Mediation

Everyone knows at least one mediation joke. My favorite is that the sign of a successful mediation is when everyone leaves equally unhappy (which, by the way, is partially true).

Despite the sometimes negative reputation mediation has gained over the years, it can be a very effective, every economical way to resolve disputes. The specifics of mediation may vary a little depending on the forum, but the basics are this. All parties get together in one room and provide a brief opening statement. The parties then break up into separate rooms. The mediator will typically visit with the party seeking relief first. He or she will find out a little about the claims being made and the relief being sought. The mediator will then visit each of the other parties and find out about their defenses or counter-claims. Anything told to the mediator is completely confidential. Depending on the complexity of the case, dollars and cents may not even be discussed in this first round. The mediator is simply trying to learn in an hour or two what you’ve lived with for some time.

At some point, the claimant makes a formal demand (typically a monetary amount, but sometimes it could be specific performance). That demand is relayed to the other party(ies), who explain to the mediator why they believe that figure is incorrect. If everyone is there is good faith, a counteroffer is usually given and taken back to the claimant. This process repeats itself until either a settlement or stalemate is reached.

"Why," you ask, "should I spend a morning or whole day sitting in the office of some mediator (and pay them for their time) when we could just send offers back and forth over the phone?" Well, there are several reasons.

First and foremost, if you are working under an AIA contract, there is a good chance that you will have to mediate. The AIA General Conditions of the Contract for Construction (Form A201-2007) states that "Claims, disputes, or other matters in controversy arising out of or related to the Contract except those waived....shall be subject to mediation as a condition precedent to binding dispute resolution."

Secondly, mediation really can be a cost-effective way to resolve disputes. Compared to the potential costs of extended litigation or arbitration, the time and expense related to a mediation is not very high. It is useful to have a neutral third party provide his or her honest assessment of a case. They hear all the facts and arguments the way a jury or arbitrator would hear them. And they will offer their disinterested assessment of how a case might turn out if it is not resolved.

A mediator can also be a much more effective messenger of the strengths of your case than you are. Even if they are just relaying the arguments you have already made directly to the other party over the phone (or face-to-face), the fact that the messenger is a neutral third party will often times give those same arguments a little more weight.

Perhaps the most important aspect of mediation is that the parties still control their own destiny. You control how much (if any) you agree to pay or accept. You control what terms and conditions a settlement will have. And you have the right to get up and leave at any point. There is no obligation to settle, and the mediator cannot commit you to a settlement. There is no judge, jury, or arbitrator telling you what you will or will not do. This is a far cry from what happens at a trial or arbitration should the dispute not be resolved. There, you put your company’s fate in the hands of complete strangers over whom you have no control.

At the end of the day, however, mediation only works if all parties are making a good faith effort at resolving the dispute. If a party is not interested in a resolution, it is a waste of time. But if the parties are genuinely interested in trying to work out their differences, then it is certainly a worthwhile endeavor and may prevent bigger headaches down the road.