Mediation is widely used and almost considered standard in the construction industry for attempting to resolve disputes. In fact, if you have used an AIA form agreement recently, you may recall that one of the standard dispute resolution provisions requires mediation as a condition precedent to either arbitration or litigation. Despite the prevalence of mediation requirements in construction agreements, the actual mediation process, including what strategies the mediator can and should be using to help the parties resolve their disputes, remains somewhat unclear for many people. This article describes some of the standard mediation approaches, and also discusses some mediation techniques that are not frequently used, but can be very helpful resolving disputes in the right situations.
The “Typical” Mediation
There are several different approaches mediators can use, but the two most common are facilitative mediation and evaluative mediation. In facilitative mediation, the parties spend a considerable portion of the mediation in a joint session so that the mediator can facilitate a conversation between the parties. The parties typically present and exchange information, and the mediator’s role is to guide the discussion so that the parties have an increased understanding of each other’s position, and develop solutions to their disputes. The mediator accomplishes this by asking questions and paraphrasing and normalizing responses for the other side. Typically, in facilitative mediation, the mediator does not give his or her opinion regarding the positions that each party takes. Similarly, facilitative mediators do not opine as to the amount for which they believe the case should settle, and they do not give their opinion regarding what they think a judge or jury would decide if the case were to go to trial.
Mediators who use the evaluative approach, on the other hand, do give their opinions as to the parties’ claims, and they often predict the outcome of a case if it were actually tried in front of a judge or jury. Under the evaluative approach, mediators spend time separately with each party in order to understand their positions on legal and factual issues. Parties typically have very little faceto- face interaction, so the mediator is fully in control of the flow of information between the parties. Because a mediator using this approach typically weighs in on specific legal issues and the merits of each party’s claims, it is important that he or she not only have legal expertise, but also substantive knowledge regarding the construction industry in order to properly evaluate the parties’ positions.
Although facilitative mediation has been widely used for decades, many parties opting for mediation today believe that part of the value of mediation is receiving a third-party objective evaluation of the case. Thus, many construction mediators use a combination of approaches, often beginning a mediation using a facilitative approach and then transitioning to an evaluative approach for the remainder of the mediation. A typical construction mediation begins with the parties meeting in a joint session where they exchange information and detail their positions. Parties then break into separate caucuses, and the mediator shuttles back and forth for much of the rest of the mediation having separate discussions with the individual parties. During these separate discussions, mediators typically discuss the parties’ positions in more detail and offer their perspective on the strengths and weaknesses of each party’s case.
The Mediator’s Proposal
Even though many mediators will not stray from the typical formula described above, a good mediator will be flexible and adapt his or her strategy during the mediation to meet the parties’ needs, interaction, and stage of the dispute. This adaptation can include the implementation of alternative approaches, which are not necessarily widely used, but can be useful in specific situations. For instance, should the parties come to a true impasse at the end of a typical mediation, some mediators will offer to provide the parties with a “mediator’s proposal.”
Under this approach, the mediator is asked to choose a proposed settlement amount, which he or she offers to both parties, separately. Generally a mediator’s proposal represents a number where the mediator believes the case is most likely to settle, rather than his or her opinion regarding the value of the parties’ claims. The parties are free to accept or reject the offer, but their responses are only communicated to the other party if they both accept the offer. If one party rejects the offer, then that party will never know whether the other party accepted the offer. One of the benefits to this approach is that parties do not feel like they have to make the final concession in order to reach an agreement.
Double-Blind Multiparty Mediation
Multiparty mediations with multiple defendants can add an additional layer of complication to settlement discussions. For instance, some defendants refuse, on principle, to pay more than other defendants. In other cases, insurance companies or sureties do not want to establish a precedent for paying certain amounts on certain claims. One mediation strategy that can help address these and other issues is the “double-blind” approach.
Under this approach, the parties may have an initial joint meeting to exchange information and state their positions. Then, they are divided into separate caucuses, and the mediator obtains an opening demand from the plaintiff. This opening demand is communicated to all defendants separately and each defendant is asked how much they would like to contribute to the “pot” in order to settle the case. The mediator never tells any of the defendants what the other defendants have offered to contribute, nor does the mediator communicate to the plaintiff how much each individual defendant has offered toward settlement. Instead, the mediator adds up the proposed contributions of all the defendants and discloses the total amount to the plaintiff as one single collective offer.
Assuming the plaintiff rejects the initial offer and decides to make a new demand, the mediator goes back to the defendants and communicates only the gap between the new demand and the defendants’ initial collective offer. The specific dollar amount of the new demand is kept confidential. The mediator then attempts to elicit additional contributions from each individual defendant, and the process continues until there is an impasse or a settlement. If there is no settlement, one benefit to this approach is that there are no assumptions regarding future negotiations — the defendants never know how little the plaintiff was willing to accept and the parties never know how much each individual defendant was willing to contribute.
It is important for parties to enter into mediation with an understanding of their particular mediator’s techniques. It is equally important to keep in mind that the mediator’s goal is to resolve the dispute. So even when a mediator provides an opinion regarding the merits of a case, it may not accurately reflect the likely outcome, but rather where the mediator believes the case may settle.