Page 79 - M & A Disputes

Neutral Practitioner Procedures

Most disputes are resolved through a process by which the parties issue written submissions and allow
the neutral practitioner to ask questions and, perhaps, hold a hearing. Less common are disputes in
which the practitioner performs procedures such as visiting locations, interviewing employees, and con-
ducting testing without (or in addition to) the parties preparing written submissions. Although less
common, there may be situations when this procedure may be an alternative preferred by the parties.
One example relates to having the neutral practitioner visit locations and inspect inventory that is dis-
puted with respect to its salability.

Hearings or Conferences

A common discussion point in these proceedings is whether the parties or neutral practitioner desires to
have a hearing. The parties often ask if there needs to be a hearing, and the answer is often "No." If the
procedures employed include multiple written submissions by the parties, and the neutral practitioner
has the ability to issue written questions or requests for documents, the practitioner often finds that he or
she has enough information to render a decision without needing a hearing. Often, hearings are not used
to introduce new evidence or present new arguments, and the parties simply reiterate their respective po-
sitions. As such, practice is mixed about whether there should be hearings. Certainly, if the testimony of
one or more individuals is critical, or the credibility of the parties’ positions can best be explored
through a hearing, then a hearing can be beneficial.

Some factors influencing whether there will be a hearing are the cost associated with having a hearing
and the impact on the timing of the neutral practitioner’s decision. Hearings can add significant costs to
the overall cost of the dispute resolution process because the parties may have several attendees travel to
the hearing location, and there may be additional professional fees incurred by legal counsel, advisers,
and the neutral practitioner in preparing for and attending the hearing. Likewise, a hearing may add an
element of additional time to the dispute resolution process. Scheduling a hearing date or dates for
which the parties and their respective representatives or employees are available to attend may extend
the process for weeks or months. As such, the parties and the neutral practitioner should carefully con-
sider the merits of a hearing, given the additional costs and potential time delays incurred to reach a de-
cision.

The decision whether to have a hearing should be discussed in the preliminary conference and addressed
in the engagement letter. Although it is necessary to address this in the engagement letter, a decision on
whether to have a hearing is not necessary at that time. A common procedure is to allow for a hearing if
either of the parties or the neutral practitioner requests one, and that procedure is then reflected in the
engagement letter. Furthermore, the parties can agree that a hearing will focus on limited issues before
the neutral practitioner in order to reduce the scope and, ultimately, the cost of preparing and holding
such hearings.

In conducting the hearing, the neutral practitioner may allow the parties to make opening and closing
remarks, much like is done in a trial. After any opening statements by the parties, the neutral practitioner
may proceed with leading discussions on each of the disputed issues, or the parties may offer presenta-
tions of each of the disputed issues. Typically, an efficient approach is one in which each issue is dis-
cussed in depth prior to moving on to the next issue. An alternative approach that works well when there
are several witnesses is to have each party present its position on all the issues at once, with witnesses
offering all their testimony across all issues. This approach may take more time, but it may be more effi-
cient in scheduling testimony provided by witnesses. In allowing witnesses to testify, a decision should
be made about whether the party not presenting the witness has the ability to cross examine witnesses.

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