Virtual Mediation – How Do I Make It Work For Me

Adrian L. Bastianelli, III and Jennifer Harris | Peckar & Abramson

Mediation took the construction industry by storm in the late 1980’s and has become a staple for resolving construction claims. Today, most construction contracts, including the ConsensusDocs, require mediation as a condition precedent to binding dispute resolution, whether it be arbitration or litigation. As a result, many construction executives have spent long hours sitting in conference rooms trying to reach resolution with their counterpart through mediation in order to avoid the alternative – costly arbitration or litigation that often produces an unsatisfactory result.

While many businesses have foreclosed the possibility of meeting in person due to the COVID-19 pandemic, the contractual requirements for mediation remain.  Thus, in most cases, in-person or live mediation is no longer an option; however, attorneys and mediators have developed a virtual process to replace the live process. With a new process comes many questions: Does the virtual process work? What are the best practices and pitfalls for virtual mediation? Will virtual mediation continue when COVID-19 fades away? How do I make virtual mediation work for me? The answers to these questions and more are discussed below.

The Virtual Mediation Format

There are numerous platforms that can be used for virtual mediation, including Skype, Google Meet, WebEx, Zoom, and others. Of these, Zoom is the preferred platform for mediation because it provides breakout rooms for caucus sessions and is easy to use. Regardless of the platform you select for the mediation, you and your company’s participants need to understand how it works for mediation and hold a practice session before you go online with the mediator.

In a live two-party mediation, there are typically three conference rooms — one for the parties to use for joint sessions, plus one each for the parties to use for private caucus sessions with their team and the mediator. This format does not change in a virtual mediation, except, instead of three physical rooms, there are three breakout rooms that are used for the joint and caucus sessions.

In a live mediation, the mediator often engages in informal chats in the hallway with the decision-makers or counsel, and the decision-makers and counsel do the same with each other. These informal discussions can be more productive than all the posturing in the formal meetings. Of course, there is no hallway on Zoom, however, there are unlimited breakout rooms where a meeting can be held separately with counsel or a decision-maker. The difference is that the informal hallway chat now becomes a formal meeting that must be arranged in a separate breakout room, which may not be as productive as the informal hallway discussion. In any event, you need to beware of the availability of the extra breakout rooms for side meetings with the mediator or your counterpart and use them productively.

When considering which platform to use, you should consider the security of the platform and its compatibility with your company’s operating system. As many contractors are aware, Zoom had security issues at the forefront of the COVID-19 crisis. Today, it appears that Zoom has corrected these issues and implemented protections such as password protection, the ability to lock meetings and waiting rooms. Regardless, you should work with your IT personnel to ensure that security concerns are addressed and that they will be able to successfully live-stream the mediation on the selected platform.

The Pre-Mediation Phase

Probably the most important change in construction mediation over the years has been the development of a robust pre-mediation phase. The pre-mediation session between the mediator, decision-maker, and counsel before the day of the formal mediation often is critical to the mediation’s success. Many lawyers and parties, however, do not recognize its importance and treat pre-mediation only as an opportunity for a brief chat with the mediator for which no preparation is necessary.  While it is an opportunity to talk to the mediator in an informal setting, it is much more, including an opportunity to educate and arm the mediator with your story, obtain documents that you need for the mediation, discover potential roadblocks to settlement, uncover adverse arguments and issues that you have not recognized, discuss people problems, evaluate nonmonetary solutions, plan for ways to break impasse when it occurs, and establish a strategy to achieve a settlement.  You should never underestimate the importance of the pre-mediation session and come unprepared.

Going virtual has made the pre-mediation phase far more productive than it was prior to the use of Zoom and other platforms.  No longer is it a short phone conference between counsel and the mediator. Now, in the pre-mediation session, the mediator will be looking you and your counsel in the eye over Zoom and beginning the mediation with an in-depth discussion of the issues, roadblocks, strategies, and other subjects, while at the same time beginning to develop a personal relationship with you.  By the time you arrive at the formal mediation, the parties and mediators will be well along in the process – at the 9:00 am start of the virtual mediation, the parties will be at the 2:00 pm point in the normal live mediation.  You must understand and take advantage of this difference or be left behind.

If your mediator does not initiate a robust virtual pre-mediation session, then you should request one. It is your opportunity to set the table for success.

The Joint Opening Session

While the pre-mediation session has become more robust, the joint opening session has been reduced, if not eliminated entirely, particularly in some parts of the country.  In addition, the robust pre-mediation session has in some cases either replaced or lessened the need for the joint opening session. However, there still is a benefit of a joint opening session. Often the decision-maker for the other party has not heard your arguments articulated as convincingly as you can make them or has not heard what was said by counsel who may have sugar coated or understated the arguments. And, you may not have heard the other parties’ arguments presented in their most stark terms.  The opening session is your chance to talk directly to the other decision-maker and for you to hear the other party’s best arguments.

The joint session may be the only time you see your counterpart in a virtual mediation. In a live mediation, you will necessarily encounter your counterpart in the hallway or the coffee room, where you can have informal conversations and interactions, judge your counterpart’s demeanor, and further your personal relationship. Not so in a virtual mediation. If you don’t see your counterpart in the joint session, then you may not be together again in the virtual mediation unless one of you or the mediator formally requests a side session in a breakout room. So, take the opportunity in the virtual mediation to sit in an opening session and look your counterpart in the eye before you break up and move into cyberspace.

One other helpful hint is to take advantage of demonstrative exhibits in the opening session of a virtual mediation.  In a live mediation, the exhibit is flashed on a screen at the end of the room and often ignored by all.  In contrast, in a virtual mediation, the exhibit is on the computer screen directly in front of the other decision-maker for an extended time, making it far more likely that the decision-maker will take the time to review it in detail. A critical photograph, contract clause, or letter may have a far greater impact under these circumstances.

The Caucus Session and Closing

After the joint session, the parties retreat to their separate caucus rooms. The caucus sessions are the heart and soul of the mediation – where the heavy lifting on settlement occurs and closing is achieved.

In a live mediation, the mediator spends the day moving between caucus rooms, meeting the parties and counsel. During this time, the mediator develops a relationship with the decision-makers and counsel, observes their body language, demonstrates the mediator’s knowledge and understanding of the dispute, and begins developing trust. The mediator also listens carefully and observes the parties’ body language during the caucus sessions to discover what is actually important to them – unearthing their interests, less so their positions. When the time comes, the mediator uses the relationships and knowledge garnered in the caucus sessions combined with tried and true closing procedures to help the parties reach a settlement.

So, can the mediator be as effective in caucus sessions through a video camera as in face to face sessions? The answer probably is no. However, the mediator can still be effective in helping the parties reach a settlement in a virtual setting, it may just require more help from you and more work and time to accomplish.

Your input must begin in the virtual pre-mediation phase. You need to make sure that the mediator is well on the way to settlement before the formal mediation begins. Virtual communication, and therefore virtual mediation, is more difficult than when it is face-to-face, and it takes longer to effectively communicate the same information and achieve the same results. So, start early and reduce what must be accomplished in the formal mediation session.

You should limit the number of people that you bring to the mediation. You don’t need a room full of people available to answer any possible question like you might in a live mediation because your people are only a Zoom invite away from joining the virtual mediation. The more manageable group gives you more individual time with the mediator and removes the internal arguing and second guessing that goes on in a room full of people.

There is another reason that live mediations tend to close and do so at the end of the day. The parties have invested time and committed resources trying to settle. In a live mediation, everyone is about to leave to catch an airplane or at least go home and probably will not be available to recommence the live mediation for some time because they have a busy schedule and have moved on to the next project. The parties typically want to close before this happens and will often stay late into the evening to achieve that settlement. The dynamics are not the same in the virtual world.  Many times the parties are at home, and if settlement does not occur, they will simply move to another room to have dinner or a drink. The end-of-day pressure point may not be as effective in that situation.  However, the decision-makers and counsel likely will be in the same place the next day to continue the mediation. It is easier to get back together quickly for another day of virtual mediation and there is no cost to do so. This is a real change that you need to recognize in your preparation and negotiations.

Conclusion

So, what are the answers to the questions posed in the second paragraph above? Yes, virtual mediation works. Those cases that should clearly settle will settle virtually, while those that clearly shouldn’t settle, won’t. Those cases in the middle of the continuum, where settlement is dependent on the mediator’s ability to develop a personal relationship with the parties and to use the mediator’s personal charisma or apply pressure, are less likely to settle in the virtual forum than they would have in a live mediation.

Virtual mediation, however, is much less expensive and easier to fit into busy schedules. It is often hard to get the insurance carrier representative to the live mediation. That is not as true in a virtual mediation. Your experts and jobsite personnel are a click away. In addition, it is easier to reconvene for a second or subsequent day.

Virtual mediation, either in whole or in part, likely will stick around after the impacts resulting from COVID-19 subside. At a minimum, the virtual pre-mediation phase is a substantial upgrade over the old telephone call with counsel and likely will be the standard even if the formal mediation reverts to being live.

The parties will weigh the size of the claim, cost factors such as legal and expert fees, travel time, the need for personal relationships to close, and the ability to schedule the mediation to decide which mediations should be done virtually and which should be done in-person. The second session of mediation after relationships have been developed, information exchanged, and negotiations progressed, probably will be done virtually in most cases. Small mediations almost always will be done virtually.

Ultimately, yes, live and virtual mediations are different – but that does not mean that you should refrain from engaging in the dispute resolution process. A virtual mediation may be exactly what is needed to get a dispute resolved.

Mediation – Best Practices

Kent B. Scott | Babcock, Scott & Babcock

Corporate counsel, as well as outside trial counsel, have increasingly embraced mediation to resolve disputes.  Many companies now incorporate mediation as part of their standard policies, procedures and documentation.  Many court rules require mediation or some form of alternative dispute resolution before a case goes to trial.  The reasons for this are obvious: mediation works. 

Some Preliminary Thoughts

Many litigators still do not appreciate the subtleties and full range of the mediation process.   They view it as a competition for the heart and mind of the mediator, thinking if they can persuade the mediator to their point of view through effective legal argument, the mediator will in turn prevail on the other side to throw in the towel. 

But mediation is not a contest.  It is a facilitated negotiation.  While some evaluation of the merits by the mediator (usually in private caucus) is certainly part of the process, there is a lot more to it. The object is to get the other side to enter an agreement, not vanquish them.   Changing roles from litigation advocate to the lead negotiator in a mediation does not come naturally or easily to everyone.  Litigators should consciously try to adjust their attitude and put on their negotiating hat before embarking upon a mediation.

Mediation can be an exhilarating and rewarding experience for the lawyer because it provides the opportunity to be creative and intuitive and also to work closely with clients toward what is likely to be a positive outcome.

Selecting the Mediator

Mediators are not a commodity, and it is important to select the right mediator for your case.  Ideally you would like to appoint a mediator who has both process skills and some familiarity with the subject matter of the dispute.   Check references carefully and make sure you and your client have a good understanding of the proposed mediator’s particular style, experience and success rate.  It is perfectly appropriate to interview the mediator and to ask the mediator about his or her particular approach, provided both sides are given the opportunity.   Every mediation will be different, and you should look for a mediator who has the talent, experience and range of skills to manage the dynamics of your particular dispute.

A good mediator will know when it is best to be a patient listener, and when it is important to provide some guidance and direction.   The mediator should have a well-managed ego, and not have the need to control the entire process.  A good mediator will know when to stand back and let the process take its course.  People skills are also important, as is stamina and the ability to listen patiently, and to do whatever it takes to close the deal.   An effective mediator has to be a good closer.

The Mediation Position Statement

            The mediation position statement is one of the best ways for the parties to help the mediator help them. I would encourage counsel to exchange mediation statements for a better understanding of opposing positions. Any confidential information to be considered by the mediator should be sent to the mediator confidentially. The mediation statement should be as candid as possible about the strengths and weaknesses of the case. Counsel should also include their best judgment as to the range of likely outcomes on both liability and damage issues should the matter go to trial. Items to be discussed in the mediation statement would include the following:

  • status of the legal proceedings
  • a statement explaining the factual and legal positions of each party
  • attach key documents and pleadings
  • A history of settlement negotiations
  • the client’s interests, needs and expectations
  • The identification of parties and counsel who will be attending the mediation

For a more complete description as to what to include in a mediation position statement, consult the Utah Mediation Best Practice Guide approved by the Utah Judicial Council on April 25th, 2016.

Preparing Opening Statements

            Many lawyers squander the opportunity for an effective opening oral statement in  mediation by simply saying they have very little if anything to add to their written mediation statement.   Remember again that the object in mediation is to motivate the client on the other side to enter an agreement.   The opening statement is the lawyer’s opportunity to give the client on the other side a preview of how the case may play at trial, and at the same time open some doors to the possibility of a negotiated agreement.   Don’t start the mediation with your closing argument to the jury.   Don’t make a bombastic speech that will completely alienate the other side.   Remember that at the end of the day you hope to be able to shake hands with the other side on a deal.  Convey the strengths of your case and the weaknesses of the other side’s case in your opening statement.  But do so without personal attacks or inflammatory language.   Indicate that you and your client, while confident about your position, are reasonable people and are willing to listen to and consider what the other side has to say.

Preparing for Private Caucuses

            Most mediations involve private sessions between the mediator and each side.   This is the opportunity for parties to collaborate with the mediator on strategies for resolving the case, and for the mediator to gain a better understanding of what the parties’ expectations and needs are.    Most mediators, quite appropriately, will try to engage the client representative in a dialogue during these sessions.   Often, this becomes an opportunity for the parties to “bare their souls” with the mediator about their concerns and expectations.  

            Make absolutely sure that you have a clear understanding with the mediator as to what the ground rules are as to the degree of confidentiality that applies to these private sessions. 

It is unreasonable to expect that everything that is discussed with the mediator in these private caucuses will be kept confidential from the other side.   Most experienced mediators will indicate to the parties that they will respect all confidential matters, but that the burden will be on the parties to identify that part of what is said in the caucus that must be kept confidential from the other side.       

Mediator Evaluations and Mediator Proposals

            Most parties at some point will want to know what the mediator thinks of their case, and also what the mediator thinks a fair settlement should be.   Some input from the mediator along these lines can be helpful at the appropriate time if communicated privately.  But be cautious about asking the mediator to make a proposal or pushing for a mediator’s proposal too early in the process.  This is an impasse-breaking technique favored by some mediators whereby the mediator privately communicates a settlement proposal to each side

 Closing and Documenting the Settlement

Think ahead of time about what terms you will require in a settlement agreement, such as a confidentiality agreement, and communicate any special provisions privately to the mediator early in the mediation.  Anticipating issues such as this with the mediator before the economic terms of a settlement are agreed to is a good idea in most cases, because the mediator can then prepare the other side and avoid annoying roadblocks or potential deal killers that can arise in documenting the settlement.  

You should not leave a mediation session in which a settlement has been reached without documenting the essential terms of the deal in language that confirms a binding settlement agreement is intended and providing in the settlement agreement that it is admissible to prove its terms notwithstanding any mediation confidentiality statutes or mediation confidentiality agreement.  Usually, it is adequate to hand-write an enforceable settlement memorandum listing the essential terms of a binding settlement, but which states that it will be superseded by a more formal document which the parties agree to negotiate in good faith and in a manner that is not inconsistent with the essential terms.  

Occasionally companies or governmental bodies will require a board approval for the settlement, which makes it difficult to sign a fully binding agreement at the conclusion of the mediation.    Usually, it is enough for the employer’s representative to agree in the written settlement document that the settlement contingent only upon board approval, but that the representative commits to recommend that the settlement be approved by the board representative. 

Conclusion    

            Here is a quick review checklist of practice points to keep in mind as you embark upon a mediation.

1.         The goal of the mediation process is not to win, but to persuade the other side to enter an agreement on terms that your client can accept. 

2. The key to success in mediation is careful preparation.   

3. Exercise care in selecting the mediator.  Know your mediator’s style. 

4. Prepare your client for what to expect at the mediation.

5. Prepare a written have mediation position statement which is exchanged by the parties.

6. Include in the mediation position statement the issues of fact and law an argument supporting your client’s position . Also include key documents in pleadings as well as the clients’ objectives and interests.   

7. Draft a settlement agreement before the mediation to use as a checklist of the terms you will need in the final document. Send to the mediator any special terms you may require so that he or she can help you negotiate them. 

Remember, at the end of the day your mediation should be used to find a better alternative to a litigated result. Happy mediating to all.

Mediation: Investing in the Solution

Kent B. Scott | Babcock Scott & Babcock

Mediation is an effective alternative dispute resolution method that empowers the parties to resolve their dispute while preserving their resources in terms of time, money and effort.  Mediation is a dispute resolution process where the opposing parties meet with a neutral third party to find a better option to a litigated result. Any resolution requires both parties to consent to the terms thereof before the agreement is finalized. The signed agreement binds both parties and can be enforced by the courts.

Why Use Mediation?

Owners in today’s economy expect completed construction projects faster and cheaper than before. These challenges often lead to misunderstandings and disputes that may require legal action. A drawn out legal dispute diverts resources and time away from the project while reducing the profit margin for contractors, design professionals, and owners. Mediation is designed and is intended to reduce costs and time spent on the dispute resolution process. This article will examine and discuss the mediation process and its ability to efficiently and effectively resolve disputes.  

Limited Discovery. One of the most expensive parts of a legal dispute is the discovery process where the courts require both parties to produce documents, files, or other information relevant to the dispute. The discovery process may require considerable time and effort by both parties in a dispute. In mediation both parties simply agree to exchange the relevant information used to support each side’s case.

Faster Results. There are many rules and procedures involved with the legal system that require following a set time frame and court calendar. Mediation allows the two parties to meet on their own schedule at an agreed upon time and place that also fits the mediator’s schedule. Often both parties hope for a fast resolution to the dispute, so an agreement is typically reached faster than going through the courts. A faster agreement means a faster return to normal business routines.

More Efficient Legal Strategy. Mediation requires the disputing parties to focus on solving the dispute. The legal strategy shifts from building a case with supporting facts and legal authorities to focusing on a resolution that is a better option to a litigated result. Mediation does not require the preparation and filing of motions and supporting materials. The written motion process requires valuable resources spent on attorney’s fees while mediation typically requires shorter and more focused summaries of the dispute that are submitted to the mediator. Successful mediation includes attorneys and advocates, but the amount of time and effort needed by attorneys in the dispute can be significantly reduced.

Confidentiality & Privacy. Mediation is conducted privately which can help protect parties from potential embarrassment and lost business if a supplier or customer learns about a lawsuit. Disputes resolved in Court are published, potentially putting one or both parties in an un-favorable light. Before mediation begins both parties will sign a confidentiality agreement and submit it to the mediator. If the mediation is conducted after a legal dispute has been filed, the judge and jury are not entitled to hear any information exchanged during the mediation. What is done in mediation stays in mediation?

Preserve Business Relationships. Many parties in mediation find a way to move on from the dispute and return to a business relationship with each other. Resolution through mediation will help to avoid a long and drawn out adversarial litigation battle that will often hurt the business relationship past the point of future cooperation.

Mediation retains the power of choice with the parties. It  is the only dispute resolution method that, through the facilitation of the mediator, allows the parties to choose the final agreement. The options available to resolve a dispute are far more numerous than legally define remedies which a court is restricted to use. The mediation success rate is roughly 80%. Even if the mediation process fails to result in an agreement, parties can still benefit from narrowing the issues in dispute or possibly reaching a partial settlement.

Contract Documents Requiring Mediation.  The parties may consent to conduct a mediation of their dispute in advance by including a mediation clause in their contract. A number of construction project contracts such as the AIA and Consensus Docs forms require mediation if there is a dispute. The parties may be better off if they can agree on the timing of mediation before the legal system gets too involved. If the contract requires arbitration or litigation, mediation is still an option if both parties agree to the timing, location, and mediator.

What to Expect in Mediation

When and Where. One of the most appealing aspects of mediation is that parties can agree to mediation at any time before a jury reaches a verdict, a judge issues a ruling, or an arbitrator declares a reward. Mediation often starts after a claim has been filed and some limited discovery has taken place. However, mediation can be conducted before any legal action is taken. Most design and construction contract contain mediation clauses requiring the mediation of any dispute arising under or relating to the contract. The contract may reference an upper tier prime contract and incorporate the terms its terms that may include a mediation provision.  The parties should plan on either a half-day or a full day. Mediation may require more time depending on the complexity of the claim or the difficulty of reaching an agreement.

Dealing with the Opposing Party. Typically a brief opening statement allows for both sides to tell their side of the story with the other party and mediator present. If this creates an uncomfortable setting for one or both parties, the mediator can change the format of the meeting and meet privately in caucuses with each of the parties. The mediator should have enough information and communication at this point to, along with consultation with counsel, make the best judgment call on how much interaction the parties should have in order to accomplish a successful mediation. To increase the chances of a smooth mediation proceeding, both parties should bring any concerns to the attention of the mediator about interacting with the opposing party.

Party Participation. The parties should bring their attorneys and a very limited number of employees or persons with relevant information regarding the dispute. Usually this requires no more than two employees or witnesses for each side. Scientific and technical disputes sometimes require an expert, but this should be the exception and not the rule.  In any event, the most important participants are the decision makers from each side. A decision maker is anyone who has authority to agree to mediation terms. There may be some situations where there are multiple decision makers for each side. Having a decision maker for each side is crucial for an efficient and binding mediation.

Day of Mediation. There is no hard and fast rule, but a typical mediation starts with an opening joint session followed by private caucuses with each party until either an agreement is reached or the mediation is suspended or terminated. The mediator starts by setting out the ground rules and expectations for civil and professional conduct. Each party will direct an opening statement to the opposing decision maker that briefly describes the dispute and their ideal resolution terms. After opening statements the parties separate and the mediator caucuses with both sides. Private caucuses allow the mediator to gather information in a comfortable and confidential setting. Candid and complete information exchange is a critical component in reaching a settlement.  The mediator will discuss strengths and weaknesses of positions, and if needed, will help parties re-evaluate their position. During the caucuses the mediator will keep in mind the desired outcome for both parties while working towards a solution.

Settlement, Recess or Termination. Once a settlement is reached, the main terms of the agreement are summarized and signed before either party leaves mediation. This agreement is enforceable by any court of appropriate jurisdiction. If mediation fails to produce an agreement, the mediator can help determine if another meeting will potentially achieve an agreement or if the mediation should be terminated and the dispute sent  back to litigation.

The Recipe for a Successful Mediation

  • The attendance of  a decision maker.
  • A strong commitment from both parties to resolve the dispute.
  • Choosing a reputable and skilled mediator.
  • Willing parties who keep an open mind.
  • Hard work and willingness find a better option to a litigate result

Conclusion

Mediation will cut down the necessary resources spent on disputes while increasing the chances of moving on from a dispute with a business relationship intact. The mediation process allows for a private setting and direct input by the parties in the final outcome of an agreement. Mediation, which provides the disputing parties with the opportunity to find a resolution that represents a better alternative to a litigated result, will allow the parties to invest in the solution rather than litigate through the problem.  Mediation empowers the parties to be responsible for the resolution they have crafted rather than having a litigated resolution imposed upon them by a judge or jury.  The mediation process, in short, provides disputing parties with a better option to resolve their differences. Happy mediating to all!

Because I Haven’t Mentioned Mediation Lately. . .

Christopher G. Hill | Construction Law Musings

Any regular reader of Construction Law Musings knows that I am both a great believer in mediation and a certified Virginia mediator.  After the last few weeks in which I participated in mediation by Zoom, a Judicial Settlement Conference (read, court-ordered mediation with a retired judge), and will be participating in another mediation in person next week, it seems as if others believe in the process as well.

After all of this mediation activity, all of which related to construction project-related disputes, I am more convinced than ever that almost every construction case should at least be submitted for mediation.  The list below gives my reasons for saying this:

  1. The parties are in control.  In litigation or arbitration, the parties present their evidence to a third party or parties with no familiarity with the “boots on the ground” reality of the construction project at issue.  This third party gives a cold review of what evidence court rules allow them to consider and gives a final ruling that one side “wins” and the other side “loses.”  This decision has monetary consequences for the losing party, not the least of which is a large attorney fee bill after potentially several years of legal wrangling.  With mediation, those closest to the project, the parties, can say what they want, present what they feel to be the best case, and work for a solution.  The solution can be flexible and allow the two sides to reach a business decision that is at least better than a large monetary judgment against one of the parties that is only further enforceable in court.
  2. Mediation is flexible.  As stated above, litigation/arbitration is “one size fits all.”  Courts and arbitrators can only do one thing, award judgment to one of the parties.  A mediated settlement can result in anything from a one-time payment in settlement of the matter to a long term payment plan indexed to money brought in and anything in between that the parties can agree to.
  3. Mediators are good at what they do.  Sometimes the parties simply need a fresh pair of eyes on the problem.  A mediator doesn’t have a stake in anything but helping the parties come to an agreement.  Further, an experienced construction mediator will have no issue in helping “issue spot” with construction counsel and client to point out things that either weren’t seen by the parties or that were seen but not seen as significant.  This type of third party input can and most of the time does lead to progress toward a settlement.
  4. Mediation (almost) always works.  Even when the formal mediation process does not result in a settlement that day, the process almost always works to move the parties toward resolution.  On more than one occasion where I was involved in mediation, the process has enlightened both sides and a settlement was reached shortly after the mediation.  And finally,
  5. Mediation is always less expensive.  In the zero-sum game of construction litigation, mediation is always less expensive in the long run.  Mediation short circuits the expensive (in both opportunity costs and direct costs) process of construction litigation.  While the result of mediation is a compromise in which neither party gets everything they may have wanted, in most, if not all, of the cases I have resolved through mediation, the parties were better off financially for having settled.  Remember, construction companies cannot plan for litigation so every dollar spent is a dollar lost.

In conclusion, I firmly believe that construction disputes are best resolved by the parties and not the courts.  The courts are often necessary (I am a construction litigator after all), but should be the last resort, not the first.  Even where litigation looks like the only path to resolution, be sure to consider mediation.

What to Expect at Mediation

John Davidson | Nexsen Pruet

“This isn’t what I expected.” I hear that comment frequently from people that do not often participate in mediations. If you are involved in the construction industry, you will very likely have to participate in a mediation at some point to try to resolve a dispute. It might be a construction defect case, a payment dispute, a claim involving an ongoing project, or a myriad of other issues. Lawyers participate in mediations all the time. Clients, usually not so much. In fact, many clients participate in very few mediations and may have no idea what to expect. This article will help with that.

What is mediation?

A mediation is an in-person or virtual meeting between parties, whether individuals or companies, and their lawyers to try to settle a dispute. In order to give some structure to the settlement discussions, the meeting is run by a mediator. The mediator is neutral and does not advocate for either side. The mediator’s job is to talk to each of the parties, ask questions about each party’s position and case, and to explore areas of common ground to try to get the parties to reach a resolution.  

Is mediation the same as arbitration?

No. Arbitrations are essentially private trials that result in an award and generally a winner or loser. A mediation does not result in an award or a winner or loser. The mediation will only result in a resolution of the dispute if the parties agree to it. No one in a mediation will force a decision on you – the decision to settle is up to the parties entirely.

What happens at mediation? 

Although processes can change, a typical mediation looks like the following.

Parties will first meet together with the mediator. The mediator will likely have everyone introduce themselves and will explain the process. The mediator will then tell you that discussions during the mediation are privileged and cannot be divulged at a hearing or trial and nothing said at the mediation can be brought up later. That does not mean the facts of the case or information learned are inadmissible later, but you cannot use something said or an offer made at the mediation later. The mediator will also remind everyone to be professional and civil. 

The mediator will then give each side an opportunity to explain the dispute and their position. The plaintiff usually goes first and the lawyer will give their position. The others parties will then do the same. Although the lawyers usually do most of the talking, clients are allowed to talk if they would like. But, always discuss what you plan to say with your lawyer and decide whether it is better to talk in the opening session or later in private with the mediator. 

After opening remarks, the mediator will likely have the parties go into separate rooms so he or she can privately talk with each of them. In these private discussions, the mediator will ask questions about their positions, probe into and challenge those positions, and ask parties to pay attention to and consider the other side’s position. 

At some point, possibly in the first private session or later, the mediator will ask the parties to begin making offers and counteroffers – to negotiate. The client will have an opportunity to discuss with their lawyer his or her response and how it will be communicated to the other side. Through discussions with the mediator, they will get insight into what the other side feels is important and what it is looking for in a settlement. The other side will get the same insight about you.

During these private sessions, the other side will be planning their next move. You will wonder what is going on with the other parties and why things are taking so long. This is where I see parties get impatient and distrustful of the process and want to leave. All of those feelings are normal. However, you should trust that the mediator is working hard to settle your dispute. He or she will let you know if things cannot be resolved. 

Mediations typically do not go quickly. It takes time for everyone to get comfortable with the process and to be willing to compromise. Mediations routinely take a full day or longer. 

If the mediator decides there is no opportunity to settle the dispute, he will end the mediation. However, at the end of the day, if he or she thinks there is still an opportunity to settle, the mediator may suggest you adjourn for the day, and then continue to talk to the lawyers by phone to try for a resolution.  

If you reach an agreement, the parties will do a short settlement agreement at the mediation, to make it binding. The agreement will include all necessary terms of the settlement. If a longer agreement is needed, the lawyers will work on it in the following days after the mediation has concluded. 

There are many other details in what happens at mediations, which I’ll touch on in a later article. However, these points should help you understand the mediation process and make you more comfortable in participating in that process.