1. www.tuckerlaw.com www.gleason-cpa.com Alternative Dispute Resolution (Costs, Issues, Role of the Financial Expert) Presented by: Judith K. Fitzgerald and Michael A. Shiner of Tucker Arensberg and Mark M. Gleason and William G. Krieger of Gleason & Associates

2. www.tuckerlaw.com www.gleason-cpa.com ALTERNATIVE DISPUTE RESOLUTION Why ADR? –Generally, minimize risk of adverse litigation outcome –Generally, thought to be less costly –Generally, retain better control of time constraints –Mandated by many courts Items to Consider –Separate emotion from economic reality –Early involvement of professionals/experts –Managing client expectations 2

3. www.tuckerlaw.com www.gleason-cpa.com Types of ADR Mediation –“Process of resolving or settling differences by working with all the conflicting parties” –Various theories and types but all involve Agreement among parties to mediate Disinterested mediator Often subject to same disqualification rules as a judge Confidentiality Report to the court, if in litigation, re results 3

4. www.tuckerlaw.com www.gleason-cpa.com ADR - The Mediation Process –What is the typical process? Conflicts check Engagement letter Initial call or meeting to establish guidelines Usually submit position statements Limited discovery prior to or during mediation Scheduling sessions – where and when convenient Time limits? Need the principles to be present Generally meet separately with various parties Until ready to close the deal Leave with a term sheet when possible 4

5. www.tuckerlaw.com www.gleason-cpa.com Arbitration “Submission of dispute to the judgment of an impartial person or group appointed by mutual consent or statutory provision.” –More like traditional litigation –A neutral third party handles the dispute Could be actual litigation Could be motions practice 5

6. www.tuckerlaw.com www.gleason-cpa.com Arbitration based in contract Process agreed to in a contract –As a mandatory substitute for litigation –Imposes a final and binding decision – Enforceable by the courts – Generally, no effective appeal process 6

7. www.tuckerlaw.com www.gleason-cpa.com Types of Arbitration Binding Non-binding Baseball AAA AIA 7

8. www.tuckerlaw.com www.gleason-cpa.com Arbitration Issues Expense Choosing the format Choosing the arbitrator(s) Who chooses the experts Lack of appellate process 8

9. www.tuckerlaw.com www.gleason-cpa.com Early Neutral Evaluation Early Neutral Evaluation (“ENE”) “Advice of an experienced attorney concerning the strength of the case” –Appropriate for smaller cases –Appropriate for technical and financial issues 9

10. www.tuckerlaw.com www.gleason-cpa.com ENE Purpose: –Objective evaluation intended to move parties away from unrealistic positions –Provide insight into strengths and weaknesses. –Success dependent on the parties' faith in the fairness and objectivity of the neutral 10

11. www.tuckerlaw.com www.gleason-cpa.com Settlement Conference “ Effort to arrive at mutual agreement without need to complete litigation” Judge by judge process Parties can request a settlement conference with the court Formal with a judge Informal by the parties 11

12. www.tuckerlaw.com www.gleason-cpa.com Mandatory in most districts WDPA requires ADR early in case CCP (Allegheny) judges use ADR shortly before trial as conciliation conference Consult counsel for drafting ADR clauses: –Meet and confer as first step –Selection process –Specialized facilitator(s) –Fee shifting –Choice of rules/law/forum Pennsylvania ADR 12

13. www.tuckerlaw.com www.gleason-cpa.com Selecting the neutral Retired or former judge Seasoned trial attorney Professional mediator/arbitrator –National vs. Local Non-attorney, Lay person Person with specialized knowledge/expertise 13

14. www.tuckerlaw.com www.gleason-cpa.com Defining the Financial Expert Who? What? Where? When? How? 14

15. www.tuckerlaw.com www.gleason-cpa.com Role of the Financial Expert Early damage assessment –Identifying issues in dispute –Marshalling facts/discovery assistance –Bringing key elements into focus Financial experts help clarify issues –Articulate issues from an outside perspective –Present financial facts in a clear and concise manner 15

16. www.tuckerlaw.com www.gleason-cpa.com Role of the Financial Expert (cont.) Financial expert as a neutral evaluator –Provides opinion (does not represent one side or another) –Cost savings –Conclusion Arbitrators hiring financial experts –Shared cost of the financial expert –Financial expert report issued –Slightly higher cost than an expert determination/neutral evaluator –Conclusion 16

17. www.tuckerlaw.com www.gleason-cpa.com Consultant vs. Expert Consultant –Consultants do not have to be designated –Advice, guidance, confidentiality –Are not deposed or retained by opposing party Expert Witness –Needs to be designated –Subpoenaed for deposition –Obligated to prepare reports / discoverable materials –Testify at trial 17

18. www.tuckerlaw.com www.gleason-cpa.com Consultant vs. Expert (cont.) Crossing Over –An expert who is retained as a consultant is not necessarily limited to the consultant role. –It is possible to retain an expert to consult on a case then later designate them as a financial expert. –Consideration of overall case strategy. –The cross over from an expert to later become a consultant is not recommended. 18

19. www.tuckerlaw.com www.gleason-cpa.com Case Study 1 - Early Damage Assessment FLSA employment class action lawsuits often involve hundreds or thousands of plaintiffs and require the analysis of massive quantities of data to understand potential liability issues and estimate damages. Whether analyzing the commonality or typicality of plaintiffs’ claims in the class certification litigation phase, or quantifying the potential range of damages to assist counsel with mediation or settlement discussions, the retention of a financial expert in the early stages of litigation can provide an enormous benefit. Gleason & Associates was engaged by a national specialty retailer to assess potential damages for its alleged non- compliance with labor laws. 19

20. www.tuckerlaw.com www.gleason-cpa.com Case Study 1 - Early Damage Assessment (cont.) The plaintiffs alleged that they were not able to take a required meal period at the appropriate time during their shifts or for the appropriate length of time because the employer did not provide adequate coverage for the store. Gleason’s Role: Collaborated with the client and its counsel to understand damage theories, varying threshold definitions of the applicable state’s labor laws, and the financial exposure associated with each. Obtained more than 100,000 data records containing individual employee’s daily time in and time out during the alleged damage period. Using data validation processes, we formatted the records for uniformity and developed a database of employee time-entry data. 20

21. www.tuckerlaw.com www.gleason-cpa.com Case Study 1 - Early Damage Assessment (cont.) Gleason’s Role: Incorporated additional information obtained from various human resource records (i.e. employee titles, promotion dates, etc.) and queried the database in real-time to perform the numerous analyses requested by the client. - Filtered the data to exclude employees who were not eligible for a break. - Categorized the population into groups to facilitate additional detailed analyses that cross referenced inadequate breaks with periods of inadequate employee coverage. - Calculated the potential damages associated with each situation. - Repeated analysis using subsets of employees and various break intervals for the named plaintiffs. - Building upon these queries, we completed numerous alternative analyses and rearranged the data to aggregate instances by year, by retail location, and by employee. 21

22. www.tuckerlaw.com www.gleason-cpa.com Case Study 1 - Early Damage Assessment (cont.) Results: Armed with our analysis and conclusions, the company entered mediation equipped with extremely powerful tools including (a) financial damage estimates; and (b) related supporting data. Our analysis demonstrated that 80% of the alleged noncompliant instances had adequate employee coverage, thereby, disproving the plaintiffs’ allegations. Had this company waited until after mediation to seek financial consultation, counsel may have only had a general understanding and a less compelling argument to support the defendant’s position that the actual damages incurred were minimal. As a result of the successful mediation, the client negotiated a favorable settlement of the employees’ claims and avoided prolonged class action litigation. 22

23. www.tuckerlaw.com www.gleason-cpa.com Case Study 2 – Financial Expert on an Insurance Appraisal Panel Dispute between a steel company and its insurer concerning the amount of business interruption lost income sustained by the steel company resulting from an equipment breakdown. Gleason was hired by the steel company to be part of an appraisal panel. 23

24. www.tuckerlaw.com www.gleason-cpa.com Case Study 2 – Expert on an Insurance Appraisal Panel (cont.) Event Panel Chosen (1 by each party + the “umpire”) Site Tour Request for InfoInfo ProducedQuestions Present Case to Panel Decision by Panel (Agreement by 2 of the 3 panelist) 24

25. www.tuckerlaw.com www.gleason-cpa.com Strategies for success Know the strengths and weaknesses of your case Understand the ground rules for the process Work closely with your consultants/experts Provide opportunity to client to express opinions Prepare client for ultimate compromise Know your bottom line 25

26. www.tuckerlaw.com www.gleason-cpa.com Contact Information Judith K. Fitzgerald jfitzgerald@tuckerlaw.com 412-594-3933 Michael A. Shiner mshiner@tuckerlaw.com 412-594-5586 Tucker Arensberg, P.C. 1500 One PPG Place Pittsburgh, PA 15222 412-566-1212 www.tuckerlaw.com 26

27. www.tuckerlaw.com www.gleason-cpa.com Contact Information Mark M. Gleason, CPA, CVA, ABV, CLP mgleason@gleason-cpa.com 412-391-9010 William G. Krieger, CPA, ABV, CFF, CGMA, CFE wkrieger@gleason-cpa.com 412-391-5404 Gleason & Associates, P.C. One Gateway Center, Suite 525 420 Fort Duquesne Blvd. Pittsburgh, PA 15222 412-391-9010 www.gleason-cpa.com 27