Top 5 Construction Mediation Tips and Techniques: Tip #1 – Ensure You and Your Client Fully Understand What Mediation is and What its Benefits and Purposes are.
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Any significant piece of construction litigation will at some point be mediated in advance of trial. Florida Statute 44.102 provides for a court-ordered mediation and sets forth the main reasons why a construction mediation case should be mediated, both from the party’s perspective and the court’s perspective. Namely, mediation offers an opportunity for a third party neutral to encourage and facilitate the resolution of the dispute amongst the parties. The parties in large construction defect or contract litigation cases often become so embroiled in the daily minutia of winning small discovery or motion practice battles that the opportunity to share a complete overview of their triable case with an independent third party construction mediator and all of the parties involved in the matter will serve as a chance to refocus the case on the major issues and monetize those issues to refined damage calculations in preparation for trial. The confidentiality and privilege requirements imposed by Florida Statutes Chapter 44 afford the participants in the construction mediation process confidence to openly share their case with those participating in the construction mediation in the spirit of having an open and willful exchange geared towards reaching mutually beneficial resolution of claims. Construction mediation presents many significant opportunities to understand your case, the case of your adversaries and to resolve the dispute without the pressures, risks and expense of a trial on the merits. Yet, construction mediation is only a valuable appointment if the parties are prepared to have meaningful and honest dialogue about the case, its total worth and its potential outcomes. What follows are a series of five Jimerson Birr Blog posts highlighting 5 construction mediation tips and techniques that will ensure you get the most out of your construction mediations.
1. Ensure you and your client fully understand what mediation is and what its benefits and purposes are.
My number one tip seems like a concept so simple that it shouldn’t need explanation, yet it is the number one impediment I have found to resolving cases in matters involving inexperienced counsel and clients. Mediation is a process (sometimes but not always court ordered) for those more interested in ending the dispute than they are continuing the costly fight. It often involves an initial meeting of the parties accompanied by the exchange of brief statements and open discussion of issues, and then a caucus of the parties to exchange rounds of offers as lead and communicated by the mediator. While it is very important to put your best foot forward in explaining your case and understanding theirs, it is not the Super Bowl and your case will not be won and lost at mediation. The mediator doesn’t have the authority to render a judgment and they will not ultimately make or break your case. Therefore, there is no need to get frustrated if you are being challenged early in a mediation. Big cases with tightly contested issues will never settle right away. Those who pack up their bags and leave after a spirited exchange of opening statements, an unproductive round of initial low-ball offers, or after the mediator scoffs at a few of their legal theories are those who are destined to enjoy all of the exhilaration of six-figure trials, weeks of trial preparation and day-long cross examinations. Be careful what you ask for as I have found that trials for clients are not always as enjoyable as they are for me. Think through the risks and rewards of not settling the case at mediation, the strategy involved with inducing meaningful bilateral discussions, check your ego at the door and engage in the potentially day long process with good faith. There is a reason that court-ordered mediations settle about 75% of the time.
Construction mediation in nature affords the benefit of having a third party neutral infuse ideas as to merits and flaws in the positions of each of the parties to allow the parties to have a reasonable compromise. It is very rare that everyone leaves a mediation completely pleased, as the old axiom goes “It is only a successful mediation if everyone leaves pissed off.” A good mediator will dig in to understand the issues, poke holes, utilize bargaining and legal techniques and offer ideas geared towards avoiding an impasse. Clients who understand that mediation avoids having a finder of fact taking the decision making process out of the hands of the parties are those who will welcome inputs on their case from a mediator or even the opposite side. In doing so, you are empowering yourself with information that leaves the decision making process in your hands. While a settlement or compromise is rarely a widespread thermonuclear victory, when clients consider the cost (plus the lost productivity, stress, public relations, precedential value and other intangible costs) of resolving a dispute at trial, the bottom line is usually bettered through a reasonable settlement reached at mediation. Construction mediations are private, swift and cost-effective. Like anything else in life, you will only get as much back as you put in.
By nature, clients look to their lawyers for guidance in areas they know little about. It is important to understand what your clients know about the litigation process (hopefully it extends beyond their TV viewing experiences) and the mediation process. You should determine if your client has ever participated in a mediation; don’t just assume your client knows what a mediation is. Prepare them for the protocols of receiving and responding to an unreasonably high demand or low offer from the opposing party, especially if it is a response to your unreasonably high demand or low offer. Prepare them for the bargaining techniques the construction mediator will employ and the hurry up and wait process associated with back and forth negotiations.
Construction mediation with skilled and creative participants has the benefit of allowing the parties to fashion resolution that is more imaginative than the static win and loss that a judgment will effectuate. It affords the parties the opportunity to address background issues, or other operational barriers which may not otherwise be a part of the active litigation. Thus, those who engage meaningfully can use it as a business tool to expand relationships or mitigate risk that may be far reaching beyond the proceedings of the day. I have been in many mediations in which we changed our discussions of the issues in the case at bar to other projects and disputes, or pending issues ancillary. In construction mediations, the parties are free to fashion their own solutions to the conflict, including solutions that a court would not be able to order. Having smart participants with reasonable temperaments allows the opportunities for parties to reach a settlement and continue to work together to complete the construction project, very often with a good customer referral at the end of the job. If a mediation is handled gracefully, it doesn’t necessarily mean the end of the party’s relationship like a testy trial and trial verdict likely would. This is particularly true of pre-suit mediations or mediations in litigation with a salvageable contract in the early stages of a construction project.
In litigation, sometimes parties become so jaded by the competitive nature of the adversarial process and the lawyers guiding it that they are unable to communicate with each other well enough to work out settlement agreements. When the parties engage in the consensual process of construction mediation and empower the mediator to develop effective communications and negotiations processes, the parties are often able to shed the predispositions and emotional baggage that they entered the mediation with. In many disputes the mediator’s neutral prospective can enable to parties to take a fresh look at the conflict and at potential solutions so they can move past a visceral impasse. Skilled construction mediators are able to direct discussions amongst parties that probably don’t like each other very much at the moment, limit fighting by controlling the flow of blame and make sure all parties are heard and stay focused on the issues.
As lawyers, it is important to pay attention to the details of the mediation. Have you done your background work to understand the personalities (i.e. egos) of the parties and their full background history? Do you need to take precautions to ensure the parties do not create unnecessary tensions or otherwise hinder the integrity of the proceedings? Do you have the right corporate representative with decision making authority at the negotiation table? Have you talked to your client about the risks and costs of not settling at mediation? Do you have a trial, discovery and motion practice schedule/budget in place in the event you do not settle? Did you brief your client on the value of the case and the mediation process as a whole in advance? Do you personally know the mediator and his/her style? Did you plan for flexible travel and/or child care in the event the mediation goes long? Do you have snacks or meals planned for the participants (hungry clients are irritable and irrational clients)? Does the venue meet all of your technology requirements for presentations, researching, communicating or document processing? Small details like these can make the difference when those tight multi-million dollar mediations are at that watershed moment of going one way or the other. Make sure you and your clients are prepared for a long day if that is what the mission mandates.
Construction mediations may not be the perfect resolution mechanism for every case, but I do believe they should always be participated with in good faith and strongly considered for all of the opportunities that can come from them. They are so much more than a condition precedent to trial. Construction mediations give the parties an opportunity to clear up misunderstandings, find areas of agreement in a way that would never be possible in court and narrow the issues to those only worth fighting for.
Please revisit the site tomorrow as we post Part 2 of our 5 part Construction Mediation Tips and Techniques series entitled: “Tip #2- Know your case well. Know their case better.”
Robert J. McPherson, Building Resolutions, News from the AAA Construction Division, Issue #1, March 2010
Gregory S. Martin, Mediating the Construction Dispute- Are You Ready to Mediate, RPPTL Action Line, Volume XXXII, No. 2, Fall 2010
Larry R. Leiby, Florida Construction Law Manual, Volume 8, 2011-12 edition