The Benefits and Pitfalls of Jointly Retained Engagements

When properly conducted, joint engagements may create a stronger perception of fairness and foster a conducive climate for settling financial matters.

Chartered Business Valuators (“CBV”) are often retained to help identify and resolve issues when parties are in dispute. In many circumstances, each party will retain their own CBV expert to prepare a business valuation or other report, and then the parties will present their findings in an attempt to resolve the matter through court or alternative dispute resolution.

In recent years, however, family law practitioners have retained CBVs jointly in an effort to minimize professional costs and to foster a conducive climate for settling financial issues. When properly conducted, and when both parties understand the benefits and limitations of joint engagements, joint engagements may be a useful tool to settle financial matters.

What is a Joint Engagement?

A joint engagement occurs when both parties retain the same expert to prepare an engagement report. Joint engagements may be either binding (when the parties agree in advance that they will accept the engagement conclusions) or non-binding (when the parties do not agree in advance that they will accept the engagement conclusions).

The advantages of a joint engagement are:

• The CBV may have better access to information, as both parties are participating jointly in the information gathering process;
• They may be less expensive, as the parties share the costs of one expert report;
• Joint engagements may create a stronger perception of fairness, and may foster a conducive climate for settling financial matters. In other words, the process is less adversarial; and
• The dispute may be resolved more timely, as the parties are usually cooperating.

The disadvantages of a joint engagement are:

• From council’s perspective, joint engagements may not provide their client with an opportunity to negotiate a more favourable settlement;
• Joint engagements may sometimes result in greater costs if both parties end up engaging separate CBVs to critique the jointly-retained engagement report;
• When the parties disagree on key facts and assumptions, the CBV may be required to issue multiple scenarios adopting each party’s facts and assumptions; and
• If one or both parties are unsatisfied with the approach adopted by the jointly-retained CBV, the engagement may be abandoned mid-way through the process.

To ensure the joint assignment is cost-effective and meaningful, the parties involved should understand:

• The CBV will act on behalf of all parties, and will conduct the assignment in a manner that is independent and unbiased;
• The CBV will adhere to the jointly agreed instructions, and will not accept new instructions unless they have been accepted by all parties;
• All correspondence to and from the CBV will be sent to all parties;
• The CBV will not provide negotiating advice to any party; and
• No information received in connection with the matter from one party can be treated as confidential as far as the others are concerned.

Final Thoughts

While joint engagements are not a “one size fits all” approach to dispute resolution, when properly conducted, they may increase the parties’ perception of fairness and reduce the overall costs associated with the engagement. Joint engagements may be especially useful when both parties have knowledge of business and are actively working toward resolution.

If you would like to discuss your unique situation, give the experts at Davis Martindale a call. We would be happy to have a personalized discussion with you.