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In May of last year, we discussed an opinion in U.S. ex rel. Thyssenkrupp Safway Inc. v. Tessa Structures LLC.  If you recall, this case involves a three way payment dispute between a supplier, Thyssenkrupp, a subcontractor, Tessa Structures, and a general contractor, Vista Contracting.  As discussed in the prior post, Thyssenkrupp did not get paid on a federal project and filed a Miller Act bond claim against all of the appropriate parties and a breach of contract claim against Tessa Structures.  Tessa Structures then cross claimed against Vista Contracting for indemnification and contribution.  Vista Contracting moved for a stay pending mediation and/or arbitration of the cross claim.

Of course, the contract between Vista Contracting and Tessa Structures required mediation between subcontractor and contractor in one place and arbitration of any claim relating to the subcontract.  In the opinion (U.S. ex rel. Thyssenkrupp Safway Inc. v. Tessa Structures LLC) the U. S. District Court for the Eastern District of Virginia in Alexandria considered the interaction of the two seemingly contradictory clauses.  In doing so, the Court considered other courts’ opinions as to the application of the Federal Arbitration Act to mandatory mediation clauses.  After running through these opinions, the Court eventually determined that there was no need to talk about these distinctions given the broad nature of the arbitration provision of the contract.

In short, the Court determined that the broad language (i. e. any claim) required a stay despite Tessa Structures making the argument that its claim could not be determined until after the Court determined the validity and value of Thyssenkrupp’s claim.  The Court, as Virginia state and federal courts are want to do, looked at the plain language of the agreement and tossed this seemingly logical and practical issue aside.

The takeaway?  Look at dispute resolution provisions in your construction contracts very carefully. I have discussed arbitration clauses in the past and only like them in the right circumstances.  In this case, Tessa Structures got caught in a practical bind by moving forward with the broad mandatory arbitration language in its contract.  These clauses will be enforced, an properly so in most instances.  Should you, as a contractor or subcontractor, find yourself faced with such a provision, an experienced construction attorney can assist you in negotiating a more equitable clause.

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

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I have stated on many occasions here at Musings that mediation is a great solution in many, if not most, construction cases. As a construction lawyer, there are very few cases in which I do not at least broach the subject of mediation with my client and likely with opposing counsel.  When wearing my advocate/counselor at law hat, I find that mediation is a great way to allow construction professionals to see a possible business solution to their legal problem.

A neutral third party set of eyes on the problem can in many instances reveal what in many cases their attorney has been saying all along: namely that litigation in the construction world is often a zero sum game with collection issues even in the event of total victory or destruction of the other side in court.  Add that to the fact that, at least here in the central Virginia area, construction contractors and subcontractors (when the problem is posed the correct way) would rather deal with the problem and retain the relationship than go to court and risk destroying a long term relationship with a valued source of money or good work, and mediation is almost a no-brainer.

Because of my experience with mediation from the advocate’s side of the table, I decided to look into becoming a mediator myself.  As many of my loyal readers (thank you) have heard, I am currently going through the Virginia Supreme Court mediation certification process.  After a bit of a hiatus, I have gotten into the co-mediation portion of the certification requirements.  This last step toward certification in certain of Virginia’s courts involves my teaming with an experienced mediator for the purpose of both actively participating and learning the trade.  As always this has been enlightening.

Even more than the scenarios I went through during training, these real world experiences have opened my eyes to the fact that in many instances the problem that we construction attorneys see between the parties are not really those that are driving the dispute.  Where we see contractual clauses to be argued in Court, the parties see real world, sometimes emotion filled, issues that may have nothing to do with the “legal problem.”

Admittedly, at times I have to really think before I speak as a mediator.  I have to tell myself that I can’t jump across the table and let the parties know how irrelevant the past relationship is to the present dispute.  I have to sit back and be a guide and let the parties take the conversation where they want it to go.  Finding the line between gentle reminders of the stakes and actively moving the parties to the outcome that I believe to be the “right” one is difficult for me as a fledgling mediator.

However, by accomplishing the facilitative role of a mediator, the parties can almost always get to the heart of the matter.  After each co-mediation or exercise in this training, I look back and realize that most people don’t think like lawyers.  The “heart of the matter” may not, and likely often isn’t, the words on a contract (though I cannot emphasize enough the need for a good construction contract).  Often the flashpoint for litigation is found in an interpersonal encounter having little or nothing to do with the contracts that we lawyers love to discuss.  Once this issue (or issues) see the light of day, the rest moves relatively quickly.

Seeing the way that parties can generally come to an acceptable (if far from ideal) solution to a problem without the “help” of a court that can only decide who wins is both refreshing and enlightening.  Having the experience as a mediator and the insight gained in facilitating the parties’ agreed resolution can only help me properly counsel my clients towards a business like resolution to disputes.

In summation, after my first of these co-mediations I am even more convinced that mediation should at least be an option in almost every construction (or other civil litigation) case.

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

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For this week’s Guest Post Friday, Musings has a real treat. Victoria Pynchon mediates and arbitrates complex commercial litigation, including multi-party construction disputes, for ADR Services, Inc. in Los Angeles, California. She blogs about negotiation at the Settle It Now Negotiation Blog and about the mediation and arbitration of intellectual property disputes at the IP ADR Blog. You can also follow her on Twitter here.

Update:  Victoria has started a new Commercial ADR Blog, please check it out.

1. Leave the Decision-Makers at Home

A mediation – particularly a multi-party construction mediation – is more drama than law; more character than rights; and more emotion than reason. Mediation, like trial, requires the lawyers to restore the texture, dimensionality, morality and personality back into the dispute that we lawyers flatten for the purpose of satisfying the law’s requirement that we litigate only the “relevant” facts necessary to satisfy legal “forms of action.”

On game day, it’s not the mediator, but the parties themselves who must decide who is bluffing and who is not; what allocation of responsibility among the parties feels fair; whose claims of poverty or freedom from liability have the ring of truth; and, which parties have deeper pockets or greater negotiation flexibility than their attorneys have claimed.

Just as you wouldn’t want your jury to “call in” their verdict, you don’t want the mediation decision-makers miles away from the mediation table when the cards are being played. Remember that people seek out lawyers only when they feel they have suffered an injustice. Righting that wrong requires more than money or dismissal. It requires the belief that you, the attorney, have gotten your client the very best deal possible in light of the facts finally revealed, the personalities involved and the hard realities faced.

2. Leave Early Because the Other Parties are Acting in Bad Faith

“Americans” (and I use the term loosely for anyone, citizen or not, who buys retail) become uncomfortable after two or three bargaining “moves,” i.e., offer, counter-offer, counter-counter, “see you in Court!”

Until the mediator tells you she is convinced the parties will never reach agreement, the potential for a mutually beneficial settlement continues to exist. As I often say, “as long as your opponent is moving in your direction and you have the authority to move in theirs, the negotiation should continue. Unless you’ve hired a disreputable or simply unreliable mediator, don’t ignore her suggestion that a little patience with the process might result in a big reward for your client. If you are concerned that your movement will set a ceiling or floor without resulting in a deal by day’s end, your mediator should be suggesting bracketed or hypothetical offers and counters. What you should never do is pack up your litigation bag in frustration while the mediator still has tricks up her sleeve.

3. Refuse to Permit Your Client to Talk to Their Opponent.

To everything there is a season . . .

Rigidly adhering to any mediation format (separate caucuses or joint sessions only, for instance) reduces your ability to strategically use whispered confidences in the hallway; candid conversations between counsel without their clients; meetings between the mediator and a difficult party; discussions between the mediator and one or more of the attorneys without their clients; and, meetings between the disputants in complete privacy.

There are dozens of different permutations and combinations of attorney-client-mediator dyads, triads and the like. Each different relationship draws out of us someone slightly different. Depending upon our “audience,” we are more or less comfortable, deferential, authoritative, subject to persuasion or persuasive.

During the course of the mediation, your neutral studies these dynamics and should be making suggestions about which parties can most effectively be discussing which aspects of every proposed deal. Not only should you carefully attend to mediator suggestions about party and attorney dynamics, you should alert your mediator to dynamics of which you’re aware that might be helpful in deploying personality resources on game day.

4. Let the Mediator Bully the Parties

A mediator who is bullying you or your client to settle simply hasn’t gotten the knack of asking questions and creating opportunities. She’s still too used to wielding power. If it’s important enough to spend your day mediating, it’s important enough to tell the mediator that you do not want her bullying any of the parties.

I was co-mediating the final day of a construction dispute with twenty-five to thirty parties when my colleague lost his cool. By two in the morning, a single sub-contractor was holding all parties hostage to his refusal to settle even though he was alone in having achieved all but complete victory – the Plaintiff having agreed to exchange mutual releases to settle with him. Nevertheless, the sub adamantly refused to give up his right to bring a malicious prosecution action against the Plaintiff.

“He needs a woman’s touch,” my co-mediator suggested.

Male or female, someone needed to learn why this single defendant had become so intractable. A bit of questioning revealed that early in the litigation, the sub’s attorney had inadvisably assured his client that he could win a malicious prosecution suit. Counsel was not about to back down now, particularly after he’d been harangued by my colleague in front of his client. I was all but certain the sub had no intention of spending further money litigating the case. Why was he clinging to his right to sue? The three of us talked for 45-minutes while the rest of the parties waited. I don’t know what it was in that conversation that revealed the problem to me. I only know that at some point I realized that the sub could not justify the money he’d paid his counsel unless he emerged from the litigation victorious.

“You know,” I finally said, “you’re the only defendant who actually won here.”

“How do you figure that?” asked the sub, eyeing me with suspicion.

“Everyone else, no matter how unlikely their potential liability, had to pay the Plaintiffs to be released from the case. Your attorney is the only attorney who negotiated a settlement for nothing. He won! And the case promptly (and finally) settled.

Remember that settlement is not about power or authority. It’s about influence and you cannot influence another human being by bullying him. You can only influence him by asking questions, listening carefully to the answers, and responding to the need he is expressing. Not only will hectoring fail to produce the desired result, it will usually trap the bullied party into a position he has no actual desire to maintain. Restrain the pit-bulls and release the attentive questioners. Theirs is the Kingdom of Resolution.

6. Negotiate in the Nano- and strato- spheres.

Spending a significant amount of time negotiating numbers that are far out of the range of potential agreement is not only a waste of everyone’s valuable time, it strains the parties’ patience and often results in impasse even when their “zones of potential agreement” overlap.

The party with the courage to step up to the line of potential impasse is the party who will gain the bargaining advantage. Study after study has demonstrated that the negotiator who makes the first reasonable offer is the party who will “anchor” the negotiation in his favor, not only at the moment the offer is made, but throughout the negotiation.

These few mediation pointers may seem obvious in the way a carefully crafted line of cross-examination seems inevitable. But as anyone who’s ever tried a case, or mediated a complex construction dispute knows, a successful outcome requires rigorous planning, enormous patience, and years of practice.

Choose your mediator carefully and orchestrate your bargaining moves as carefully as you would stage your jury trial. With the right neutral and the right parties at the right time, not only will your case settle, but the settlement you achieve can feel like victory.

Please join the conversation by commenting below or subscribe to keep up with this and other Guest Post Friday posts.

UPDATE: Vickie has been kind enough to discuss this post in another of her insightful articles at her Settle It Now Negotiation Blog.

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Are you a lawyer, real estate pro, contractor, or just a person negotiating his or her way through life?  If you didn’t answer “yes” to this question, I would be surprised.  We don’t all think of ourselves as negotiators or mediators, but any attorney or individual who has to work through any situation of conflict (whether a crowded parking lot, an employment review or request for a raise) “negotiates” multiple times a day.  As they often say, acknowledgment is the first step to enlightenment (or something like that!).

When I was sent a copy of  A is for Asshole: The Grownups’ ABC’s of Conflict Resolution by its author, my good friend, fellow attorney, and mediator extraordinaire Victoria Pynchon (@vickiepynchon on Twitter), I was flattered.  When she asked me to write a “blurb” for inclusion in the book, I was floored.

A reading of this advanced copy (and the published version with its great illustrations), gave even a seasoned construction attorney, former psychology major at Duke University, and mediation advocate some thoughts to chew on.  Vickie takes a “primer” type approach to the vast field of psychological and practical factors that create conflict in our lives.  Her approach to this serious subject (one that permeates my construction practice on a regular basis) uses day to day situations (whether the above-mentioned crowded parking lot or a harried mom dealing with a sibling argument after the fact) to illustrate concepts in a way that makes the reader (in this case me) smile and have multiple “AHA!” moments.

The use of an “ABC” type structure of short chapters and concrete examples that make you smile (or sometimes blush) from the kinship you feel with the subject of that chapter, whether “L is for Lawyer” or “F is for Friend” makes the advice and insight concrete in a way that frankly surprised me in its candor and digestibility.  The book really does break down what could be a dull subject discussed in a psychology or sociology class into an enjoyable read.  With each page, I either thought “I know that guy” or “Wow, am I like that?” I’m sure you will have the same reaction.  The insights from this great book can only help in my day to day construction law practice.

If you haven’t gathered by now, I like the book and recommend it to lawyers and anyone who wants insight into dealing with the many characters and situations that we all encounter on a daily basis.  I could not say it better than Jay Jay French of Twisted Sister did in his blurb for the book:

After reading Victoria Pynchon’s book- – I really now understand the meaning of We’re Not Gonna Take It- – this book rocks!

Update:  You can now get this great book on the Kindle!

Please join the conversation with a comment below.  Also, I encourage you to subscribe to keep up with the latest Construction Law Musings.

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In the past week or so mandatory arbitration has been all the rage.  From those that argue that arbitration is becoming more burdensome than litigation, to my friend and fellow construction attorney Scott Wolfe who gives great advice on how to make arbitration worth it again.  You can place me in the camp of those that think that mandatory arbitration clauses of the type typically found in contracts can add a layer of expense that can be unnecessary.

However, if an arbitration clause is carefully drafted, and properly used, these clauses an be helpful in assuring that the streamlining effect for which arbitration was created actually occurs.  Because the contract is king in Virginia, these provisions can essentially create the rule of civil procedure used to resolve any dispute relating to the project.

Anything from the number and method of appointing the arbitrators, to the ability to use attorneys, to the time between notice and arbitration hearing and whether mediation is a requirement,  to the documents and other pre-arbitration exchanges can and should be specifically outlined.  The construction contract can also state who decides between court or arbitration.  This can be one party or both.  The possibilities are almost endless.

Because Murphy was an optimist and the fact that even the most carefully managed project can lead to litigation, the provisions of your construction contract are highly important.  Please discuss these provisions with an experienced construction attorney prior to presenting or signing a construction contract.  If you are careful, even the most cynical of us could find arbitration helpful.

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As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

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As I left a mediation last week at 8:30 at night, I realized something that I knew all along.  Mediation works.

Why does mediation work?  For several reasons that I can think of.

The first, and likely most important is that lawyers are expensive.  In most construction cases, we charge by the hour and those hours build up, especially close to a trial date.  A mediated settlement can avoid this sharp uptick in attorney fees that always occurs in the last month before trial.  Therefore the earlier the better.

The second is the flexibility to make a business decision.  Commercial contractors and subcontractors are in a business, and they should be making business decisions.  While one such decision can be to go to litigation; litigation is not always the best solution from a financial, or stress perspective.  Construction professionals, with the assistance of construction attorneys, can come up with a creative way to deal with a problem and solve it.

While sometimes trial is inevitable (yes, even with a mediation), mediation allows for more options.  At trial, someone wins and someone loses.  A judge must pick sides and leave someone (and possibly both sides) unhappy.  Then there are appeals, collections, and other expensive issues to deal with.  Mediation allows compromise and allows the parties to agree to terms that the Court (or arbitration for that matter) could not give them. Add to this the opportunity costs of protracted litigation and the idea seems to be a no brainer.

The third is that a contractor can leave a mediation satisfied that they took part in the process and in controlling their own fate.  Let’s face it, litigation is a foreign world for most construction professionals.  Once that call is made to their lawyer, the process can seem to be out of their hands, and in many ways it is.  A good mediator can change that.  While the compromise may not result in complete satisfaction, trial can, and often does result in dissatisfaction.  At least with mediation, one can feel as if he was in some control and not on a headlong charge to oblivion without a way to put on the breaks.

Don’t get me wrong, mediation must be approached with a spirit of compromise and sometimes starting litigation is the only way to get there.  If the parties aren’t committed to the process, no settlement can occur.    Mediation does not work all the time, particularly if the parties present hurdles to the process.

In short, while litigation has its place and I am a construction attorney with the experience to pursue a case from start to finish, I would much rather help the contractors and subcontractors I represent continue to make money and avoid the stress, expense and monetary cost of litigation through contract review and mediation where possible.  This is for one simple reason, mediation works.

Please join the conversation with a comment below.  Also, I encourage you to subscribe to keep up with the latest Construction Law Musings.

PS- for more thoughts on this, please check out this great post by Adam Baker.

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For this week’s Guest Post Friday (on a Thursday) here at Construction Law Musings, Victoria Pynchon (@vickiepynchon) joins us for the 4th time.  Victoria is an attorney-mediator with ADR Services, Inc. in Century City; an arbitrator with the American Arbitration Association in Los Angeles, California; and, a negotiation consultant and trainer world-wide.  Victoria co-founded She Negotiates Training and Consulting in 2010 and writes for ForbesWoman at its She Negotiates blog.  She is the author of one of my favorite books on conflict resolution,

First Let’s Talk About Anger

Please raise your hand if your clients — corporate clients — are angry about the burdens of litigation.  Irritated with the document “demands” and interrogatories.  Frustrated about the e-discovery.  Ticked off at the way opposing counsel asks them questions as if they’re lying.  Hot under the collar about the mounting attorneys’ fees and the distance between the day suit was filed and the probable day on which a trial might eventually be scheduled.  Simmering about the time the litigation consumes, time they’d prefer to be spending doing their actual jobs — planning for and implementing business strategies for a profitable future instead of fighting about the unprofitable past.

And we’re not even talking about your clients’ anger at the defendant who has stolen their intellectual property or stopped worked at the construction site or refused to release the remaining funds in the construction loan account. And if you believe that powerful people in highly successful and profitable businesses do not fear that litigation might hurt their careers, think again.

Why I’m Talking About Anger

Dealing with anger is my job.  As a negotiation coach, mentor, facilitator, and mediator, I need the parties to commercial and construction litigation to be thinking as clearly as they possibly can when challenged to resolve a dispute that’s been the primary thorn in the side of their business for months or years. Everyone arrives at the mediation in some degree of anger — from mild irritation to controlled rage.  Because anger tends to prevent the parties from thinking clearly and from sharing information that would dramatically increase their ability to achieve the best possible negotiated resolution, I’m usually called upon to help the parties move from hostility to collaboration.

What’s “Fundamental Attribution Error” Got to Do with It?

Social scientists who study the reasons people act the way they do have discovered something fundamental about the way we explain our own conduct and interpret the behavior of others.  What researchers have learned is this:  Whenever other people’s behavior causes us harm, we tend to assume that they intended to hurt us. Short of evidence to support that conclusion, we assume that harm-causing behavior arose out of recklessness or a careless indifference to our own well-being.

If our spouse arrives home late on the evening we’ve scheduled an outing with our friends, we’ll reflexively blame their tardy arrival upon their desire to thwart our plans.  Our spouse, on the other hand, will assume just the opposite – that his lateness has nothing to do with bad faith or ill intentions, but to external factors beyond his control – the traffic in Los Angeles, the hurricane warning in  Biloxi or the blizzard in New York City. Though both spouses might be partially right, the “wrong-doer” will always err in diminishing his intentions and the injured party will always exaggerate the role of the perpetrator’s bad intent.

This error is one of attribution – the motive or circumstance we attribute our harm to. And the error is fundamental – Trobriand Islanders are as likely to make this error as Icelanders.  If we didn’t err in this manner, we’d have given up on planning our own futures centuries ago. Attributing the cause of our own harm to the ill will of our fellows gives us a fighting chance to control our future by punishing wrongdoers. Ascribing harm to random circumstance leaves us helpless, continually vulnerable to forces far beyond our control.

So What Does FAE Have to Do With Settling Construction Litigation?

First, FAE makes us angry, preventing us from thinking as clearly as possible.

Secondly, FAE prevents us from seeing “our own part” in the conflict at hand.  This latter effect has been found by researchers to prevent athletes from finding and addressing the causes of their substandard performance. When they chronically attribute their substandard performance to the fault of others, they fail to search for and find those causes over which they have actual control – the errors in judgment or imperfections of performance that contributes to their failures.

How many times have all of us blamed our loss on an unprepared judge, indolent jury, or the bad faith strategies and tactics of opposing counsel? Lots. And there’s no reason for us to be ashamed of it. Our “error” is universal, fundamental to the behavior of the human species.

Once we’re aware of this cognitive bias – this tendency to blame another – then we are armed against falling into its trap.

Giving Up Blame Eases Tension, Permitting Resolutions that are Collaborative and Effective

Now that you know about fundamental attribution error, you can never again be

quite so perfectly certain that your righteous indignation is justified.  You might just be able to give your opponent the benefit of the doubt.  He is not the malicious, cheating liar you believe him to be.  And you are not the saint upon whom harm has been imposed without any fault of your own.

Most people are so certain that the conflict to be resolved is the other guy’s fault that they can’t even begin to see that resolving the dispute is a mutual problem that  best resolved in concert.  And it may sound unlikely, but learning about FAE made all of my relationships -  most particularly the one with my husband – far better almost immediately.

I’m hoping it might make your legal practice happier and your skill in settling litigation more effective as well.

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For our first “Guest Post Saturday” here at Construction Law Musings, we have a great one.  Victoria Pynchon is an attorney-mediator with ADR Services, Inc. in Century City; an arbitrator with the American Arbitration Association in Los Angeles, California; and, a negotiation consultant and trainer world-wide.  Victoria is one of the founders of She Negotiates University and the author of A is for Asshole, the Grownups’ ABC’s of Conflict Resolution which will hit the stores and Amazon.com next week.

Feel like you’re negotiating from a position of weakness?  Join the club.  I’ve never spoken to an organization big or small or person powerful or weak who doesn’t say the same thing.  Why?  Because everyone wants what they want and few people or institutions think they have the power to make other people do what they want, no matter how much money or power they possess.  People are like that.  They don’t like to be told what to do and don’t much cotton to being paid off to do something they don’t want to do.  Stubborn.  Proud.

Litigators are the savviest students of relative strengths and weaknesses.  You’re strong after you win a summary judgment motion or an award of sanctions for discovery abuses against opposing counsel and their clients.  You’re weak after defendant’s demurrer is sustained or plaintiff skewers your best witness during a recent deposition (my favorite:  a colleague, cross-examining an expert witness who said he relied upon what counsel told him, asked “if counsel told you the moon was made of green cheese would you have factored that into your analysis.”  Improbably, before coaching objections were made, the expert promptly answered “yes.”)

As a mediator, lawyers are always explaining why now is not the time for a sit down.  They’re two years into the case but they “haven’t done enough discovery yet” or they won an important pre-trial motion that they hope to leverage into a jury instruction establishing a critical fact to be the incontrovertible truth.  Why should I settle when I’m in a position of strength? they ask or why should I settle when my case looks weak? My standard answer after 25 years of litigation practice is this.

Because tomorrow you’ll be losing.  Or winning.  You know it and they know it.  Someone always has an advantage but few lawyers are rarely able to hold on to it for long.

So what do the negotiation gurus have to say about getting your own way when you feel you’re weak.  Quite a lot it turns out.

Two of the savviest negotiators around, Deepak Malhotra and Max Bazerman in their tremendously practical book Negotiation Genius have devoted an entire chapter to Penelope’s problem called Negotiating from a Position of Weakness.  They don’t suggest throwing yourself on the mercy of your negotiation partner as Penelope does (well, not as their onlyrecommendation).  Rather, they suggest a host of strategies weak bargainers can use to act strong, look strong and be strong.

§  Don’t Reveal that You Are Weak

[H]aving a weak BATNA is not terribly problematic if the other side does not know that your BATNA is weak. If you have a weak BATNA, don’t advertise it!

§  Overcome Your Weakness by Leveraging Their Weakness

[W]hen both parties have a weak BATNA, it means that the [Zone of Potential Agreement] is large.  In other words, a lot of value is created when the two sides reach an agreement.  Who claims more of this value? . . . [T]he one who fares better is the one who makes the other side’s weakness more salient throughout the negotiation.

§  Identify and Leverage Your Distinct Value Proposition

[V]ery often, you do bring something to the table that distinguishes you from your competitors.  This is your distinct value proposition (DVP), and it need not be a lower price.  You may have a better product,, a higher-quality service, a good reputation, a strong brand, or a host of other assets that your [bargaining partner] values and that you can provide more effectively or cheaply than your competitors.

§  If Your Position is Very Weak, Consider Relinquishing What Little Power You Do Have (This was Penelope’s strategy in the Yahoo negotiation subject of her post).

[I]f you can’t out muscle the other side in a negotiation, you may want to stop flexing our muscles and, instead, simply ask them to help you.  When negotiators try to leverage their power, others reciprocate.  This pattern can be disastrous when you are the weaker party.  But when you make it clear that you have no intention of fighting or negotiating aggressively, others also may soften their stance.

§  Strategize on the Basis of Your Entire Negotiation Portfolio

[A]udit the implicit assumptions you make when formulating your negotiation strategy.  You may perceive yourself as being “weak” if you only measure strength as the ability to push hard in any given negotiation without losing the deal.  But you may discover that you are actually quite “strong” once you begin to think about your ability to withstand losing some deals because you are maximizing the value of your entire negotiation portfolio.

§  Increase Your Strength by Building Coalitions with Other Weak Parties

In the realm of international relations, a vivid example of the power of coalitions surfaced during the 2003 World Trade Organization negotiations in Cancun, Mexico.  Disgruntled by the continued lack of attention paid to the issues of concern to developing nations . . . twenty-one “weak” countries banded together to create the Group of 21.  This group is now in a much stronger position to negotiate for the interests of its members than any member nation would have been on its own.

§  Leverage the Power of Your Extreme Weakness-They May Need You to Survive

[I]t is often useful to tell the negotiation “bully” that an overly strong show of force can be counterproductive:  “If you push me too hard, you’ll destroy me — and lose a value-creating partner.”

§  Understand — and Attack — the Source of Their Power

A number of Planned Parenthood clinics around the country have adopted a particularly creative strategy for fighting back [against protesters], usually referred to as the “Pledge-a-Picket” Program.  Here’s how it works:  The clinic asks its supporters to pledge donations to the clinic on a per protester basis.  The more protesters that show up to picket the clinic, the more money the clinic raises in donations! . . . The Planned Parenthood of Central Texas in Waco has even posted a sign outside its clinic that read:  “Even Our Protesters Support Planned Parenthood.”

Once the Planned Parenthood clinics understood that the source of their opponents’ power was the ability to draw large numbers of protesters outside the clinic, they were able to think of a novel way of diminishing the benefits of doing so.

Malhotra and Bazerman conclude their chapter on Negotiating from a Position of Weakness by noting that

while being in a position of weakness is sometimes unavoidable, you will negotiate most effectively when you leverage the fundamentals — systematic preparation and careful strategy formulation.

As Google executive Eric Schmidt famously said, litigation is just a negotiation being conducted in the courts. Take the long view, bring that tremendous creativity you use when you try a case to a jury to the settlement table and take back what your client most misses ~ control of his present and the ability to plan for a productive future.

As always Vickie and I welcome your comments below. Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.

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Here at Construction Law Musings, we have discussed mediation from numerous angles.  From a great Guest Post from Vickie Pynchon (@vpynchon) on Ways Your Construction Mediation will Fail to my own personal musings on the subject.

All of the thoughts from these posts flooded to mind during one long mediation experience recently.  The parties had already tried a court sponsored mediation that lasted maybe an hour and, a few months later, were ready to charge into the void of trial (a result that would have lead to an interesting case with some cool construction issues, I might add), but the lawyers decided to take one more shot with a private mediator.  As is true in almost all commercial and construction disputes, the parties each had strong feelings and reasonable arguments from a legal perspective.  In my latest case (as in most cases where a good mediator is used)  a deal got struck.

Also, and as always happens, I learned something during the process and left it even more committed to the possibility of voluntary (as opposed to contract or court mandated) mediation at the proper point in time between parties who are poised and ready to go to battle in the courtroom.  I say this as a litigator by trade and training that truly enjoys the courtroom battle.  However, I need to remind myself that “Counselor at Law” often follows “Attorney” after my name and I take that second designation seriously.

I saw the reasons that mediation works to resolve even the thorniest of construction disputes, from the ability of businessmen to make business decisions to the possibility of a creative solution unavailable in a pure litigation context.  I also saw how a mediation might not work, from the desire to just shut it down to a mediator that did not take the time and twist the arms.  Mere shuttle diplomacy never seems to do anything to move the parties toward resolution any more than a settlement conference without a mediator would have.

I also saw that mediation can move the ball forward even after a day of hard-fought negotiation results in everyone going home.  Even when parties are at the end of their ropes and all hope seems lost, sometimes a break can lead to a breakthrough.  When all seems lost and a break is the difference between “no” and “maybe,”  “maybe” is always better.  This last needs to be remembered late in the day when the parties are in from out of town or seemingly at their final offers and ready to dig in their heels.  This is true even though most mediators with whom I have worked seem to cling to the thought that once the parties leave the office or conference room the deal is lost.  Sometimes (though far from always), the fresh perspective of a good nights sleep can relieve tension and lead to a bit more rope.

The takeaway?  In even the most difficult and contentious of construction disputes, once business people get into a room with the mindset to fight for  a compromise, a deal generally results.  In most cases the parties’ bottom lines minutes before the mediation starts turn out to be a lot more fluid than even they thought by the end of the day.  The ability to vent as well as be a part of a process (mediation) as opposed to a passenger on a careening train (litigation) almost always results in a more satisfactory resolution.  The parties can leave the mediation exhausted, psychically bruised, but firm in the knowledge that they worked hard to solve a problem and that they came to an imperfect but palatable resolution instead of a decision by a third-party sitting in judgment.

In short, mediation works and, in my opinion, should always be a tool in a litigator’s tool belt.

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.

We have discussed arbitration clauses at length here at Musings.  From the judicious use of these clauses to help resolve disputes to waiver of rights under these clauses through inaction, arbitration clauses permeate the construction landscape.  A recent case out of the Western District of Virginia Federal Court adds a new wrinkle to this analysis.  In Protherapy Associates LLC v. AFS of Bastian, Inc et al, the Court considered an arbitration clause in a service agreement.

In this case, the Plaintiff provided therapy services to residents of nursing homes.  It sued for breach of a contract that included a standard arbitration clause stating that all disputes relating to the contract are to be resolved through arbitration.  Subsequently, the parties reached a settlement agreement through e-mail negotiation.  The agreement, again in e-mail form, stated the amounts to be paid to the plaintiff by the defendants and on what schedule.  The settlement e-mail also stated that any dispute relating to the non-solicitation provisions of the contract would be resolved in the Western District of Virginia Federal Court.  However, this final e-mail did not provide for any particular jurisdictional requirements for payment disputes and explicitly left any unchanged portions of the original contract in full force.

The defendants brought a motion to compel arbitration under the original contract.  The Court denied this motion relating to the non-solicitation claims and granted it as to the payment dispute.  The Court reasoned that the parties specifically waived arbitration as to the non-solicitation provisions but specifically left arbitration in force regarding all other contractual claims.

While this case is not one relating to a construction contract, it provides some good lessons for construction professionals and the construction lawyers who advise them.

1.  E-mails resulting in changes to a contract, even through settlement negotiations, can waive contractual provisions.

2.  Choose your words in such e-mails carefully, you may end up in two different venues like the defendants in this case if you are not careful to either keep arbitration in force for all claims or for none.

3.  The power in point 1 of this list, when used carefully, can assure that the parties to a contract end up in the venue that they desire when seeking to enforce a negotiated settlement.

In short, be careful when crafting a non-judicial settlement of a contractual dispute to avoid litigation over what the settlement means.  It is expensive enough to litigate any breach of terms of a settlement without having a court tell you what those provisions entail.

Image via stock exchange

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-No Derivative Works 3.0 U.S. license.