Originally posted 2014-08-08 09:00:52.
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.
Christopher,
Your musings on the subject of mediating construction claims are right on the money-figuratively and literally! Construction professionals live with risk management decisions every day. There is the risk of underbidding a job, design errors, construction site accidents, labor disputes, and the list goes on and on. When a construction dispute goes to trial, the risk continues, but there is a distinct difference between litigation risks and those risks that are common to the construction industry: control. When you submit your dispute to a judge, jury or an arbitrator, you lose control, and you give it to people who have little to no understanding of your problems, and several weeks of trial ( and lots of money spent ) will not necessarily make them sympathetic to your point of view. As a result, mediation becomes a very important dispute resolution tool for construction professionals. With the assistance of seasoned contruction lawyers, parties to a construction dispute can evalauate the facts and analyze the law, and in most instances reasonably project the likelihood of success(or failure) if the case goes to trial. Construction lawyers are adept at performing decision tree analyses that include the costs of litigation that help their clients understand the success and failure ratio of a case (meaning, how much you have to spend to get the case through trial and even an appeal and what are your chances of a jury voting in your favor). With this advanced preparation, parties can participate in a mediation where they retain control of the outcome. If the dispute is resolved, it is because the parties decide it is in their respective best interest to do so. In short, mediation allows construction professionals do what they do for every other aspect of a project: control and manage risk. It should be in everyone’s toolbox.
Thanks for the thoughtful comment Ron. I appreciate any insight from the mediator perspective.
Chris,
I would add another advantage of mediation to your list. Mediation helps to repair the relationship between the parties and keeps dispute resolution private. The world of construction is small, and contractors and construction companies do not want to end up being shunned, or have a public record of a win or loss in a lawsuit. Even if the parties themselves do not end up working together again, mediated settlements are confidential. Parties can maintain their privacy and protect their reputations in the construction community.
Thanks Andrea,
This is an argument for mediation prior to litigation. Once litigation starts, the suit is in the public domain. On the other hand, being seen as one that works to resolve disputes is never a bad thing.
thanks to all who joined the conversation! Please keep it going!
I am but a humble student, but I have to say that I am on board the mediation boat too. Another advantage of mediation is not only the possibility of avoiding the time-and-money expense of weeks of trial, as Ron has said, but redirecting that opportunity cost back into actual productive pursuits.
Thanks for this post.
Thanks for the comment Adam and thanks for your mention in your post today.
Good post and one I fully agree with (as you know!). I am a huge fan of mediation.
Even mediations that go very badly are instructive and the overwhelming majority of cases that mediate settle either during the mediation or soon after as a direct result of the progress of the discussions.
.-= Timothy R. Hughes´s last blog post .. Drywall Claims: New Testing Data, and is US Drywall a Problem Too? =-.
Thanks for the contribution to the discussion Tim. I agree. Many times, just taking that first step is the big one psychologically.
I think you are on to something very fundamental with your last comment Chris. Sometimes in our type of cases, that is less apparent – fights and misunderstandings are part of the business and economics of construction, so this process is way more typical.
You get outside that type of milieu and even considering sitting down across the table to talk resolution can be an epic paradigm shift.
.-= Timothy R. Hughes´s last blog post .. Are You Sure You Really Want to Sign that Petition? =-.
Thanks for your continued contributions Tim. I appreciate your joining the conversation!
.-= Christopher G. Hill´s last blog post .. Looking at Construction Cases “De Novo”- An Apellate Perspective =-.
I am being asked to go to mediation, what should i do first from your experiences. Should i retain counsel? If so does anyone have a good reliable, and successful firm that they can recommend.
There is also no legal reason i have to agree to this right? This would force them to pay legal fees and risk that part of the process, right?
Any thoughts,
Hi Christopher,
I am a builder and have a a small construction company employing between 20 and 40 builders here in London.
Luckily I have never had any legal issues which required a lawyer to become involved. However, I read your article with interest as you never know what is around the corner. The mere thought of having a lawsuit to deal with on top of having to manage numerous building sites stresses me out indeed.
To be honest with you, I had actually never even considered mediation as an answer to a potential legal conflict, but it is somewhat reassuring that there are other ways to deal with both customers and perhaps even accidents at work than a legal conflict. (Although people may think differently there are not fortunes to be made at my level of the construction ladder, and paying a lawyer for a lengthy trial scares the living daylights out of me.)
Martin, Preisler Construction Ltd.
London
Of course, if you can come to some agreement through mediation then this is fantastic. The key in any won win situations is to intervene before the issue has become a huge thorn and cannot be resolve with support and discussion.