The construction industry has something important to teach us about resolving disputes. Architects, engineers and contractors long ago accepted mediation as a primary dispute resolution process due to its efficiency and effectiveness.
The construction industry has something important to teach us about resolving disputes.
Architects, engineers and contractors long ago accepted mediation as a primary dispute resolution process due to its efficiency and effectiveness. In the mid-1980s, insurance executives realized mediation’s potential as an alternative to litigation and advocated to integrate mediation into the construction industry contracts. Now, most construction contracts require mediation as an initial step for resolving disputes.
As mediation became more widely used and word of the advantages of mediation spread, disputes outside of the construction industry were mediated. Mediation has become so widely accepted in Utah that, in 2012, the Utah courts implemented an administrative rule to require mediation in nearly all contested civil litigation.
Mediation is an informal process in which a neutral third party — the mediator — assists the parties in reaching a negotiated settlement. Mediation is forward-looking, the goal being for the parties to reach a mutually acceptable solution. The process deviates from litigation, focusing on solving problems rather than assigning blame. While there is no authoritative study on how often mediations result in settlement, the American Arbitration Association reports an 85 percent success rate for their construction dispute mediations. This extremely high percentage is evidence that mediation is a worthy alternative to litigation.
Every mediation is unique, based on the facts, circumstances and the chosen mediator for the matter. While the duration will vary, the majority of mediations are completed in eight hours or less. Even highly complex cases may be mediated within several days. In contrast to litigation, where parties must comply with and wait for an opening in a crowded court calendar, which can take months or years, mediators arrange a mutually convenient time and place for the mediation in a more expedited manner.
The mediator is a neutral facilitator of the negotiation. Unlike a judge, jury or arbitrator, the mediator does not decide who is right or wrong and has no authority to impose a decision or settlement on the parties. Instead, the mediator helps the parties to jointly explore and reconcile their differences through communication and problem solving. One benefit of mediation over litigation is that the parties may jointly select a mediator who is familiar with the type of dispute in which they find themselves. For example, for design and construction disputes, the parties may select a construction attorney to act as the mediator. This familiarity often streamlines the discussion and the settlement options.
Mediation is only as successful as the parties’ willingness to resolve the dispute. Because the mediation process emphasizes the input and freewill of the parties, those who enter the mediation with optimism for resolution and negotiate in good faith are more likely to find an acceptable settlement than those who begrudgingly participate because a court ordered them to do so.
The mediation process may also help maintain relationships as agreements reached through mediation avoid much of the hostility associated with litigation. This is especially important in disputes involving neighbors, family members or businesses, where ongoing relationships can be preserved.
Experienced mediators use a format that is best suited for the particular dispute. Generally, the process of mediation falls into six stages:
First, the mediator will make an opening statement that introduces the parties and explains the goals and expectations of the mediation.
Second, the parties make opening statements to explain, in their own words, what the dispute is about, its effect, and ideas for resolution.
Third, the mediator may facilitate direct communication between the parties regarding what was said in the opening statements. This allows the mediator and parties to determine what issues need to be addressed.
Fourth, the mediator may meet privately with each party in a “caucus” to discuss the strengths and weaknesses of the party’s position and brainstorm ideas for settlement.
Fifth, after caucuses with each party, the mediator may bring the parties together again for direct negotiation, especially when resolution is probable.
Finally, if the parties have reached an agreement, the mediator or the parties will put the main provisions in writing.
An agreement reached during mediation is enforceable in court just like any other settlement agreement. If no agreement has been reached, the mediator will review the progress made in the mediation as well as future options, such as meeting again for further mediation or proceeding with arbitration or litigation.
Nearly all aspects of the mediation are confidential. This confidentiality is especially important if sensitive matters are part of the dispute. Documents created for the mediation and discussions during the mediation may not be introduced during a subsequent trial if the dispute is not settled. Likewise, the mediator cannot be compelled to testify at a subsequent trial.
Even if the mediation does not lead to resolution, it will often give the parties a better understanding of their respective strengths and weaknesses in the matter. Many mediators will offer the parties the mediator’s third-party evaluation of the dispute, which presents a glimpse of how a judge or jury could view the dispute. This allows the parties to reconsider their respective positions. Also, mediations that do not result in immediate resolution often drive subsequent settlement discussions that do yield a settlement.
Mediation is flexible, efficient and cost-effective. Mediation has the advantage of allowing the parties to choose the outcome rather than have it determined for them by a judge, jury or arbitrator. The final decision to settle, and on what terms, always remains with the parties. With an experienced mediator and well-prepared attorneys, mediations can often result in an acceptable settlement that avoids the time, expense and hassle of protracted litigation.
Adam T. Mow and Brad M. Liddell are construction attorneys at Jones Waldo Holbrook & McDonough PC in Salt Lake City.