Masonry Magazine October 1998 Page. 28
Mediating Complex Cases
Mediation has grown in popularity, and for good reason... Success!
by Zela Claiborne
In October 1997, the American Institute of Architects ("AIA") introduced new versions of some of its standard construction contracts (A201 and B141). One significant change to the documents is the addition of a mediation requirement. Before proceeding to arbitration or litigation, disputes arising under these contracts must be mediated under the Construction Industry Mediation Rules of the American Arbitration Association ("AAA"). The addition of mandatory mediation suggests that an ever-growing number of disputes will be mediated in an industry which already has distinguished itself by leading the way in ADR.
Most of the current literature claims a success rate for mediation somewhere above 90%. Selecting an appropriate mediator is, of course, extremely important to success. Choose a mediator with experience in construction disputes and a reputation for fairness and effectiveness. Equally important to success, though, is the selection of party participants. Mediation will only succeed if each party is represented by a decision maker with full settlement authority. The mediation process depends upon decision makers from one party hearing the opposing party's case and evaluating it with an open mind. For this reason, a person heavily involved in the events leading to the dispute, even though he or she may be a useful source of information, may be too biased or too eager to justify earlier behavior to make an effective party representative and decision-maker for purposes of settlement.
Low Risk
Mediation is a low risk procedure because it allows for a speedy resolution, often in a day or two, and involves a relatively low cost when compared to arbitration or trial. If mediation can be scheduled before significant discovery takes place, the savings to the parties can be substantial.
One caveat: mediation will be successful only if the parties prepare adequately. Claimants in a large dispute will have to pay consultants to draft at least a preliminary claim document if they expect to receive a substantial settlement. In complex disputes, some discovery may have to take place if mediation is to lead to resolution. Money spent to prepare for mediation is easily justified if it leads to prompt settlement.
Enforceable
Settlements reached in mediation are enforceable if the key terms are reduced to writing. The settlement agreement prepared at the mediation may be handwritten and should be executed before the proceeding closes. A more formal agreement should be prepared by counsel within the period of time agreed upon at the mediation. Attention to this issue will assure that a successful mediation really results in a prompt settlement and avoids the costs of protracted litigation.
Confidential
Parties are willing to exchange information freely in mediation because the procedure is confidential. AAA rule M-12 provides that information disclosed to a mediator in confidence shall not be divulged by the mediator. Further, the law in most states provides that views expressed and information shared, including admissions, are to be kept confidential and cannot be introduced as evidence in any future proceeding.