Case Appraisals: an effective dispute resolution tool
“Case appraisal” means many things to many people in many jurisdictions. Appraisals range from institutional, legislated processes (as in the US) through facilities offered or mandated by the rules of court (eg: Queensland), to being a consensual, private process that parties simply agree to use amongst themselves. As part of our continuing quest to make dispute resolution more efficient, this article deals with the last of these scenarios.
The process operates “without prejudice” and requires each party to present its case, in a prescribed and time-limited form, before an independent appraiser who is required to form and express an opinion on the merits of same and its likely prospects of success in court.
The appraisal may deal with legal and /or with technical issues. Accordingly, appraisers may be legal or technical experts, or a combination of both.
Opinions are usually expressed at the conclusion of the process. Typically they are confidential and non-binding and may not be used in any other proceedings.
Process rules are individually negotiated on a case by case basis and include whether to allow: legal representation (usual), examinations and responses (usual) and direct inquiry by the appraiser (usual).
The Local Scene
The case appraisal concept is not new, nor is it particularly radical. Business people and ordinary individuals usually want to thoroughly test an expensive idea or product before they commit to buy. Given the cost of following litigation to the bitter end, a “dress rehearsal” for a court case is a good idea.
Many matters referred to counsel, usually after considerable costs have already been incurred, are spirited off into the hallowed halls of the Bar to a “conference”. There, senior counsel or silk, after their palms have been crossed with copious amounts of silver, provide informal assessments of cases to opposing counsel. Solicitors may be included in this process, clients are usually excluded.
Whatever advice was formerly given, the new pronouncement is delivered with the authority of a papal bull and both advisers and clients are expected to fall into line.
The whole “clubby” scenario is often resented by parties who feel disenfranchised by a process that they have to pay for and abide by, but are excluded from. A comment often heard is that: “I felt I was treated like a child – as though I was too stupid to understand what to do for my own good”.
Will the real case appraisal process please stand up and be counted?
A proper case appraisal process empowers solicitors to guide their clients towards pragmatic and practical outcomes they can understand, control and commit to.
The process is open, transparent and accountable with a primary focus on resolving the actual claims and problems, rather than on evaluating the legal technicalities. In my experience, retired judges and senior solicitors make excellent appraisers, as do other professionals with legal and dispute resolution training.
Case Appraisals – Key Features
Example (case study)
The process may best be explained by an example drawn from a real case (identities have been camouflaged to protect the unmentionable):
The Potentially Huge Company Pty Ltd (“Huge”) was established to import and assemble components from Korea for a staff amenity product that was a “no brain seller” to any business employing more than 10 staff.
Huge’s somewhat sparsely supported business plan projected the achievement of fabulous profits within 24 months of commencing trading. Shady Bank was prepared to lend Huge $500,000 on the strength of the plan, along with personal guarantees and security taken over all three director’s homes.
$100,000 was spent importing stock components, the balance was spent buying delivery vehicles, setting up an office, warehouse and computer systems and in engaging and extensively training a telemarketing, assembly and maintenance workforce. In addition, a website was established, brochures were printed, plans were laid and contacts made.
The business was ready to start trading on D-Day, with the telemarketing team required to develop leads from its carefully researched target list to pass onto the sales team, who had their cars warming up on the company launch pad.
Then .. disaster! No phone service. The selected telecommunications services provider, to use the correct technical expression, stuffed up. As a result, Huge had only one telephone, no fax and no email lines for four weeks. A ruinously expensive and highly non-credible attempt to get going using mobile and private telephones was abandoned after two weeks and most of the staff were laid off.
The stock arrived on the wharf and there wasn’t enough money left to pay the duty and fees to retrieve it. Litigation was commenced using borrowed funds from friends and family. Claims were made for fabulous sums of money.
The business and legal issues were complex and intertwined and while the experts fought, the client was rapidly bleeding to death with no income.
After a couple of months of sparring, with no agreement in sight over liability or quantum, a case appraisal was proposed. A retired judge was appointed to listen to both sides’ arguments, both legal and commercial. The judge was provided with an agreed joint briefing paper of less than 10 pages, before the meeting.
The judge was empowered to ask questions and, at the end of the process (which lasted under three hours) was asked to express non-binding views on a number of questions. The process then adjourned for lunch, the parties having agreed to attempt to mediate the matter that afternoon, using the judge as their mediator. (Although highly unconventional, according to standard received wisdom, the parties and their advisers agreed that they were happy to proceed with the judge as mediator, since he now had an excellent understanding of both the issues and the parties and they had no wish to commence anew with another person).
An acceptable outcome was reached and recorded before the dinner gong sounded and the process was deemed a great triumph of commonsense. Everybody was obliged to participate actively throughout the day and nobody appeared to feel short-changed by the process.
As an adviser/participant in many disputes, both large and small, it was interesting to mark the fundamentally different dynamics involved in an open and accessible judgemental process, compared with the usual secretive dealings in opposite corners of the ring, broken only by the aggressive activity caused by the clang of the ringmaster’s bell.
I’ve been involved in a number of case appraisals. All have had a wonderfully clarifying effect on the minds of the parties and have generally made it easier for their legal advisers to facilitate a prompt conclusion that sees the client satisfied and the solicitor paid promptly.
I recommend case appraisals as a practical and effective dispute resolution tool.
Wills, Estate and Succession Planning -
use Mediation for Above Average Thinking
Succession planning for the family business and estate planning for family continuity are closely related – both in the interests they address and the problems they have to overcome. Modern businesses, like modern families, are increasingly complex, making effective planning a daunting and mind-boggling challenge, even for the most incisive individuals.
This article explains how mediation, a process of assisted negotiation using an independent expert, can be used to develop practical, comprehensive plans for family business succession and estate planning – reducing pain, uncertainty and costs for individuals, families and businesses and reducing the risk of disputes arising in the future.
The Planning Conundrum
Let’s face it – planning for the future is a chore. It’s hard enough finding the time and energy to keep up with the day to day running of a business and a family. So, succession plans for business and family, who needs ‘em? Answer: You, if you want to leave a viable business and a viable family behind you!
Ordinary businesses are viewed dispassionately. Their plans are formulated in terms of turnover, costs, markets, production capacities, staffing levels, product and service lines and the like. Succession planning for family businesses and estate planning for families are sensitised and complicated by emotion. Often, the desire to avoid family conflict defers planning until it’s too late – releasing the Dogs of War to attack the business and the family when they are at their most vulnerable.
It is simply impossible for any one person, be they a proprietor, patriarch or professional adviser, to possess the practical and technical knowledge required to deal with all the issues involved in making effective business succession and estate plans. Business, legal, financial and taxation issues must be considered in conjunction with family issues – all impact the health, wealth and survival of the business and the family unit.
Accountants, lawyers, financial, tax and business advisers, business managers and family members all have a stake in the planning process. How do you obtain and integrate their collective knowledge, experience, interests, views and energies so they work with you to design a plan that satisfies everybody’s interests and needs as well as possible?
A Place for Mediation
This is the quintessential task of the skilled mediator. Mediators are process experts who work with parties, in private, to help them recognise and deal with issues and problems, generate creative options and develop constructive solutions. Their objective is to produce durable, workable agreements that preserve and even improve underlying relationships.
Mediators facilitate the flow of information, communication and understanding and provide a forum where needs and interests can be recognised. They help remove the barriers to trust required to develop plans, obtain commitments and produce agreements.
Mediators are independent and have no stake in plan or dispute outcomes. They do not evaluate or judge and the agreements they help produce are not measured objectively against external criteria. Agreements are good if they are legal, workable and the parties believe they suit their needs.
Stage 1 – Exploration
After establishing rapport, the mediator guides the group into exploration mode, where ideas and interests are developed through techniques like SWOT analysis, brainstorming, de Bono’s “Six Thinking Hats” and chaired discussions. Sessions may be joint or separate, formal or informal, open or closed – depending on needs and circumstances.
Careful process and people management allows sensitive family, business and other issues to be drawn out and resolved with minimal conflict and embarrassment. Explosive and potentially disastrous emotional energies are recognised and handled constructively, rather than suppressed and left to fester and cause damage later.
Stage 2 – Design
After welding the family members, advisers and other participants into a focused, collaborative organism, the mediator steers them through creative option generation. The mediator helps the group generate, consider and approve or reject their own options.
Stage 3 – Solutions
Finally, the mediator helps fit approved options together into coherent plans to see how they will look, feel and satisfy everybody’s interests in real life. Since they are working with the group’s own approved options, consensus, commitment and agreement are usually found quite painlessly.
Mediation was introduced to Australia as an alternative to conventional litigation. It has quickly proved its worth. It is now mutating into a second generation, more pro-active creature. The skills used to resolve difficult conflicts are now being used to help design superior plans for businesses and families.
If disputes affect your business or family, consider mediation as a cost effective, confidential, user friendly, effective process. If you want to avoid future conflict in your business and in your family, consider mediation as the modern, thinking person’s preferred approach for developing workable family business succession and estate plans.
About the author:
Jon Kenfield operates Dispute Solutions, a dispute resolution service specialising in conflict management consulting and in commercial and family arbitration, mediation and facilitation.
Dispute Solutions uses panels of highly qualified dispute resolvers, including retired judges, to provide a full range of dispute resolution services – from private judging (the only such service in Australia) to community consultations for planning and environmental disputes.