Project: Settlement. Construction mediation is no different than any other type of mediation. However, it can present additional challenges since there are frequently a multitude of parties, as well as numerous collateral issues which can impede settlement. Let’s take a look at the critical path to getting the case settled.
The
Program. For almost every construction case, the best pathway
out of the dispute is through settlement rather than through adjudication by
judge, jury or arbitrator. Point out to your client that in choosing mediation
over litigation, your client is retaking control of his business – and life.
Because as litigation unfolds, your client will quickly and unhappily
experience a complete lack of control over what happens. But with mediation,
your client will have control over the timing, process and outcome of the
dispute. Your client’s business will have no interruption occasioned by
assisting in discovery, attending depositions, and, worst of all, attending and
testifying at trial. There will be no bad blood between business entities with
whom your client wishes to continue to work. Bear in mind, people in the
construction industry are used to having a fair amount of control over their
part of a construction project. So, the idea of regaining control of their fate
regarding the legal dispute is very appealing.
Design-Build.
The beauty of mediation is that the parties can create whatever dispute
resolution process they feel will be most effective. Formats to consider
include mediation, mediation-arbitration, or arbitration-mediation.
Seek
Bids for the Job - The Mediator. A construction
mediator should possess the characteristics of any good mediator: skill,
fairness, and common sense. But, because of the challenges of construction
mediation, more is needed. No one wants a mediator who thinks The Eichleay
Formula is a Robert Ludlum book; but, to resolve a tough construction dispute,
you will want a mediator who has certain traits beyond some level of fluency in
construction law. An effective construction mediator must have highly developed
interpersonal skills, tenacity, and boundless energy for the marathon sessions
which can occur.
A mediator should be flexible and be able to move
between approaches – facilitative and evaluative – depending on the
circumstances of the mediation and needs of the parties. Specifically, you will
want a mediator who can speak to questions of evidence and other legal issues
which may arise if the case goes to trial.
Erect
the Scaffolding. A candid pre-mediation telephone
conversation is crucial to the success of the mediation. Although dubbed a
“pre” mediation call, it is in fact the beginning of the mediation because you
will begin to describe the case from your perspective during this conversation.
This is also the time where you should talk about the trial date, what
settlement discussions have already occurred, and any particular challenges you
anticipate. For example, are there issues regarding insurance coverage; in
multi-defendant cases, is there a question of apportionment among the
defendants; what to do about a non-participating defendant; and, whether a
defense-only mediation session might be helpful. There may also be personality
issues to address. Finally, you should discuss opening statements which, on
occasion, can be unduly lengthy, provocative and even counterproductive.
The
Project Documents. A good mediation summary should distill
the significant information into a format which is persuasive and manageable.
An unfiltered data dump of plans, photos, and technical information does not
provide the mediator with the most effective tools to question and challenge
the other side’s position.
Assembling
the Team. The oft cited advice of bringing the people with
authority to settle is a good starting point. Beyond that, consider bringing
people who are knowledgeable on anticipated areas of controversy. You may want
to bring someone at a senior management level who is above the fray of having
worked on the project himself. Such a person can bring great knowledge without
the protective feelings of ownership regarding the project. You, as advocate,
need to move beyond the role of warrior and become a diplomat. As the attorney
at a mediation, you should be part of the solution-not part of the problem.
No
Hard Positions on Hard Hats. The construction
industry is populated by people who take great pride in their work. So, if your
opening statement includes claims which might be taken as insulting, such as
shoddy workmanship, try to soften your words a bit. A successful mediation
needs buy in from all participants. Harsh statements attacking the integrity or
competence of a party are sure ways to harden positions.
Loss
of Productivity. Be careful if you choose to bring an
expert. An expert should attend a mediation to help educate and elucidate - not
carry the day for your side. The goal of mediation is to move the parties
beyond their positions and focus on their interests. So, do not waste valuable
time having the expert expound on why your client’s position is 100%
unassailable.
Also, sometimes even powerful evidence presented at
mediation can be a waste of time. Such evidence is not particularly valuable if
it is so technical that it will never be understood by a fact finder or, worse
still, will never pass evidentiary muster. Never forget that this is a legal
dispute headed for court if it cannot be resolved. To make the session
productive, focus on those items which will be admissible and persuasive to the
ultimate fact finder. That is what will elicit movement on the other side.
Delay
Damages (Don’t). Do not spend the whole session trying to
jam a week’s worth of evidence into a single day in order to prove the
liability part of your case. Regardless of the strength of your case, your
interest now is to get it settled. So, like it or not, you simply must move to
the numbers and - working with the mediator - find the number that everyone can
live with.
Be
Ready for Change Orders. Come to the mediation with a
settlement range in mind, but, be prepared to be flexible. Those last moves
beyond your hoped for end point may be tough but will be worth it when the case
settles.
Terminations
for Convenience. It can be tempting to take the easy
route and walk out on a mediation when it is not going well. But remember,
rarely is your client better served by a trial. The brief moment of
righteousness upon walking out will soon be eclipsed by the specter of a
lengthy expensive trial looming in your client’s future.
Concurrent
Delays. As the parties near resolution, there are some
obstacles which tend to crop up all at once. You may have some terms which you
consider minor but which the other side might balk at. Do not wait until the
very end of negotiations to raise these terms. When you present additional
terms after the other side thinks they have struck a deal, it can derail the
process. In fact, you may be providing the other side with new leverage. So,
raise these issues earlier rather than later in the negotiations.
Another cause for delay at the end is the task of
reducing the settlement to writing. Even when everyone is exhausted and content
with a handshake, do not leave until the basic terms of the settlement are
memorialized in a binding agreement. Your mediator should provide the parties
with a Memorandum of Understanding to use once a settlement is reached. But,
you should come to the mediation with any particular language which you want to
be included in the Memorandum of Understanding already prepared. You will want
to address any liens and logistics of releases of those liens. Consider the collateral
effect of this settlement. Do you want language relating to any warranties or
on any ongoing insurance litigation. These are all items which can be
anticipated and you should have language ready to include in the Memorandum of
Understanding if at all possible. It is much wiser to have an enforceable
Memorandum of Understanding when the mediation breaks than hope the necessary
terms will all be included in a later drafted settlement agreement and release.
Punch
List. If the case does not settle at mediation, the
project is still not over. Construction mediations can take more than one
session – in person or by phone. Keep working with your mediator. With the
right plan you can complete Project: Settlement within an acceptable budget and
your client will thank you for it.
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