When is Mediation Appropriate for Your Construction Case?

Here at Construction Law Musings, I have often discussed mediation as a good alternative to the expense and headaches of litigation.  What I have discussed less often are the circumstances in which it is most appropriate to consider or even push for mediation.

The obvious and clearest time that mediation must be used is where the contract requires it.  Many construction contracts, including those from the AIA (when the parties check the appropriate box) require mediation as a prerequisite to arbitration or litigation.  As is almost always the case in Virginia, this clause will be enforced.  In short, if your construction contract has such a clause, and despite my reservations about “mandatory mediation,” you need to at least go through the process before moving forward with your construction claim.

The more interesting case is where no such clause exists and the parties reach an impasse, sometimes prior to litigation and often after the filing of a construction complaint or demand for arbitration.  What questions should you as a construction attorney be asking both to and about your construction clients before attempting mediation?

Is your client in the right mindset? This is the true key to making mediation successful.  If the parties are not ready to work toward a resolution, even the best of mediators will have trouble bringing them together.  This is true even for those cases where the parties don’t reach settlement during the time spent with the construction mediator.  Without the desire to move the ball forward toward resolution, a mediation could very well end with the parties walking out wondering why they even thought to try and settle.

Is the other side of the dispute in the right mindset?  See above.

Is the case to the point where mediation would be fruitful?  Aside from the first two points, this may be the most important.  This question can be answered with two separate ways of looking at it.  The first is whether the parties know enough about each others’ positions and have enough information to go into the mediation informed and ready to discuss their differences (monetary, legally and otherwise).  Often, the sides have not discussed things aside from the legal or contractual obligations and the payment dispute that likely brought them to your door in the first place.  A bit of discovery, whether formal or informal, may help the mediator and the parties.

The second is whether the parties have, frankly, been “softened up.”  What I mean by this is that the litigation process is draining in both money and time.  Even the most determined and principled of construction companies may be ready to try the mediation route after a few months and a few legal bills.  This is not to say that the parties may not have legitimate legal points or that they may not prevail in the black and white world of litigation or arbitration, but more that they see their business interests better served through the use of mediation at some point during the grind of the litigation process.

Lastly (though this is certainly not a complete list), have the attorneys attempted to resolve the matter without the assistance of a trained mediator and feel that the parties would bridge that final gap with some assistance?  As both a construction litigator and as a mediator, this is the position of the parties when mediation is primed for suggestion.  Here, both sides could use an outside perspective on their issues and in getting one could make the final move to resolution and getting on with making money as construction professionals.

This is just a short list of the many considerations that attorneys and their construction clients should consider when deciding if mediation is right for their particular dispute.  I would love to hear your thoughts and considerations to add to the list.

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