What to become a AAA Arbitrator / Mediator? But don't know how? Join Us on June 30th at 3PM ET

Have you ever thought about what it would take to serve as a Construction Arbitrator or Mediator? Do you think you have to wait until the end of your career to pursue an ADR Practice? You don’t. Most arbitrators on the American Arbitration Association (AAA) Construction Panel still maintain a full-time practice. 

On June 30th, Division 1 (Litigation & Dispute Resolution) is teaming up with the AAA, Construction Litigation Committee of the ABA Section of Litigation, and the Forum's Diversity + Inclusion Committee for a virtual program on how you can design your career path to have a successful neutral practice.  Our panelists from the AAA, Forum/D1, and CLC will discuss what it takes to be an arbitrator or mediator with the AAA's Construction Panel, give tips for building the type of experience that the AAA looks for and offer insight and advice for building a successful ADR practice. Understanding that parties often seek diverse viewpoints in dispute resolution, the AAA has made a concerted effort to attract and mentor diverse arbitrators and mediators. During this session, the Panelists will discuss the training and continuing education offered by the AAA to its panelists, as well as its mentoring program.

It is never too early to start planning your career goals and aspirations.  We hope you join us for this discussion.  There will be time for questions at the conclusion of the program.  

REGISTER

Questions about this program or Division 1 in general, contact me, Tom Dunn, Division 1 Chair, at rtdunn@PierceAtwood.com.  

Neutral Evaluation Mediation Agreements

Often parties select a mediator with deep knowledge of the subject matter in dispute, only to conclude that the typical mediation format does not afford them the best use of the mediator’s expertise. As an alternative, in the right case, neutral evaluation may be exactly what parties need to position their controversy for resolution. This hybrid technique combines neutral analysis with a mediator’s proposal.

This process is intended to be used when the parties have come to a seemingly unshakeable impasse during traditional mediation of a complex case, such as a construction dispute in which each party charges the other with material breach of contract, resulting in respective damages calculations millions of dollars apart. The mediator should be experienced and respected in the area of law at issue and knowledgeable about how to conduct this type of dispute resolution. Rather than declare an impasse, the neutral continues as mediator, but in that role, assumes responsibility to “hear” and analyze the facts of the case and provide an informed, nonbinding evaluation and settlement recommendation as to the issues defined by the parties.

The mediator is provided with each party’s evidentiary presentation in an informal, mini-trial format, over a one to two-day hearing, structured by the parties however each side thinks will best present the essence of its case in the time allotted. Experts may be hot-tubbed; evidence may be provided via summaries, narratives or power point presentations; and post-hearing argument may be oral or written.

At the close of the mini-trial, the parties decide whether to go back to mediation or confirm that the mediator issue a written analysis and settlement recommendation. Assuming the parties want a neutral assessment, the mediator then issues a nonbinding, confidential analysis of the issues submitted for evaluation and a settlement recommendation based on that analysis.

Then, if the parties do not accept the mediator’s settlement recommendation, the parties may declare an impasse. Or the parties and the mediator go back to mediation, assuming the agreement and any necessary waivers by the parties under the applicable ethical rules allow the mediator to continue in that role after disclosing his or her opinions on the issues in dispute and settlement.

This approach has proven remarkably successful in providing parties the information they need to settle matters in which they were previously far apart or in deep disagreement as to likely outcome. It allows parties to obtain a non-binding, independent, but well-informed opinion of the case. This may be especially useful if party decision makers- such as public entities or the parties’ insurers - do not attend mediation or require strong support for settlement in ranges not previously authorized.

This strategy for neutral dispute resolution may raise concerns under the applicable ethical rules, including those requiring mediator neutrality. However, these concerns often may be allayed, in the right circumstances, with appropriate disclosures and consents.

Author's Note: With recognition to Ken Gibbs, JAMS, whose writings and practice define the best in mediation-evaluation.

Author Patricia H. Thompson, Esq., FCIArb, is  a full-time neutral at JAMS, with experience conducting virtual and in-person mediations, arbitrations and other ADR proceedings in construction and other complex commercial disputes.

Addressing Confirmation Bias in Mediation

Confirmation bias is the innate human tendency to look for and interpret information consistent with one’s existing beliefs and to ignore inconsistent information, even if that information is demonstrably true. A trial witness’ devastating demonstration of confirmation bias is the climax of the recent, popular HBO mini-series, The Undoing. While exposing the harm caused by a party’s failure to face damaging facts makes excellent court room drama, in real life, advocates have the ethical obligation to do their best to ensure their clients fully appreciate the risks inherent in their legal dispute well in advance of trial.

However, adverse risk analysis also can be challenging for attorneys, due to their natural confidence in their own skills and a proven tendency of trial lawyers to be unrealistically optimistic about their likely success. While such overconfidence may be natural, overconfidence does not guarantee success. A recent article in the Miami-Dade, Florida Daily Business Review offered a stark example of seasoned trial counsel’s failure to accurately predict the outcome of litigation. Pretrial, the defendant’s “gold standard defense” team estimated the worst-case damage estimate at $1.5 million. The jury disagreed, awarding the plaintiff $72.9 million.

Outside counsel’s preparation of a client for mediation should be a perfect opportunity to ensure the client appreciates the risks of proceeding to trial, especially any risks the client might not welcome or want to credit as being inconsistent with its opinion as to the validity of its claims or defenses.  One way for both counsel and a client to more accurately assess litigation risk in the face of inherent biases is to jointly engage in a formal, disciplined identification of those aspects of the case about which the parties and counsel have little control, and to assess the consequences if these risks do not proceed as hoped.

Such considerations will vary, but might include:

 
Jury issues such as:

• Undisclosed juror bias or cultural considerations or the possibility of not seating a jury with the sophistication and objectivity to resolve complex or emotionally charged issues, especially given the limited number of pre-emptory strikes.

• In a lengthy trial, jurors may stop listening to the defense, because they already believe the plaintiff’s case (which is another example of the risk of confirmation bias) – or the reverse: that the jury will only remember the witnesses they heard most recently.

• The possibility that a juror will research the case or issues on the Internet and, based on adverse publicity, reach a decision unrelated to the trial evidence?

Evidentiary issues such as:

• Losing an important in limine motion. 

• The possibility that the client’s fact or expert witnesses may unexpectedly under-perform, become unavailable, or otherwise are compromised by undisclosed testimony in other cases or unforeseen credibility lapses.

• Unexpectedly overperforming opposing witnesses.

• The difficulty and possibly boring nature of having to present evidence in a lengthy, virtual hearing.

• The risk in multi-party cases, such as construction disputes, that parties necessary to your client’s case may settle before or at trial, leaving your client to present its case alone.

Judicial issues, including:

• Judicial bias, undisclosed or not.

• Unfavorable jury instructions or special verdict form.

Post-trial issues:

• The risk of bad publicity.

• The financial risk of an adverse judgment on other client agreements or relationships.

• Uncollectability of your client’s anticipated, successful money judgment or fee award.

• Unfavorable result on appeal, including the cost of retrial.

Mediation offers a unique challenge to outside counsel to provide their clients the valuable and, indeed, indispensable service of rationally identifying and evaluating the merits and risks of their side of a dispute. Undergoing a disciplined process of identifying and analyzing messy and unwelcome facts as part of mediation preparation should help clients face unpleasant truths. Only then can the client feel confident in deciding whether the other side’s settlement offer really is a better alternative to trial.

Author Patricia H. Thompson, Esq., FCIArb, is  a full-time neutral at JAMS, with experience conducting virtual and in-person mediations, arbitrations and other ADR proceedings in construction and other complex commercial disputes.

Best Practices for Remote Mediation

Despite the ongoing pandemic, attorneys require effective methods for resolving construction disputes. 2020 has proven that legal conflicts are the natural result of the unprecedented uncertainty a global pandemic can produce. Parties need to resolve conflicts to continue business operations, pay employees, and protect property. Litigators have increasingly utilized virtual meeting software to achieve these goals.

Mediation can be a great opportunity for litigators to resolve construction disputes without the time and expense of going to trial. Given the ongoing COVID-19 pandemic, mediations are increasingly being held virtually using technology like Zoom. While many of the same best practices apply, certain aspects of the virtual mediation process are a brave new world. Construction lawyers should be prepared to embrace the new challenges and opportunities offered by the “new normal” of remote mediations.

Like a traditional mediation, successful attorneys invest their time to select the best mediator, prepare clients for the process, and manage expectations. Although these fundamentals continue to apply regardless of the format, this article will focus on steps particular to virtual mediations.

Preparation and Communication

A pre-mediation call remains critical to a productive mediation. Clients, regardless of their level of sophistication, should hear an explanation of the mediation process. This call should both manage a client’s expectations and answer remaining questions about how mediation differs from litigation.

Next, discuss the special characteristics of a virtual mediation. The mediation may include a pre-mediation session with the mediator. One obstacle lawyers report with Zoom mediations is establishing trust and good communication with the mediator. A virtual pre-mediation conference with the mediator may be helpful to help get this process started.

The client may require reassurance that private communication remains available in the context of a virtual meditation. Review expectations about confidentiality and security, such as whether the Zoom mediation should be password protected, and additional security measures, such as utilizing the most current version of Zoom and controlling access to the participants’ locations. Multifactor authentication may be a good idea when privileged, confidential, or sensitive information is involved.

Getting Comfortable with Zoom

This is where things really start to get interesting. Attorneys should make sure to discuss the specifics of Zoom or other virtual meeting technology with clients prior to the mediation. Part of this process is simply increasing a client’s comfort level. Many lawyers have reported conducting a practice or dry-run helpful to walk the client through the process. Some clients may benefit from a friendly reminder about selection of appropriate clothing and location. The client should be in a location with a strong WiFi connection which should be tested in advance. Ideally the location will be without background noise or other potential distractions.

The parties should make sure to allocate a specific amount of time to devote to the mediation, free from distractions and interruptions. This is often challenging when participants are located in their own homes or offices with their phones and computers close at hand. Multitasking and phone pick-ups can easily distract participants from the business at hand.

Plan for confidential communications with your client during the mediation. An additional, private virtual room should be made available. Depending on the client and the case, texting, emailing, or instant messaging may be a workable backup solution.

What About Documents?

Sharing information in advance can help resolve logistical and technical issues prior to the mediation. Zoom allows sharing documents during the mediation through its “share screen” button.

Sharing documents in advance will allow the mediator and other parties the opportunity to review. When confidential documents need to be shared with the mediator only, it is a good idea to establish a standard procedure. Dropbox, Google Drive and other tools can be extremely helpful when used with appropriate precautions and safeguards. Depending on the document, having a hard copy in your hands is never a bad idea. In addition to serving as a back-up for unexpected technology issues, many of us benefit from having a physical document to reference.

The same logic applies to draft settlement agreements. Like other documents, these should be circulated in advance. This way everyone has the opportunity to digest the proposed terms. Hopefully this can help parties focus their energy on the most important disputes. Often a settlement agreement can be edited and shared during the mediation. Adding appropriate labels such as the date and time can help make sure everyone is referencing the identical, most up to date version.

Many mediators will encourage parties to share their mediation briefs with each other. This can be a context where tone becomes very important. A diplomatic tone in a mediation brief may be even more important for Zoom mediations. In virtual meetings parties do not enjoy the same opportunities for building trust and rapport relative to a traditional, in-person meeting. Take this into consideration when deciding the appropriate voice for your mediation brief.

The Day of the Mediation

If the parties have prepared, planned, and consistently communicated leading up to the date of the mediation, the day itself can run surprisingly smooth. Using new technology can always bring unwelcome surprises, but a thorough WiFi test for internet speed can help identify and eliminate many common issues like frozen screens and interrupted audio.

Before any conversation, participants should confirm who is actually in the room. This practice can help maintain confidentiality and help parties feel comfortable to speak freely.

Most virtual meeting platforms will allow the mediator to create separate “breakout rooms.” It is a good idea for the mediator to set these up first, then visit each breakout room individually to confirm everyone is where they need to be. Like traditional mediations, Zoom allows a mediator to travel between separate rooms to conduct private conversations with attorneys and their clients.

Signing the Agreement

If the mediation was productive and the parties are ready to sign an agreement, now what? Electronic signatures can be applied using “DocuSign” and other similar programs. If completing a written settlement agreement is not possible, parties can tentatively agree that all material terms are resolved. Memorialize this agreement in a term sheet.

Even if only a limited or partial agreement is reached, a term sheet can still be created and signed. A good mediator should remind everyone that, notwithstanding this positive development, such a limited, tentative agreement will be unenforceable. Make sure to schedule a second mediation date to keep things moving towards settlement.

Conclusion

Out of necessity, the COVID-19 pandemic has given birth to a flourishing market for virtual meeting technology. The legal uses of Zoom and other platforms will continue to evolve and improve in the future. For now, litigators have already developed enough best practices to settle many disputes remotely. Fortunately, many of the same tips apply. Communication, planning, patience, and preparation continue to be crucial for a successful mediation both on and offline.

Author Patrick McKnight is an associate in the Litigation Department at Klehr Harrison Harvey Branzburg LLP in Philadelphia, Pennsylvania. Patrick also serves on the Klehr Harrison Coronavirus Task Force. He can be reached at pmcknight@klehr.com.

Guided Choice CLE Program

Paul Lurie

Back in the Fall of 2014 at the Chicago meeting, we were fortunate to have Paul Lurie speak about the concepts of Guided Choice Dispute Resolution. I moderated the session and learned a great deal from Paul and about Guided Choice being a way for our clients to resolve their disputes more quickly and more cost effectively.  

In concert with the American Arbitration Association, Paul has developed a webinar called "Using Guided Choice to Increase Satisfaction with the Value of Mediators." The instructor staff includes multiple luminaries in the world of dispute resolution and construction law, including (of course) Paul Lurie as well as Adrian Bastianelli, Steve Paul, Peter van Osselaer, Michael Leech, Karl Bayer and Denise Madigan. 

Once you register for this webinar, the other great thing about this program is that you can view it at any time on your computer or on your tablet or smartphone. It is a 1.6 hour presentation with slides, and it is available currently (and until the end of February, 2016) for just $50 by going to the AAA's Education Services website.

If you are not sure what Guided Choice is, Paul has also launched a new Guided Choice Mediation/Early Dispute Resolution website. There, you can find out the basic principles of Guided Choice, learn how to choose a mediator consistent with early dispute resolution, and see what role a lawyer plays in this process. In addition, there is a full bibliography for articles discussing and advocating for Guided Choice (including the blog post I wrote for the Dispute Resolver in anticipation of the Chicago meeting).

Finally, if you have specific questions about Guided Choice, I have found that Paul Lurie is very willing to respond to any inquiries. You can e-mail him here.

What Kind of Mediator Do You Want?

This is an article published by John Watkins, a partner in the Atlanta office of Thompson Hine LLP. It provides his insight into the characteristics that he looks for when he is trying to select a mediator. 

Hopefully, this will spur your thoughts as to the issues that you should consider when you are selecting a mediator as well. It also could help you try to imagine what mediator your opponent is looking for -- and that may be the person who gets a tough case resolved.

Another question for debate and discussion: are there other characteristics that you look for in selecting a mediator that are not on here? If so, what are those characteristics? Why do you look for them?

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What Kind of Mediator Do You Want?

Although I serve as a mediator, my primary role is as a lawyer, representing parties in disputes. Thus, I am often called on to choose a mediator in a case in which my role is as an advocate. Because a dispute involves two (or more) parties, and because the mediator usually must be chosen by agreement, neither party can mandate a particular mediator. Similarly, neither party is obligated to agree to a mediator proposed by the other side.

There are many views on the characteristics of a good mediator, but here is what I look for:

• Willing to probe and ask tough questions. Back in the day, many viewed a mediator's role as "facilitative," meaning that the mediator was simply to facilitate discussions between the parties and never to express an opinion or an evaluation of the parties' positions. Many attorneys now derisively refer to such mediators as "note carriers." I agree. A mediator has to be prepared to reality test by asking hard questions when appropriate, and to try to move the parties toward settlement.

• Truly neutral. Although a mediator has to be willing to ask tough questions, I do not want a mediator who definitively favors one party's position over the other's particularly early in the mediation.

• Practical experience. A mediator needs to bring practical experience to help the parties resolve a dispute. Many lawyers reflexively turn to retired judges. Although retired judges can be good mediators and are particularly useful for some disputes, an experienced lawyer may be a good, and in some instances, better choice. Why? Because lawyers (1) likely have experience in settling similar disputes (as opposed to deciding them), and (2) may have a better understanding for practical and emotional client concerns that are often key to reaching settlement. Regarding the latter, I generally want the mediator, whether a lawyer or retired judge, to have had experience at some point in representing clients.

• Creative. Many disputes involve more than just a monetary component. A mediator who can bring creative ideas for settlement is extremely valuable.

• Optimistic. A good mediator has to be optimistic about reaching a dispute. Optimism, coupled with a dose of dogged determination, keeps the parties talking and increases the possibility of a settlement.

Although there are other qualities that can be important, a mediator with these qualities will probably be near the top of my list.

Is the Med-Arb Format Right For You?

By Nicholas P. Brown, Pierce Atwood, LLP

As the cost of litigation has grown and the appetite for its attendant risks declined, owners and contractors have increasingly relied upon mediation and binding arbitration to resolve disputes. One particularly unique dispute resolution format is the combination mediation/arbitration (or “med-arb”) where the same neutral serves as both mediator and, if needed, arbitrator. In the med-arb format, mediation and arbitration are scheduled concurrently so that the threat of arbitration, and its binding result, hangs over the mediation like the proverbial Sword of Damocles. The parties know that if mediation fails, arbitration immediately follows without delay.

 

The significant wrinkle in the med-arb approach is that the neutral mediator also serves as fact-finder and decision-maker in the event of arbitration. This is not the case in the traditional mediation/arbitration scenario where the mediator has no role in the arbitration and decision-making process. Thus, the parties know that their discussions with the mediator are confidential and will not have any influence on the arbitrator’s decision. This traditional separation between mediation and arbitration enables the mediator to encourage a level of candor from the parties that may be difficult to achieve in the med-arb format.

 

With the med-arb format, the parties must recognize that the mediator may learn facts about the dispute or the parties that might otherwise be inadmissible in arbitration. The mediator is expected to disregard such information in the event he or she subsequently sits as arbitrator. But human nature can make it difficult if not impossible for the mediator to erect the appropriate mental barriers and “forget” what he or she has heard. As such, parties to the mediation may withhold information harmful to their case that they might normally share with a traditional neutral mediator. Where the parties exercise such caution, the likelihood of a mediated settlement may decline.

By the same token, parties may disclose to the mediator wholly irrelevant yet harmful information about the other party in an effort sway the soon-to-be-arbitrator’s impressions of the case. In this way, the mediation may be used as a means of presenting evidence that might never have been heard.

Given this dynamic, you may be wondering about the benefits of the med-arb approach. First and foremost, is the opportunity for a quick and relatively inexpensive resolution. A recent dispute I worked on took less than nine months to fully resolve from the moment the case came through the door. Once the parties agreed to the med-arb format, it took just four months for the arbitrator to issue her decision and award. Considering the significant number of issues presented by the parties, litigation likely would have dragged on for two or more years and likely would have entailed extensive discovery. Under the circumstances, med-arb offered a tremendous opportunity to save the time, expense, and aggravation of a prolonged litigation schedule. 

Second, the threat of immediate arbitration may provide the necessary incentive for the parties to approve a mediated settlement. With traditional mediation and arbitration, the arbitration hearings are often not even scheduled at the time of mediation. Thus, arbitration may seem more theoretical than real to your clients whose rights and interests will be ultimately be decided should mediation fail. Without the imminent possibility of loss at arbitration, settlement may remain out-of-reach until just prior to arbitration.

 

Ultimately, these benefits must be weighed against the risk of having the same person serve as mediator and arbitrator. Attorneys are well advised to consider the relative strength of their case taking into consideration all facts and circumstances that might be shared with the mediator by the opposing party. Thus, if you are concerned that your client may be cast in an unflattering light by the disclosure of otherwise inadmissible evidence during mediation, the med-arb format may not provide a benefit to your client. In contrast, if your client has a strong case and you believe there is little risk that the mediator will be swayed by irrelevant information, med-arb may offer a cost-effective alternative to litigation. Regardless, attorneys should assess the strength of their case using a holistic approach that might not normally be needed.

 

For further information and an interesting discussion of the merits and pitfalls of the med-arb format, the following articles are recommended. See Martin C. Weisman, Med-Arb: The Best ofBoth Worlds, Dispute ResolutionMagazine, Spring 2013, at 40; Brian A. Pappas, Med-Arb: The Best of Both Worlds May Be Too Good to Be True, Dispute Resolution Magazine, Spring 2013, at 42. Both articles and others are available at http://guides.library.harvard.edu/content.php?pid=442479&sid=4396465

Sign On the Dotted Line! by Hon. Nancy Holtz (Ret.)

“One of the main purposes of mediation is the expeditious resolution of disputes. Mediation will not always be successful, but it should not spawn more litigation . . . .”

So said the New Jersey Supreme Court in the case of WillingboroMall LTD v. 240/242 Franklin Avenue, LLC, 71 A.3d 888 (2013), as it considered a mediation which itself became the controversy. Five depositions, a four-day evidentiary hearing, and two appeals later, the high court set forth a new rule in New Jersey requiring that, to be enforceable, an agreement reached at mediation must be in writing.

The controversy began when a commercial case, arising out of the sale of a mall, was sent to mediation by the trial court. At mediation, the parties reached an agreement. The mediator reviewed the terms of the settlement with the parties, but the settlement terms were not put in writing at the conclusion of the mediation.

Several weeks later, in what may have simply been a bout of buyer’s remorse, Willingboro’s manager balked at the settlement. He complained that his attorney and the mediator had unduly pressured him to settle. In his words, he would have confessed to the Lindbergh kidnapping and the Kennedy assassination if it meant he could have extricated himself from an “incredible uncomfortable, high pressure situation.”

With Willingboro refusing to honor the deal struck at mediation, Franklin brought a motion to enforce the terms of the settlement that included certifications from its own attorney and the mediator disclosing communications made during the mediation. Rather than oppose the motion invoking the mediation communication privilege, Willingboro opposed the motion with its own disclosures of confidential communications.

During the evidentiary hearing conducted by the trial court, Willingboro changed course and moved to strike the confidential communications already disclosed. But the trial court found that Willingboro had waived the privilege and that a binding agreement had been reached between the parties. On appeal, the appellate division affirmed.

Willingboro next appealed to the New Jersey Supreme Court and two issues were certified: (1) whether New Jersey law required that a settlement agreement reached at mediation be reduced to writing at the time of the mediation to be enforceable, and (2) whether Willingboro had waived the privilege that protects communications made during mediation from disclosure.

The New Jersey Supreme Court noted that there is a mediation communication privilege with only two exceptions: (1) the signed writing exception, which allows a written settlement agreement to be admitted into evidence to prove a settlement; and (2) when there is a waiver of the privilege.

The court stated that “[i]n the absence of a signed settlement agreement or waiver, it is difficult to imagine any scenario in which a party would be able to prove a settlement was reached during the mediation without running afoul of the mediation-communication privilege.” The court upheld the ruling that Willingboro had waived the privilege and that the settlement was binding.

Recognizing that the court system favors the settlement of disputes by mediation, the court observed that the success of mediation depends on confidentiality. To protect this confidentiality while encouraging the use of mediation to reach binding settlement agreements, the court announced a new rule: “[G]oing forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforced.”

As the courts continue to encourage mediation as a more economical and expeditious means to resolve cases, this new rule in New Jersey will no doubt be adopted in other jurisdictions that have yet to address the issue. A signed writing (or video or audio recording, which the high court suggested as an alternative) may ensure the enforceability of settlements reached at mediations.

A Mediator’s Takeaway

Mediators may wish to provide a standard form that attorneys can utilize to memorialize the key terms of a settlement. In the event the parties are not able to complete a memorandum of understanding before the close of the mediation proceedings, the mediator may want to suggest that the mediation remain open until the settlement is reduced to writing.

Parties choose mediation for expedience and economy. Willingboro should serve as a cautionary tale to mediators: Parties are entitled to rely on the guarantee of confidentiality at mediations. If a dispute arises, a mediator may not divulge privileged communications in order to assist a party in enforcing a settlement reached during mediation. The result in Willingboro speaks volumes about the consequences of disclosing confidential communications.

Hon. Nancy Holtz is a mediator and arbitrator based in Boston, Massachusetts providing neutral services nationwide.

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© 2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

A Blueprint for a Successful Construction Mediation, by Judge Nancy Holtz (Ret.)

Division 1 Member, Nancy Holtz, shares with The Dispute Resolver her insight on a blueprint for a successful construction mediation. 

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.