Construction disputes are usually resolved short of a court trial between the parties. Many disputes are resolved in the field without having to resort to any formal dispute resolution process. For those disputes that do require the parties to resort to formal processes, mediation is frequently the process of choice.
Mediation is a process where a neutral third party assists the parties in reaching a resolution to the dispute. Some mediations involve two parties, some involve multiple parties. Some mediations occur as a result of the court ordering the parties to mediation, others as a result of an agreement between the parties.
However, in all successful mediations, several key elements prevail.
A good mediator is selected
Each individual mediator’s approach to mediation is different. Some mediators are primarily facilitative. They approach the mediation with the intent of improving the parties’ ability to communicate and understand each other’s position and to work collaboratively to explore options for resolution. A purely facilitative mediator will not take a position for one party or the other.
Other mediators, however, will readily evaluate the parties’ various positions and use their evaluation to drive the parties toward settlement. Effective construction dispute mediators typically utilize a combination of these two approaches.
While construction dispute mediations may start with the mediator using a facilitative approach, the mediator will often shift to an evaluative approach at some point in the mediation. Construction disputes are fact intensive, involve contractual rights and duties, and are candidates for evaluative consideration.
The key to success, though, is for the mediator to have the experience, skill, and training in mediation coupled with actual construction experience to not only understand the issues and the relevant facts, but also to know when to shift to an evaluative mode. Doing so too early or without an understanding of the technical issues will cause one or more parties to lose trust in the ability of the mediator.
Positions are thoroughly prepared
One of the goals in mediation is educate the other party or parties about your case. Frequently, mediation is the first time many of the decision makers are actually hearing the full story of the dispute. You must convince someone who is already skeptical that their risk of not reaching a settlement is greater than the resolution proposed. The best way to be convincing is to be thoroughly prepared.
On the other side of the coin, if you do not understand the weaknesses in your position, you cannot effectively evaluate the risks you face if you fail to reach a settlement in mediation. Parties involved in a dispute can get tunnel vision and fail to see the weak points of their positions. By honestly and thoroughly preparing your position, the weak points are also highlighted.
Each party understands the other parties’ position(s)
This frequently occurs during the actual mediation instead of during preparation. The role of the mediator is to help the parties understand the other parties’ position(s). During the course of the mediation, it is not unusual for a party to hear points that were not previously known. It is in gaining this understanding that the parties find the common ground to reach a resolution.
The mediation is timed properly
If the mediation is too early, the parties will not have had enough time to develop and fully understand sufficient aspects of the dispute. This development and understanding is often crucial to reaching resolution. The perceived risk of the unknown is too great. If the mediation is too late, the parties may be too invested in the dispute to consider a compromised resolution. The “correctness” of their position will be set too firm to move.
How do you time the mediation? There is no magic moment in time that is the only correct time for mediation. However, mediation will only be successful if all parties involved are committed to reaching a resolution and have sufficient information to do so. If any party is not committed to resolution, or lacks sufficient information to compromise, it is probably not the right time for mediation.
Collaboration of aligned parties
In a multi-party mediation, it is not unusual for the position of one of the parties to align closer to the position of another party. For the parties whose positions align, cooperation can lead to greater pressure being applied on a third party to settle the dispute. Alignment is at heart of partnering and typically will foster collaboration. Collaboration leads to problem solving, and problem solving leads to resolution – the ultimate goal of any mediation.
Effective themes are used to tell the story
A primary purpose of mediation is to get the other parties to fully understand and appreciate your position. Developing themes helps you to tell the story of your position. Themes make it easier to communicate your position and to allow the other parties to understand your position. As the other parties develop a better understanding of your position you increase the probability the parties will reach a resolution. It is important to develop themes that are credible and consistent and then deliver them with conviction—the three C’s of a good mediation statement.
Parties are prepared to compromise
It has often been said that a good resolution is one where both parties are unhappy. What this really means is that resolution of a dispute requires compromise, and construction mediation is no different. It is rare in mediation for a party to get everything they want, including everything they would seek in litigation.
It is important to remember what the parties do not get if they are able to reach a resolution in mediation. They do not get the continued transaction costs associated with further action such as litigation or arbitration—resolution avoids all of this. In a complex construction dispute, this cost can sometime exceed the value of the dispute. The parties also avoid the emotional costs of continuing the dispute and the personal time of all the disputants and their employees that must be devoted to continuing the dispute. This can be substantial.
Presentations satisfy the 3 C’s
A good presentation at mediation must satisfy the 3 C’s: it must be Credible; it must be Consistent; and it must be delivered with Conviction. As discussed above, one of your goals in mediation is to convince the other parties that your position will prevail if the dispute reaches litigation.
Documenting your position, especially if it is contemporaneous documentation (created at the time the issues surrounding the dispute first arose), is a powerful way to send that message. On the other hand, presenting arguments with documents created after the dispute arose for the sole purpose of mediation will not have much of an effect.
A successful mediation generally entails all or a majority of the elements discussed above. In the event that a dispute is not resolved at mediation and proceeds to arbitration or litigation, much of the preparation for mediation will be useful.
However, it is vital to remember that a primary goal in mediation is to educate the other parties of the “correctness” of your position and to gain a further understanding of the other parties’ position so you can accurately evaluate the risks of not resolving the dispute. By understanding your risks and communicating your case credibly, consistently and convincingly, you improve your chances of reaching a favorable resolution through mediation. Especially if you are truly there to compromise and reach resolution.