Kent Scott | Babcock Scott & Babcock | June 8, 2017
Mediation is an effective alternative dispute resolution method that allows disputing parties more say in the outcome while cutting down on the time and resources spent on resolving disputes. The mediation process includes opposing parties sitting down with a neutral third party who facilitates a way for the opposing parties to reach an agreement. The agreement requires both parties to consent to the terms 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. Not meeting these expectations often leads 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 reduces costs and time spent on dispute resolution due to the following reasons.
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. In mediation both parties simply agree to exchange the relevant information used to support each side’s case.
Faster Results. 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 centers on solving the dispute and therefore the legal strategy shifts from building a case with overwhelming evidence to coming up with possible ways to resolve the dispute. Additionally mediation does not require motions and written arguments to support motions. This long process requires valuable resources spent on attorney’s fees while mediation typically requires shorter summaries of the dispute that are submitted to the mediator.
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.
How Successful is Mediation? 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.
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 filing a claim and some limited discovery already done. 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. The mediator should have enough information and communication at this point to make the best judgment call on how much interaction the parties need to have a successful mediation.
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. Having a decision maker for each side is crucial for an efficient and binding mediation.
Day of Mediation. The mediator starts by setting out the ground rules and expectations for professional conduct. Then each party will direct an opening statement to the opposing decision maker that briefly describes the dispute and their ideal resolution. After opening statements the parties separate and the mediator caucuses with both sides. Private caucuses allow the mediator to gather information, negotiate, and find consensus. The mediator will discuss strengths and weaknesses of positions and if needed help parties re-evaluate their position.
Settlement, Recess or Termination. Once a settlement is reached, the main terms of the agreement are summarized and signed before either party leaves mediation. 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 back to litigation.
Successful Mediation Tips
- Decision making parties and attorneys who are very familiar with all aspects of the dispute.
- Strong commitment from both parties to resolving the dispute. A party who is half-interested in resolving the dispute can become too entrenched in their position to compromise.
- Choosing a reputable and skilled mediator.
- Parties refraining from getting firmly entrenched expectations or demands.
- Willingness to see big picture solutions from compromises.
- Honest and good faith participation from both parties.
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. Finding a resolution through mediation instead of litigation will improve the speed and efficiency in solving disputes.
Kent B. Scott is a Shareholder in the construction law firm, Babcock Scott & Babcock PC in Salt Lake City, Utah. He currently serves on several mediation panels and mediates commercial and construction disputes.