What is Mediation?
Mediation is when disputing parties agree to meet with a respected impartial person, the Mediator, to attempt to reach a mutually acceptable settlement. There are no formal court procedures or rules of evidence, although careful pre-mediation preparation and organization are important for a successful Mediation outcome.
Unlike a Judge or Arbitrator, the Mediator has no official authority to render a decision or force the parties to accept a settlement. Yet, according to the Conflict Resolution Center, the surprising result of using the Mediation process in cases that had been previously entrenched in conflict is that the disputing parties achieve an acceptable settlement 85% of the time.
During the last twenty years, Mediation has grown into one of the most popular methods of resolving civil disputes in the United States. Many lawyers, insurance companies, risk managers and legal departments now use Mediation on a day-to-day basis to help resolve claims and litigation as quickly and efficiently as possible. Mediation also has the advantage of being private and confidential.
What types of disputes can be resolved through Mediation?
Mediation has been successfully used for all industries and all types of disputes. Within the Construction industry, types of cases successfully resolved through Mediation include construction defect, non-payment, construction related real estate, single or multi- party, residential and commercial issues.
It makes no difference whether liability is admitted or contested, whether the case is in litigation or not yet filed, or whether the dispute involves many millions of dollars or a non-monetary objective, Mediation has proven effective in all of these situations.
There are two types of disputes that are not appropriate for Mediation: when there are criminal allegations or when someone is not capable of representing themselves due to mental or other illness.
If you are not sure which method is best to resolve your dispute, please call us to speak with a Dispute Resolution Specialist.
What is the timing of Mediation?
The Mediation process can begin at any time. Whether you are in the middle of a construction project or at its completion, Mediation is an effective avenue for resolving differences. The sooner the parties can sit down and use the process of Mediation, the more likely the dispute will be successfully resolved. Mediation works well to resolve disputes mid-project, especially when the goal is to continue working together toward completion.
If you are already on the litigation path, Mediation is still an available and valuable process for your case. A Mediation session has the effect of getting settlement negotiations focused much more quickly than if the case proceeds to trial. Proposing Mediation is an excellent way to get settlement discussions moving in the right direction and away from court.
What are the benefits of Mediation?
- Self-Determined Outcome
Because both parties work towards resolution, you are able to maintain control of the dispute outcome, instead of leaving the award/judgement up to the Arbitrator or Judge.
- Higher Rate of Compliance
Mediation offers a higher rate of compliance since the both parties develop solutions together. A court judgement is imposed on a party by a Judge and can be harder to collect.
Mediation sessions are able to be scheduled at the parties’ convenience. They do not depend on the public court schedule.
- Better Information
Since you and the other party have first hand experience and knowledge of the dispute and how it developed, you know the dispute details better than anyone. You probably also have ideas about a good solution. Therefore there is no one better qualified, including a Judge or Arbitrator, to craft an agreement that will work and will last.
- Most Cost Effective
Mediation is one of the most cost effective options for resolving a dispute that you have been unable to resolve by yourself. An early settlement, naturally, saves litigation expenses and other costs related to managing the dispute.
- Preserve Relationships
Mediation improves communication and understanding between parties while strengthening personal and business relationships.
- More Understanding
Mediation provides a forum for communication. It is an excellent way to have your position and motives understood and to understand the other side better.
- Custom Solution
The Mediation process allows for a more comprehensive and custom solution than the legal system can provide. A Mediation agreement is a flexible document that is not limited to monetary compensation. Some examples of non-monetary resolutions are having a tile job re-done, getting cabinets rehung or sometime even a written apology.
- Private and Confidential
Another advantage of Mediation is that it is private and confidential. Conducted by private agreement, Mediation is not open to the public and the Agreements reached are not a matter of public record. It is important to note that all court judgements do go into public record that can be searched and read by anyone. In addition, court judgements can negatively affect the party’s credit ratings for seven years.
How is a Mediation case started?
Generally, one party to a dispute will contact MFC’s office to initiate Mediation or discuss it as a possible dispute resolution option. Often, the parties have discussed the possibility of Mediation prior to contacting MFC, however another option is to have MFC contact the other side to describe the benefits of Mediation and how to get started. An impartial organization such as MFC might have a greater chance of gaining the parties’ participation in Mediation. Because Mediation is so effective and usually provides a win-win outcome, MFC administrators are typically successful at convincing everyone to participate.
What takes place at the Mediation session?
All parties to a dispute need to be present at the Mediation session. For example, participants in a typical construction defect case usually include the Owner, the Contractor and their respective counsels (if any), sometimes an insurance carrier, and the Mediator.
Each party and their representatives meet with the Mediator individually to encourage candid communication about their position and goals for the Mediation session. These separate meetings, called caucuses, are confidential. In each caucus, the Mediator will discuss the risks of the case, best and worst outcomes, quality of evidence, and the costs of litigation
Then all parties, representatives and the Mediator meet in a joint meeting format. After introductory remarks by the Mediator, each party is given the opportunity to explain its position in the presence of the other participants. These informal opening statements are a starting point for each party to increase their understanding of the other side’s case. It helps to have an open mind and expect to hear a new perspective.
After the joint session, the Mediator will usually again meet with each side individually. The Mediator will explore common ground and possible settlements. It is common for the Mediator to go back and forth between the parties for a number of private meetings, just as the Mediator may bring the parties back together for joint discussions. Should both parties come to resolution through the Mediation process they will commit to this Agreement in writing and both parties will sign it.
All Mediation cases are conducted in accordance with the MFC Mediation Rules and Procedures.
What if the case doesn’t settle?
Many cases will settle at the Mediation or shortly thereafter. If a settlement is not reached at the first Mediation session, the Mediator may continue the discussions by telephone, and often the parties elect to have further sessions as they see progress is being made. If a full settlement is not reached, the parties are free to pursue other options such as arbitration or litigation.
How to prepare for a Mediation session?
Preparing for Mediation is much easier than preparing for Arbitration or Trial. There is no discovery nor pre-session pleadings required. In complex cases, the parties are encouraged to prepare a Mediation Brief which is a short, clear document that explains each issue in dispute. It is best to avoid blaming and judging. Focus on the facts of what happened and what you would have liked to have happened.
Prior to the day of the Mediation, all parties should gather sufficient information to be able to make settlement decisions. It is common for MFC to help with informal information exchanges. Please make MFC or the other parties aware of any information you need prior to the Mediation.
A critical element of a successful Mediation is that each side must have present, a person with final authority to settle the case. In other words, a person on each side with decision making authority, their representative (if any) and witnesses (if any) should attend.
A ten to twenty minute opening statement should be prepared. Keep in mind that this is an excellent opportunity to talk and listen directly to the other side. Representatives should consider whether their clients should participate in this presentation (e.g., how the dispute has affected them.)
You should be prepared to discuss the details of your case. Have quick access to needed information.
How much will Mediation cost?
MFC charges hourly or per diem fees for the Mediator’s time, which will be billed after the Mediation is concluded. MFC collects a retainer before the session based on the estimated time the Mediation will take.
In most cases, the parties agree to divide the Mediation costs. With MFC there will be a clear fee agreement prior to the Mediation session taking place. Please call MFC and speak with a Dispute Resolution Specialist to discuss your options and help you estimate a cost range.
For a mid-project dispute, a Neutral Construction Expert can be brought in at any time, without a formal Mediation, to hear an issue and give a recommendation or assist in a negotiated resolution. The project can keep moving and the dispute is resolved on-site before it can escalate into two opposing entrenched positions.
How is Mediation different from Arbitration?
The main difference is that Arbitration places control of the outcome in the hands of the neutral Arbitrator. Arbitration involves the presentation of evidence to an Arbitrator for a legally binding decision. Therefore, your goal in Arbitration is to “prove” your case to the Arbitrator.
The goal of Mediation is to find common ground and develop an Agreement that is acceptable to both parties.
Both are alternatives to the court legal system. Both have the advantage of being able to choose neutral subject experts as opposed to judges who are generalists. Both are typically faster and less expensive than the court system.
How are Mediation clauses used?
Many businesses and attorneys routinely insert Mediation clauses into contracts. By using such a clause, the parties are pre-agreeing to use Mediation first in the event of a dispute. See Sample Mediation Clause.
How can I get more information about Mediation?
MFC has a library of Dispute Resolution articles and other materials that are available on our website https://www.mfcbuild.com/resources as well as more upon request.
We are happy to furnish you with references.
MFC has developed a guide to help you choose which dispute resolution service (Mediation, Arbitration, Dispute Review Board or Expert Witness) is best for you depending on the parties, goals for outcome and timing. Please call us to speak with a Dispute Resolution Specialist.
Sample Mediation Clause
A business contract, lease or other written contract may contain a Mediation clause. By using such a clause, the parties to the contract agree to mediate any disputes. The following Mediation clause does not have to be used “as is” in order to use the services of MFC.
SAMPLE MFC MEDIATION CLAUSE:
In the event a dispute shall arise between the parties to this [agreement, contract, lease, etc.], the parties agree to participate in at least four hours of Mediation in accordance with the Mediation procedures of Myles F. Corcoran Construction Consulting, Inc. (MFC) The parties agree to share equally in the costs of the Mediation. The Mediation shall be administered by MFC in accordance with the MFC Mediation Rules and Procedures.
Mediation involves each side of a dispute sitting down with an impartial person, the Mediator, to attempt to reach a voluntary settlement. Mediation involves no formal court procedures or rules of evidence.*
Enforceability: Generally, Mediation clauses are enforceable. However, Mediation is essentially a consensual process, and a settlement is unlikely if one party is forced to participate. The Mediation clause recognizes that both parties have considered, and are open to, the Mediation process. Should both parties come to resolution through the Mediation process they will commit this Mediated Agreement to writing and both parties will sign it. This written and signed Agreement can be enforced as a legal contract.
*Reprinted with permission from “United States Arbitration and Mediation”.