Kent B. Scott | Babcock Scott & Babcock | August 18, 2017
Today’s current economic climate challenges owners and contractors to complete projects in less time for less money. These pressures have created more demanding time schedules and monetary budgets that, in turn, have created an increased number of disputes. Another developing trend is the increased costs in time, money, efficiencies and lost opportunities taken up by these disputes. The legal fees and costs incurred in resolving disputes become a major component of the dispute. The dollars that should go into project profits are now going into the resolution of project disputes.
This article will discuss the basic concepts of mediation as one of the tools that is used by clients and their attorneys to resolve construction project claims.
Mediation is a procedure where two or more parties attempt to resolve their dispute with a neutral party—the mediator. The mediator remains neutral throughout the meeting. The process is confidential. No resolution can be reached without the consent of the parties. If an agreement is reached, the agreement will be binding and can be enforced by the courts.
Anatomy of a Successful Mediation
The success of a mediation is controlled mainly by the parties. Some of the critical components of a successful mediation include:
- The background and capabilities of the mediator.
- The attendance, commitment of informed people with authority to settle.
- The needs and interests of the parties.
- Whether a trial or arbitration has been scheduled.
- Commitment of the parties and their attorneys to participate.
The following is a brief outline of the events involved in a mediation:
- The parties sign a confidentiality statement.
- The attorneys prepare a short and confidential written statement for the mediator.
- The parties summarize their positions in a joint session.
- The parties go into separate confidential meetings .
- The mediator shuttles between the parties in an effort to find common ground.
- If a settlement is reached, a written agreement is created .
- If a settlement is not achieved another session may be scheduled or the mediator may offer some suggestions to consider that may assist the parties in future negotiations.
When and Where to Mediate
There is no set formula to ensure that a mediation will succeed. Mediation can be effective at any stage of the dispute: pre-litigation, during litigation, on appeal, etc. Most mediations occur after a claim has been filed and some exchange of information has taken place. The decision as to whether or when to mediate will vary with each case.
Who Should Come to the Mediation
The following is a brief summary of those who would be expected to attend the mediation:
- Legal counsel. Yes, if the party is represented.
- The person with authority to settle and others with knowledge of the facts.
How Long Will the Mediation Last?
It is common to schedule mediations for either a half or one full day. More time should be scheduled for mediations that require extensive travel, multiple parties or involve complex factual or legal issues. It is best to build in a margin of “float” time for the mediation session.
Multiple day mediations have built-in challenges. The parties recess after the first day and go home to re-think their case in a light that supports their original position. Consequently, the parties begin the next day needing to “warm up” and get back into the solution/settlement mode.
Mediation provides an opportunity for people to input how the process is designed and conducted. The parties are given an opportunity to confidentially express their interests and values without compromising their positions in front of the other parties. It provides the parties a sense of involvement and control over the dispute resolution process and the terms of a settlement. In fact, the mediation may be the last time where clients and their attorneys will remain in control of the resolution process.
Happy Mediating to All!