Winning at Construction Mediation

Introduction
Until just recently the construction industry ignored it. But courts like the New York State Supreme Court are now mandating it, public agencies (New York City School Construction Authority) and private organizations (Associated General Contractors) are specifying it in their contracts and the just-revised American Institute of Architects Standard contract, used throughout the industry by all its members, demands the parties try it before turning to arbitration. At long last members of the construction industry, and their legal representatives, must take mediation seriously and must come to terms with it.

And no matter the route taken, if a party finds itself involved in a mediation, it should mediate to win. Yes, win!

Mediation purists may be taken back by the suggestion that one side or the other should try to win an encounter that is not supposed to be a contest. You often hear the phrase "win-win" to describe a successful mediation. Each side is designated a winner. That is often true only in the sense that each party must agree to the settlement and theoretically neither would accept a settlement not in its best interest.

The side, however, that wins the most, the one that maximizes its settlement, is the one that has best prepared, made the best presentation and was best represented in the mediation, all of which are in the complete control of the parties. But the party that will be more satisfied with the settlement is the one that takes those steps effectively with the realization that there is a very good chance - mediation succeeds 85% of the time - it can attain in mediation the same, or better, results than would be decreed in a litigation or arbitration at a cost in time, money and aggravation that is minuscule compared to the costs involved in these other two forums.

Two Main Ingredients
Two main ingredients in a party's ability to influence the outcome of a construction mediation that go hand-in-hand are the selection of the mediator and the selection of the party spokesman/negotiator. If the mediator is selected for his/her construction expertise as well as for mediation skills (the so-called evaluative vs. the strictly facilitative mediator) and the party spokesman/negotiator has a construction background and is comfortable with the dynamics of the mediation process, that party has optimally positioned itself to 'win' the mediation. A party's spokesman should not only be an effective communicator but be able to articulate the construction issues in relation to the governing legalities and able to speak the language of the trades, design disciplines and construction entities involved in the dispute.

And while case presentation is primarily aimed at your opponent [1], equally important is the impression you make on the mediator, provided, as discussed above, the mediator is not only a facilitator but has the expertise to appreciate the strength of your arguments. All mediators are neutrals without any predisposition to either party or its case. But they are also thinking persons who cannot help but be receptive to the validity of a party's position. If you can convince the mediator that your positions have merit, you have won a powerful ally who consciously, or subconsciously, can champion your case in his/her's devil's advocate discussions and questioning of your opponent. And if your opponent respects the expertise and impartiality of the mediator your arguments in the voice of the mediator can have a significant impact on lowering your opponent's demands or raising their settlement offer along lines favorable to you.

Trial Counsel or ADR Negotiator
As mediation is relatively new in the construction industry many of its legal representatives find themselves in unfriendly, untested waters. Traditionally bred as advocates with a take-no-prisoners mind set, most trial lawyers will have to make a big style adjustment for mediation. Just as a party would be just ill-served by a passive advocate in a courtroom battle so too would it be ill-served by a belligerent negotiator in the collaborative confines of a mediation. Your opponent could be receptive to the merits of your position but be blind, deaf and unreceptive because of the hostility of your spokesperson.

And if the attorney is not comfortable articulating the technical aspects of your dispute nor at ease with the language of the construction industry it may be that the client should be the chief negotiator, of course under its attorney's guidance. (Some attorneys involved in construction disputes are not, surprisingly enough, familiar with construction claims or construction law. (See "Anatomy of a Construction Mediation.")

If neither of you fit the bill - both attorney and client will have to do some soul searching in this regard - it may be a good idea, and well worth the minimal cost, to bring in an outside ADR negotiator to assist you and your attorney; one who is a construction expert, versed in construction law, construction claims and arbitration (many disputes end up in that forum if not settled) with experience in mediation.

Savvy construction people find ways to minimize their costs without diminishing their product or performance in order to keep their prices competitive in the most competitive of industries. Now that mediation is in in everyone's face, taking it seriously and recognizing it as an inexpensive and satisfying way of resolving, and even 'winning,' disputes by taking steps to maximize your chances of success is just good business. It's as simple as that.

Notes:

It may even be in a party's best interest, faced with an opponent who is not equipped to assess and negotiate a dispute intelligently, to suggest that the opponent consult privately with an Early Neutral Evaluator (See "A Tale of Two Slabs") before the mediation to evaluate the case and give guidance. And even though an offer to share the cost of such a service may raise an opponent's eyebrows, it could prove to be a good investment for both sides.

Gary Morgerman
Construction Mediation Inc.
334 West 84 Street, #2
New York, NY 10024

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