Any regular reader of Construction Law Musings knows that I am both a great believer in mediation and a certified Virginia mediator. After the last few weeks in which I participated in mediation by Zoom, a Judicial Settlement Conference (read, court-ordered mediation with a retired judge), and will be participating in another mediation in person next week, it seems as if others believe in the process as well.
After all of this mediation activity, all of which related to construction project-related disputes, I am more convinced than ever that almost every construction case should at least be submitted for mediation. The list below gives my reasons for saying this:
- The parties are in control. In litigation or arbitration, the parties present their evidence to a third party or parties with no familiarity with the “boots on the ground” reality of the construction project at issue. This third party gives a cold review of what evidence court rules allow them to consider and gives a final ruling that one side “wins” and the other side “loses.” This decision has monetary consequences for the losing party, not the least of which is a large attorney fee bill after potentially several years of legal wrangling. With mediation, those closest to the project, the parties, can say what they want, present what they feel to be the best case, and work for a solution. The solution can be flexible and allow the two sides to reach a business decision that is at least better than a large monetary judgment against one of the parties that is only further enforceable in court.
- Mediation is flexible. As stated above, litigation/arbitration is “one size fits all.” Courts and arbitrators can only do one thing, award judgment to one of the parties. A mediated settlement can result in anything from a one-time payment in settlement of the matter to a long term payment plan indexed to money brought in and anything in between that the parties can agree to.
- Mediators are good at what they do. Sometimes the parties simply need a fresh pair of eyes on the problem. A mediator doesn’t have a stake in anything but helping the parties come to an agreement. Further, an experienced construction mediator will have no issue in helping “issue spot” with construction counsel and client to point out things that either weren’t seen by the parties or that were seen but not seen as significant. This type of third party input can and most of the time does lead to progress toward a settlement.
- Mediation (almost) always works. Even when the formal mediation process does not result in a settlement that day, the process almost always works to move the parties toward resolution. On more than one occasion where I was involved in mediation, the process has enlightened both sides and a settlement was reached shortly after the mediation. And finally,
- Mediation is always less expensive. In the zero-sum game of construction litigation, mediation is always less expensive in the long run. Mediation short circuits the expensive (in both opportunity costs and direct costs) process of construction litigation. While the result of mediation is a compromise in which neither party gets everything they may have wanted, in most, if not all, of the cases I have resolved through mediation, the parties were better off financially for having settled. Remember, construction companies cannot plan for litigation so every dollar spent is a dollar lost.
In conclusion, I firmly believe that construction disputes are best resolved by the parties and not the courts. The courts are often necessary (I am a construction litigator after all), but should be the last resort, not the first. Even where litigation looks like the only path to resolution, be sure to consider mediation.
As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.
