In the 2020 Winter issue of Under Construction, two of our D1 members, Paul M. Lurie and Robyn L. Miller, discussed Using Zoom for Pre-Mediation Activities to Achieve Earlier Settlements. As they mentioned in their article, most construction disputes settle and are therefore not adjudicated by courts or arbitrators. We decided to pick their brains a bit more on effective settlement strategies from the perspectives of an ADR neutral and attorney:
Why are pre-mediation activities important for earlier settlement?
Paul: Settlement impasse issues should be identified and dealt with long before the start of any settlement negotiation. Traditional mediation in commercial cases often does not identify impasse issues until the start (or middle) of the mediation session where settlement is also discussed. Guiding Mediators are trained to understand and overcome the wide variety of impasse issues. The mediator’s ability to diagnose causes of impasse is enhanced due to a mediator’s ability to leverage confidentiality. Impasse issues are always about more than money. They include anger, missing parties, fear of public knowledge of settlement, need for discovery, insurance, and expert opinion differences. The pre-mediation session should not involve any negotiations. This creates a much more collaborative atmosphere for addressing impasse issues.
Robyn: In addition, pre-mediation activities make the mediation itself more efficient. In a traditional mediation, each party sits with their attorneys and, perhaps, experts in a room alone while the mediator goes room to room to gain introductions and understand the positions of the counsel and parties. Pre-mediation activities avoid wasting one party’s time while the mediator is being introduced to other parties. Using Zoom or similar platforms is an especially good means of allowing the mediator to meet one-on-one with the parties and get a good understanding of the people and their positions prior to the start of mediation itself.
Can you provide us with an example of diagnostic and remedial processes?
Paul: I was hired as a mediator to resolve a dispute between a City and its contractor, who was responsible for replacing windows in a historic governmental building. The City was not happy with the contractor’s original installation and its inability to prevent water penetration. The contractor had a fix which the City rejected. The City wanted a much more expensive fix, so the City was also withholding the contract balance due to the contractor, which was causing financial problems to the contractor. In their assignment of the case, the AAA described the dispute only as being about the amount of money due to the contractor. After my confidential discussions, it was clear that the impasse was more based on a technical dispute between the City’s expert and the contractor concerning the design of a fix.
In the spirit of the diagnostic and remedial process, I asked each party to nominate three contractors who could understand the problem. From the six names, I chose a president of a contractor who also had an architect’s license. That architect then presided over meetings between the parties until both a fix was agreed upon as well as a method to delivery the money to the contractor after such fix. While the architect had never mediated before, he became my “co-mediator” and the case settled.
How is the construction industry well-served by Pre-mediation?
Paul: Pre-mediation is part of the design of a mediation process. It assumes that there are multiple phases to the mediation, one of which is preparation for overcoming impasse before the start of the settlement negotiations. Again, the Pre-mediation phase does not include any settlement demands or offers. Instead, Pre-mediation activity builds trust in the mediator and overcomes resistance to their early hire. When hired early, the mediator is best able to avoid expense and delay in settlement. Pre-mediation also involves the parties’ collaborative efforts to provide the information parties need to evaluate whether settlement or litigation is in their best interest. This information significantly reduces the expense of using discovery to prepare for ultimate adjudication, if necessary.
Robyn: Pre-mediation helps the construction industry by increasing the likelihood of successful and efficient settlement. With more timely settlements, owners, contractors, and designers can minimize their “investment” in litigation or arbitration and focus their resources on new projects and opportunities.
Is there standard language to include in a contract related to Pre-Mediation?
Robyn: Pre-mediation does not require any change of language in the standard form of construction or design contracts. The parties should only need to hire mediators who know when and how to the use the tools of Guiding Mediation, including the use of Pre-mediation.
What are examples of “nudges” from the mediator that may fulfill the needs of the parties before they are willing to consider change of settlement position?
Paul: Here is an example: the mediator might suggest a meeting of experts, who are creating large disparities in the respective parties’ offers and demands, due to their disagreement over liability and/or damages. This discussion between the experts, sometimes referred to in adversarial proceedings as “hot boxing,” is considered confidential and, therefore, what is said is not admissible in litigation or arbitration. As a result, the experts can adjust their positions without having to concede that they are wrong in an open session. The benefit to this “hot boxing” is that if they are able to reduce their dollar differences, it will make it easier for the parties to change their positions and make more agreeable offers and demands.
How effective is the use of virtual platforms, like Zoom, for Pre-mediation activities if the actual mediated settlement negotiations will occur in person?
Paul: Virtual platforms are great for the kinds of Pre-mediation activities described above which are a necessary precursor to settlement negotiations. Live settlement negotiations may involve direct personal confrontations creating emotions and fears which make it difficult to overcome impasse. Virtual discussions can avoid these situations. This can result in a more collaborative atmosphere that reduces the time and expense of activities, such as furnishing information needed by parties,
Robyn: Virtual meetings are much easier to arrange than in-person meetings because they avoid the time, expense, and coordination required to get lawyers, parties, and experts in the same physical location for the purpose of meeting to agree on the mediation process. Pre-mediation also allows the mediator to spend the amount of time needed with each party to prepare for an effective in-person mediation session because the mediator will have had the time to meet the parties, their counsel, and experts in advance of the mediation. In addition, virtual Pre-mediation meetings provide an even greater opportunity to diagnose barriers to settlement which, inevitably, makes the in-person mediation be more successful.
What do you believe mediation will look like in the coming years?
Paul: Most construction disputes settle before judgment or award because at some point parties agree that a settlement, rather than adjudication, is in their best interest. Most of the expense in dispute resolution is incurred when lawyers and experts prepare for litigations or arbitrations that will never occur. The expense and delay of such preparation can be reduced by using collaborative processes to determine what information – fact witnesses, discovery, or expert testimony – is needed to satisfy the parties so that they have the information needed to overcome impasse. Using virtual Pre-mediation conferences is the best way to agree on these collaborative processes.
Robyn: Given the inefficiency of traditional mediation, as well as the time and cost savings associated with Guiding Mediation, I anticipate that Guiding Mediation will eventually be the standard – and I look forward to that day!
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Contact Paul M. Lurie: pmlurie@early-dispute-resolution.com.
Contact Robyn Miller: Robyn.Miller@crtkl.com.
Editor Lexie Pereira is a third year J.D./M.B.A. candidate at Boston College Law School and Carroll School of Management, studying to become a litigator with a specialty in construction law. This summer, she will be joining Pillsbury Winthrop Shaw's DC office as a Summer Associate. Contact Lexie: pereirle@bc.edu.
