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by Allan H. Goodman

Mediation is often used to resolve disputes arising during performance of construction contracts. Mediation is the non-binding, cooperative process in which parties to a dispute select a neutral third party, the mediator, to help them resolve their differences. The goal of mediation is a settlement agreement. While mediation is usually voluntary, many courts mandate an attempt to settle cases by mediation before setting a trial date. In a typical mediation, the mediator meets with all the parties and their attorneys in a joint session and then conducts a series of private, ex parte caucuses. In these private caucuses, the mediator assesses the strengths and weaknesses of the parties’ positions and helps them frame settlement offers. The mediator may transmit settlement offers between the parties or may have the parties meet together in settlement discussions. A skilled mediator is able to help the parties overcome impasses in negotiations and guide the parties to a settlement.

While most mediations result in a settlement, some do not. A major cause of a failed mediation is that the participants approach mediation as informal, adversarial litigation. A party or attorney acting in this manner will address his or her remarks solely to the mediator, as if the mediator were a judge. Despite the mediator’s efforts, the party refuses to have a dialogue with the opposing party and does not make a good faith effort to engage in settlement discussions. The mediation fails because the mediation process has never actually begun.

Another reason why a settlement may not be reached is that participation in mediation may reinforce a party’s assessment that it has a very strong case and that a better result can be achieved in litigation. A party who has come to this conclusion has benefited from mediation without achieving a settlement. However, the party must proceed in litigation and achieve an acceptable outcome in order to validate its assessment.

Failure to achieve a settlement during mediation can also be caused by the personalities of the participants. Some disputes have their origin in or are sustained by personality conflicts that supersede the issues in dispute. If the parties and their attorneys treat each other disrespectfully before or during the mediation, this may cause psychological damage that prevents them from focusing upon and resolving the merits of the issues of the dispute.

A mediation may terminate without a settlement because of a participant’s impatience. A party or its attorney may expect results too quickly or may think that the process is simply not working. Unrealistic deadlines or milestones for achieving results may be imposed on the mediator and the other party. This attitude is non-productive and self-defeating.  A mediation conducted under such an arbitrary time frame will terminate simply because time has expired.

Finally, the parties may blame the mediator for the mediation’s failure. There are good mediators and bad mediators, and the mediator selected by the parties or the court may not possess adequate skills to deal with the issues and personalities involved.  On the other hand, dissatisfaction with the mediator may also result from the parties’ unrealistic expectations or their own failure to commit to the process. The parties may fail to prepare for the mediation properly and refuse to attempt a dialogue with each other, but then demand that the mediator “do his magic.” There is no magic in mediation. If the parties are not willing to prepare and work together toward a solution, it is difficult to achieve a settlement solely from the mediator’s efforts.

Allan H. Goodman is an experienced mediator and arbitrator, a Judge on the U.S. General Services Administration Board of Contract Appeals, and the author of Basic Skills for the New Mediator and Basic Skills for the New Arbitrator. He is also an instructor for Redvector.com, where he offers online courses on construction mediation and arbitration. For a detailed description of his books and courses, visit www.solomonpublications.com and www.redvector.com.

ConstructionRisk.com Report, Vol. 7, No. 2 (Apr 2005)

Copyright 2005, ConstructionRIsk.com, LLC