{"id":3845,"date":"2022-07-19T01:11:50","date_gmt":"2022-07-19T01:11:50","guid":{"rendered":"https:\/\/fwhtlaw.com\/?post_type=briefing-papers&p=3845"},"modified":"2022-12-09T20:42:49","modified_gmt":"2022-12-09T20:42:49","slug":"guiding-mediation-to-meet-demand-achieving-more-effective-mediation-in-construction-litigation","status":"publish","type":"post","link":"https:\/\/www.fwhtlaw.com\/blog\/2022\/07\/19\/guiding-mediation-to-meet-demand-achieving-more-effective-mediation-in-construction-litigation\/","title":{"rendered":"Guiding Mediation to Meet Demand: Achieving More Effective Mediation in Construction Litigation"},"content":{"rendered":"

Dean and Julia are members of the firm\u2019s Construction Law Department. Dean can be reached at 612.359.7624 or dthomson@fwhtlaw.com<\/a>. Julia can be reached at 612.359.7622 or jdouglass@fwhtlaw.com<\/a>.<\/p>\n

All standard construction industry contract forms require mediation of disputes as a condition precedent to proceeding toward binding dispute resolution,[i]<\/sup><\/a> so it is a fair assumption that parties want their disputes to settle and use mediation to achieve that goal.  There is wide variation in how the mediation process proceeds, but a common approach, which this article will refer to as the \u201cStandard Approach\u201d is a follows: The parties (or some dispute resolution service[ii]<\/sup><\/a>) selects the mediator; the parties and mediator schedule the mediation session; several days before the mediation, the parties send their position statements to the mediator and each other; finally, the parties attend the scheduled mediation session to see if the mediator can help them settle their dispute. Most construction disputes eventually settle, so the Standard Approach works, but to examine how it might be improved, we conducted a survey of 330 construction law attorneys from across the country to determine whether the Standard Approach was delivering all that practitioners desired.[iii]<\/sup><\/a>  This article discusses some of the results of that survey, and, based on the responses, proposes several modifications to the Standard Approach to better achieve the results desired by the survey respondents.<\/p>\n

Setting Your Mediation Up for Success \u2013 The Importance of Preparation<\/strong><\/p>\n

The general lack of mediation preparation by the parties is shown by answers to the survey question asking whether all parties were usually adequately prepared at the mediation session to reach a settlement; the average response was only 5.2 out of 10, and it does not bode well for a successful mediation session if parties are only adequately prepared close to 50% of the time.  The responsibility to ensure parties are properly prepared to address issues that are likely to come up during mediation falls to the mediator.  The mediator is in the best position to have confidential discussions with the parties and their counsel before the session begins to discover issues that are important to them and impediments to settlement so the mediator can get all parties to properly prepare to address those issues at the eventual session.  Yet when asked on a scale of 1 \u2013 10 whether the mediators usually knew the particular impediments to settlement before the mediation session began, the average score was only 6.4. In order to be more effective at the mediation session and focus on solving the impediments, it is obviously preferable to know them well in advance before the session starts rather than discover them at the end of the day.  One respondent stated that when acting as a mediator his goal was to make sure there were no surprises at the eventual sessions so the parties could focus on how best to settle the case; that can only be done if the mediator is actively engaged with the parties well before the session.<\/p>\n

An important case in point is a mediation involving insurers.  If insurance coverage is involved in the claims at issue, the respondents were asked on a scale of 1 -10 how prepared the insurers were to reach a settlement at the scheduled mediation session?  The average response was 4.8 or less than 50% of the time.  Given the long lead time insurers need to make a decision, set their reserves, or change their evaluation of a case, it is unrealistic to expect substantial contributions from insurers at a mediation session without substantial pre-mediation discussions with them. When counting on insurance dollars to fund significant parts of the settlement, one must lay the foundation for that recovery well before the mediation, which is another reason for early mediator engagement. During these pre-mediation discussions, the mediator should explore basic insurance issues, such as: what is a particular insurer\u2019s \u201ctime on the risk\u201d; which exclusions are at issue; are there one or multiple occurrences; is there excess as well as primary coverage available; are there opportunities for parties to assert claims as Additional Insureds; and what are the self-insured retentions applicable to the policies. The mediation session is not the time for the insurers to only just start monetizing risk, and if coverage issues and demands are saved until the mediation or shortly beforehand, the advocate is hurting its cause because the insurer needs time to process those demands.<\/p>\n

To determine whether they were receiving the type of pre-mediation service they desired from mediators, the respondents were asked on a scale of 1-10 whether it would be helpful for a mediator to have a confidential discussion with them and their clients about obstacles to settlement and information needed before a decision before the mediation session.  The average answer was 8.5.  The respondents were then asked how often mediators contacted them before the mediation session began to have a substantive, confidential discussion about the dispute.  The average response was 5.1. Clearly, there is a significant gap between the demand for early engagement by mediators and the mediation services that are being supplied.<\/p>\n

Early engagement of a mediator and using techniques to resolve disputes as quickly as possible corresponds to a process known as \u201cGuiding Mediation\u201d which seeks to quickly resolve disputes and reduce the time-related expense of the adversarial process, preserve opportunities for maintaining valuable business relationships, and allow for innovative business ideas to facilitate settlement.[iv]<\/sup><\/a>  Getting the mediator involved early to help the parties design a successful settlement process are common themes of Guiding Mediation. The dynamics of each dispute are different, but a Guiding Mediator frequently seeks to have confidential discussions with each party and its counsel well before the mediation session in order to become familiar with the parties and their decision making processes, identify obstacles to resolution, and determine what discrete and specific information may need to be exchanged before a settlement decision can be made. A Guiding Mediator also seeks to ensure that all parties\u2019 real decision makers are involved and prepared to negotiate by the time the mediation session is scheduled. If insurance coverage issues may be involved, the Guiding Mediator seeks to make sure the carriers are sufficiently informed about the dispute and engaged so they do not appear at the mediation claiming to need more time before they can determine their contribution, if any.<\/p>\n

The Effectiveness of Evaluative Mediation<\/strong><\/p>\n

In addressing the type of mediator they prefer, 81 of the respondents in more narrative answers emphasized a strong preference for an evaluative mediator.[v]<\/sup><\/a>  When asked what techniques used by mediators that they have found effective, respondents provided these illustrative responses:<\/p>\n