”, so that no party can subsequently use any material obtained within the evaluation process to the prejudice of the other.

Whilst ENE is routine in the English family courts - there the evaluator will be a judge, but one who will not subsequently hear the case - and has found a place in some business disputes, it does not appear to have gained much of a following in trust and private wealth disputes. The advantages, however, of giving potential disputants an objective appraisal of their positions before their disagreement has morphed into wide-ranging and costly legal proceedings, suggests that it could be well worth considering as a cost-effective tool in many such cases.