Lessons from My First Experience as a Construction Dispute Mediator
For three years in law school, finishing in 1993, I think I hardly heard the word “mediation,” much less had any courses or training in it. In clerking in the US District Court in Norfolk for a year after that, I don’t recall much, if any, mediation occurring, certainly not with magistrate judges the way it is today. Within days of arriving at work at Gentry Locke in the fall of 1994, however, I can vividly remember having conversations with a colleague about John McCammon starting a “mediation business.” Not long after that, I began getting involved in representing parties in mediations on a regular basis. Without knowing exactly, I’d say the count of those cases is in the hundreds. Mediation has become an integral part of the overall dispute resolution process for legal disputes. In the construction law arena, it has become standard fare as a part of many of the form contract documents.
Until recently, my experience in mediation had always been in representing one of the parties involved. That has now changed. I had the welcome opportunity to serve as the mediator in a case between a local government and a contractor involving an underground utility construction project. Though it is a small sampling of experience at this point, I gleaned some excellent insight from that one case, which did settle. Here are some, but not nearly all, of the insight I gained from being the neutral, rather than on one side.
- Advance knowledge of the case is not only helpful to the neutral, it is vital. Whether the information arrives from the parties, or is drawn from previous experiences you have had with similar legal issues, construction processes, or otherwise, that head start is a head start.
- It is helpful for the mediator to create some rapport with each side either in advance, or at the mediation. Key players from the parties do have to trust, feel comfortable with, and want to work with the mediator to get the dispute settled. Each party already has skepticism (at a minimum) for the other side — there is no need for them to have that with the mediator as well.
- Some evaluative element to the mediation can be helpful. Part of why I was asked to mediate this case was due to my experience in working with these kinds of cases — for both local governments and contractors — in the past. The parties sought my opinion on some of the key change order issues, and agreed in advance that I could (and should) opine about those. And, I did. It proved helpful in the parties understanding their respective risks.
- Not getting locked into a set process for the mediation is beneficial. At the conclusion of the opening presentations by the parties, we went right into group discussions about some of the key issues, and answering some of the questions that I thought were clogging up the settlement process. We did not automatically break into caucuses. The individuals involved were professional, and the dialogue remained useful and moved the discussions forward.
- On a lighter note, setting the mediation for a morning only, and not ordering lunch, certainly helped keep the parties moving. It was an unintentional aspect of the process (at least as to the food), but it seemed to have a real impact. I don’t suggest depriving anyone of sustenance, but things do seem to move quicker when the parties start thinking they have been there longer than they should have been.
- Honesty, not trickery, is the best means of getting a matter resolved. I have heard about mediators who tell the two (or more) parties two (or more) different accounts of how an issue is likely to be resolved. From my limited experience, it was more effective, and much easier to keep straight when a consistent account of how issues are likely to be addressed in court is maintained. Certainly there are variations on how issues could turn out, and thus it is fine to work in those gray areas. But when asked to provide an evaluation — as I was in this mediation — consistency is very important.
- Be careful in communicating offers back and forth as lack of clarity can derail the entire process. During the mediation, there was some lack of clarity on how the offers were being structured, as liquidated damages and retainage were being placed into and out of the offers and responses. Ultimately, I brought the parties together in front of a white board and made sure there was an understanding of what the amounts were, how much cash would exchange hands, what accounting would need to occur with the retainage, etc.
- The devil is in the details. Despite my best efforts to get the parties to identify up front the key aspects of the settlement, beyond the payments and time extensions being requested, it was difficult to get those items in focus until the end of the process. Even as we were trying to get ink on paper to get the deal done, issues and details (including important ones that had not been brought up at all until that point) were raising their heads.
- Don’t assume that everyone speaks the same dialect of construction language. I find that in handling cases, and now in having mediated one, that parties use different construction jargon. In a case I am handling now, I am finding that “team build” and “design build” carry connotations that may not be true under the actual contract documents in place. Be careful that parties using “lingo” and terminology are using it the same way — and correctly.
- Keep the parties working, even when the mediator is out of the room. You want the parties to be invested in solving the problem. If you leave the room with nothing more to do than wait (and read the newspaper on the iPad) then not much (or nearly enough) is going to get done. Leave the room with an assignment for the group that is waiting on the other side’s next move.
- Often parties think that mediation takes too long and that cutting to the bottom line should occur sooner. Being in the role of neutral, I now see that there is a method to the madness. Parties have to have time to become comfortable with the moves they are making in the negotiations, and moves that are too extreme may not have time to sink in or become comfortable. As the process moves along with measured progress, it allows the parties to more fully accept the progress that is being made and to want (not fear) further progress.
- Another point about not being wedded to a certain process — getting smaller groups of participants together at various points in the process is quite useful. The owner in our mediation had representatives of its design firm present. Though having them there was helpful, separating them at certain points so that design issues could be discussed (and questioned) led to some additional progress. Likewise, having the attorneys meet and come to a concluding recommendation point proved helpful in getting us very close (but not quite all of the way) to the finish line.
- Using examples of mediation successes from the past can help the process. Creating psychological markers with the participants that mediation results in success seemed beneficial. That goes hand in hand with the reminder to the parties that this process works, that it often takes time, and that progress is being made (when asked).
- Keep in mind conflicts of interest for parties/participants who may not be directly involved in the process. In other words, don’t just focus on the main players but the secondary level players when taking on such an engagement (for those of you who serve or want to serve as mediator and are in private practice).
- And, lastly, for now, the nuance of construction law and the contracts do still matter. A few years ago I was mediating with a younger colleague assisting me. Late in the day of a successful mediation, he kept coming back to a discrete point of the construction contract and reminding me and the mediator that the other side was incorrect about this legal point. I explained to him in that case that we were way past the legal points and far into just getting a business deal done. He wasn’t wrong, those points do matter, it is just a matter of timing. At some point in my recent mediation, it turned from a debate/discussion of the legal and contractual issues to getting a business deal done that the parties could live with. It helped, I think, that the process did involve debates over some key legal points, and some evaluation by me, of the relative rights related to those points. It got us to getting the deal done sooner, and having a basis for explaining and understanding the outcome.
I’m sure there are many other lessons and pointers I picked up from serving as mediator. Putting this list together has given me a chance to uncover and discuss quite a few of them. I look forward to revisiting these topics in the future, and applying them to my practice regardless of the role in which I am serving.