Page 70 - M & A Disputes

Relationship Check and Disclosure

Prior to accepting the assignment as the neutral practitioner retained by the parties to resolve posttrans-
action disputes, the practitioner should conduct an evaluation of any current, prior, or future relation-
ships that may impair the practitioner’s ability to discharge the anticipated duties in an objective and un-
biased manner. The practitioner should also assess relationships in light of Securities and Exchange
Commission and AICPA independence restrictions as they relate to prohibited services for attestation
clients. If any current, prior, or future relationships are determined to exist that would create a situation
that would preclude the practitioner from functioning in a neutral capacity (that is, free from conflicts of
interest), the assignment should be declined. Circumstances that may result in either an actual or a po-
tential conflict of interest are numerous and diverse. Such circumstances should be evaluated carefully
on a case-by-case basis by the practitioner prior to agreeing to serve as the neutral practitioner.

Not all current, prior, or future relationships between the practitioner and his or her organization with
one or both parties necessarily results in a conclusion that the practitioner cannot function as the neutral
practitioner. However, when relationships exist or have existed previously, the practitioner should dis-
close these relationships to the parties for their consideration. Further, obtaining affirmative waivers
from the parties may be prudent — such waivers proactively negate future claims of a conflict of inter-
est.

Firm Relationships

In conducting the evaluation of conflicts of interest, the practitioner should determine whether any cur-
rent, prior, or future professional relationships exist between the practitioner’s organization and any of
the parties in interest to the dispute that may give rise to a conflict of interest. Such relationships could
include prior attestation assignments for one of the parties. Additionally, anticipated or pending respons-
es to requests for proposals by the practitioner’s organization for potential new work in the future for
one of the parties could also give rise to a conflict of interest.

Individual Relationships

As with potential conflicts of interest that may arise as a result of current, prior, or future professional
relationships involving the practitioner’s organization, the practitioner should also perform a careful
evaluation of whether individual relationships exist within the practitioner’s organization that could cre-
ate an actual or a potential conflict of interest. As with all professional or personal relationships that may
give rise to a conflict of interest, the circumstances that may create a situation in which the neutral ac-
countant may not be perceived as free from professional or personal bias are numerous. An example of
an individual relationship that may create a conflict of interest could be a situation in which a member of
the practitioner’s organization may be related to, or affiliated with, management personnel of one of the
parties in interest. Another example would be when a member of the practitioner’s organization is a ma-
terial shareholder of one of the parties to the arbitration. There may also be a perceived conflict by one
or more parties to the acquisition dispute if the potential neutral practitioner is currently working with
different attorneys on behalf of one or more of the law firms on matters unrelated to the acquisition dis-
pute.

Professional Conflicts

Audit relationships generally create professional conflict. In situations when the practitioner or his or her
firm provided attestation services in the past, or is currently providing these services to one of the par-
ties, a conflict of interest may exist. Such a conflict would preclude the practitioner from performing

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