Published In January 2001
One mediator agreement reads: “The purpose of the mediation is to attempt to arrive at a mutually acceptable resolution of the dispute in a cooperative and informal, rather than a legal and formal, manner.” The key words here are “attempt” and “informal.” A mediator does not decide the case, or make findings of fact or reach conclusions of law. The mediator’s primary goal is settlement; not fairness, not legal right. And a settlement cannot be achieved without agreement of all the parties. In other words, any party can walk away with impunity and stop the process. If all of this sounds vague, it is intentionally so. Basically, the process is a somewhat structured, or assisted negotiation. This article discusses the considerations of whether you want to mediate, and if so, how to prepare and succeed. Why ADR? Alternative dispute resolution (ADR) has been around since the beginning of time, and was introduced as an alternative to war. Many today look at the combative nature of litigation as a parallel to armed conflict. Lawsuits can be expensive, time consuming and enervating, sapping your company’s strength and resources. What else is out there? Quite a bit, and with different names like “early neutral evaluation,” “mini-trial,” and “fact-finding.” But of all the choices, mediation offers a fail-safe method for testing your claims with a neutral party. What are ADR’s other advantages? The proceedings are private. There is no publicity, there are no admissions that can be used against you in court, your legal and factual theories of the case are not binding on you. Typically, a mediation, even on a multi-million dollar issue, will be concluded in one or two days, as opposed to two or three years in court. When the mediation is successful, the savings in time and money are obvious. When to consider a mediation? For contract disputes, the word that is worse than “lawsuit” is “discovery.” Discovery in court involves production of documents, sworn answers to interrogatories, and sworn testimony (depositions) before a court reporter. Often, discovery is helpful to your case. It can divulge secrets the other party has been keeping, it can help you probe the other side’s offenses and defenses, and enable you to streamline your own case. So, the question becomes: Do you want to initiate a mediation when you are in the dark as to the strengths of the other party’s case, but before you absorb the expense of litigation? This is a hard question. Sometimes it takes the reality of out-of-pocket litigation costs to convince a party that a negotiated settlement makes economic sense. On the other hand, a party may request an early mediation as an inexpensive discovery tool to find out about your case. Uncertainty is one of the most powerful negotiation tools. The closer to the trial date, the more likely the parties have dug in their heels and convinced themselves that they cannot lose. But by then, they also have invested too much to lose. Factors for a successful mediation Mediators develop their reputations in the industry by getting cases settled. It is therefore important to focus on selecting the mediator. Your mediator should be familiar with your type of claim, whether it involves technical issues, scheduling problems, contract interpretation, liquidated damages, the Uniform Commercial Code, etc. If the mediator does not understand electrical contracting, you might spend too much time on education before you can get to a resolution. Experience is important, as are the mediator’s skills and style of mediating. Does the mediator know how to manage settlement negotiations when multiple parties are involved? Is the mediator comfortable with disputes involving several important issues and high-dollar costs? Can or will the mediator help the parties understand the strengths and weaknesses of their positions? These are just some of the important characteristics. There is no one perfect type of mediator or mediation personality. Still, your confidence in the process of mediation and the likelihood of success are interwoven and, to some degree, revolve around the mediator. The most common format for mediation is to have each side present a summary of the dispute to the mediator, without rebuttal. Often the parties are separated during part or all of the rest of the sessions. The mediator then engages in shuttle diplomacy, going back and forth between the sides in an attempt to reach a compromise. The parties’ commitment to mediating in good faith is essential. There needs to be a serious agreement between the parties that they want to settle the dispute. In most cases, settlement is not just about money, even if money issues motivated the dispute. These other concerns are “coins” that have a value to you and/or your opponent. The following is a list of some of the “coins” of currency in a mediation: * continuing business relationships * need for privacy * the effects on related litigation * a cost-benefit analysis of the lawsuit * disruption to your business * the desire not to divulge company secrets * to tell your story in an informal atmosphere * no guarantee to your winning in court * the other side has a deep pocket (insurance company, bonding company) * your documentation may not stand up in court How to make the presentation Do not go into a mediation unprepared. Treat it like a trial. Whether or not the mediator is an attorney, strong case law for your claims will be influential. So will graphical analysis, summaries, photographs, and other evidence. At the joint meeting, you may have less than an hour to convince the mediator, and score points with your opposition, concerning the merits of your position. Your presentation needs to be concise, pointed, and powerful. Do not worry about rules of evidence. Most construction jobs operate on “hearsay.” For example: “My foreman got told off by the project manager this morning. If we don’t get this job back on track, the owner will never give us another project.” Is this admissible in court? Maybe. Can you use this information in mediation? Definitely. Your chief presenter should be an attorney with mediation experience. This environment is unfamiliar to many, and can be off-putting to the neophyte. Never let your guard down. The mediator will attempt to show the weakness of your claim and the strengths of your opposition. He or she will be doing the same to the other party. The more convincing your own case, the more tools you have given the mediator to negotiate to your benefit with your opposing party. Go in with a number. You cannot negotiate well unless you know your settlement amount. You do not have to tell the mediator what your number is. You can be honest without being completely open. You may choose not to reveal your “bottom line” too early, since you don’t want to convert your “worst case” into the mediator’s goal. How it ends? Assuming that a settlement is reached, write it down at the mediation. In detail. And have both parties sign the agreement. Do not leave the room with unsettled terms and conditions. Where agreement is not possible, close down the mediation and proceed to trial or arbitration. You have not wasted your time. You have heard the other side’s main arguments, you have had a chance to hear how strong your claims are, and you have had the unique ability to evaluate the attorneys, yours and theirs, in a fail-safe environment. Is mediation a helping hand, assisting the disputing parties to find a mutually satisfactory settlement? Or, is it a claw, forcing you into revealing your strategies to the other side while digging deep into your pockets for money? Mediation is what you make it. With proper preparation, careful mediator selection, and experienced representation, you can mediate to closure the problem issues that have you and your company in controversy with others. Some information for this article was provided by EquiSolve, a mediation service, at www.equisolve.com. ITTIG, of Ittig & Ittig, P.C., in Washington D.C., specializes in construction law. He can be contacted at (202) 387-5508, e-mail: USBuildlaw@aol.com, or his Web site, www.ittig-ittig.com.