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!

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