Page 74 - M & A Disputes

Instances may arise when it is no longer feasible, due to the scope or nature of the items in dispute, to
adhere to the processes set forth in the transaction agreement. In these situations, the practitioner should
consider establishing revised processes to better conform to the existing situation under which the practi-
tioner will be asked to serve as the neutral practitioner.

Authority to Decide Issues of Discovery That May Arise

Often, disputes arise during the arbitration process pertaining to documents that are in one party’s pos-
session that another party feels it needs to have in order to fully analyze the accounting issue in dispute.
In certain situations, the party in possession of the documents takes the position that documents are ei-
ther not relevant to the issue in question, or the gathering of these documents would be overly burden-
some. The practitioner’s engagement letter should make clear that any matters involving disputes re-
garding the request for, and production of, documents that are in the possession of one party and not the
other will be within the authority of the neutral practitioner to decide. Many practitioners insist on hav-
ing ultimate authority with respect to ruling on the production of documents; however, some practition-
ers allow the parties to reach a conclusion on the practitioner’s scope in this area and proceed under the
specific scope as agreed upon.

Confidentiality

Arbitration is, by its nature, a private and confidential proceeding. The practitioner, in his or her en-
gagement letter with the parties, should affirm that the information that he or she receives and the work
product and files that he or she prepares during the execution of the assignment will be maintained as
confidential. Such documents will not be disclosed to third parties without the parties’ consent, except as
may be required by law, regulation, or judicial or administrative process. The practitioner should let the
parties know that he or she will comply with any legal requests (for example, a subpoena) seeking ac-
cess to such information. Should a legal request be served on the practitioner seeking access to the con-
fidential information of the parties, the practitioner should agree to promptly notify the parties of a re-
quest by anyone to examine, inspect, or copy such documents or records or any attempt to serve, or the
actual service of, any court order, subpoena, or summons upon the practitioner that requires the produc-
tion of such documents or records.

Description of the Form of Award or Report That the Neutral Accountant Will Issue

The neutral practitioner can follow a variety of award or decision forms in rendering the ultimate deci-
sion in a posttransaction dispute proceeding. If the parties choose to subscribe to a "baseball arbitration"
style, the neutral accountant is only permitted to select one party’s position or the other party’s position,
with no ability to select an award amount within the range. In other instances, it may be permissible for
the neutral practitioner to select an award amount that is completely different than the position sought by
either party. Regardless of the form that the arbitration award ultimately takes, the practitioner should
make clear in the engagement letter what form of award the practitioner is to follow.

In addition, practice varies regarding the level of detail that neutral practitioners include in their decision
letters. Some practitioners prefer to only provide the numerical findings with respect to the disputed
items. Other practitioners prepare a report that provides the reasons why the practitioner reached his or
her decision. The latter is often referred to as a reasoned award or reasoned report because the practi-
tioner provides the reasoning behind the decisions. The nature of the report provided by the neutral prac-
titioner is a factor to discuss and agree upon between the parties, and this factor is typically memorial-
ized in the engagement letter.

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