The Dispute Resolution Process: Preparing for a Successful Mediation
Partner Content
The Dispute Resolution Process: Preparing for a Successful Mediation
By Joseph Scott Shannon, Esq., Lee/Shoemaker PLLC
When contracts are signed, the operating premise is that everyone—owner, design professional, contractors—will act in good faith and diligently perform their tasks to provide the value expected for a successful project. Contracts, however, are proof that paper does not refuse ink.
Between the signing of the contract and deposit of the final payment, an unforeseen condition is discovered at the site, redesigns at the owner’s direction omit conforming revisions on drawing sheets A502 and E103, the surveyor’s control points were obliterated by the backhoe operator, and the ship carrying the structural steel from China got held up because Austin Powers was piloting a container ship and lodged it perpendicular in the Suez Canal. Increased time and costs on the project have everyone at odds seeking more compensation while blaming everyone else for the delays and cost overruns.
What’s a design professional to do? The first article in this series reviewed contractual dispute resolution provisions; the second article discussed the dispute resolution process. In this article, we look at how to prepare for a successful outcome when the contractual dispute resolution process requires mediation.
Project Records
For mediations (and also for arbitrations and litigation), successful outcomes begin with diligent record-keeping during the project. Design professionals are often tasked with maintaining a broad array of project records, particularly when their scope of work includes contract phase duties. In many cases, this gives the design professional a distinct advantage over the owner, whose focus is usually on project finances and schedules, and the contractor, whose focus is often on schedules and change orders.
Many disputes can be resolved by the design professional before they are elevated to the dispute resolution process through the maintenance of complete and diligent project documents. Should a design professional find themselves engaged in the contractual dispute resolution process, a successful outcome will often depend upon bringing comprehensive, accurate records. To do that, however, they need to be accessible, understandable and complete.
In addition to the substance of the records the design professional maintains in the ordinary course of business, there are, at times overlooked, front-end clerical tasks that can facilitate access to those records at the end of the project when disputes arise. As examples, having a dedicated project email folder into which sent emails are blind copied and received emails are filed by rule upon receipt; noting the revision dates on drawings (something from our claims experience that is not done with regularity); taking the time to index and label progress photos; having a consistent and regimented naming protocol for documents; and segregating project documents by subject, task or issue.
When the dispute resolution process is triggered, the design professional will (likely) retain an attorney. Whether experienced in representing design professionals or not, the attorney’s advocacy will be enhanced—and their fees reduced—by having the project documents provided to them in an organized, readily accessible and understandable format. The design professional, with their attorney, can then focus on the presentation of those facts in support of their claim or defense.
Preparation for Mediation
Mediations required as part of the contractual dispute resolution process will often occur without formal discovery or depositions having been taken or exchanged with the other party. For such early mediations, the design professional’s presentation of their position needs to be focused on the specific issue in dispute, with the strongest supporting documentation of the design professional’s claim or defense. Getting into extraneous issues, or raising ancillary or contributing factors, may provide the other party with insights into the weaknesses of their position and telegraphs how the design professional will conduct any subsequent arbitration or litigation proceedings if the mediation is unsuccessful.
The goal in mediation is to reach a negotiated result. If the parties do not agree, the mediation is unsuccessful, and the dispute resolution process continues to arbitration or litigation. Mediations are facilitated by a mediator who acts alternately as a conciliator, confidant, barometer and reality checker, depending upon what is required to keep the negotiations moving. The design professional needs to go into a mediation knowing what they will accept—or pay—to reach a resolution, while being prepared to hear and consider the mediator’s insights to inform the extent to which compromise is merited.
Mediation Attendance and Presentation
When attending a mediation, the design professional should be prepared for a long day. Patience is key to a successful outcome. Negotiations in earnest often do not start until the afternoon. The impatient party will either pay more than they intended or accept less than they desired. Sometimes mediations do not resolve over the course of one day, or even two days, but are continued via individual contacts with the mediator over days and weeks after a scheduled session of intensive negotiations.
Mediations tend to follow the five stages of grief: (1) Denial (“We didn’t do anything wrong!”); (2) Anger (“We deserve to get paid for our work!” or “That wasn’t a design issue!”); (3) Bargaining (“We’ll discount our claim by 10% if they pay within 10 days” or “Will they accept $10,000?”); (4) Depression (“After all the good work we did, we’re only going to get paid this much?” or “That oversight is going to cost me how much?”); and ultimately (5) Acceptance (“Fine, to be done with it, where do I sign?”). By recognizing and understanding the process, the design professional can be prepared to weather the first two steps to get to the third; avoid falling too deeply into the fourth; and arrive at the fifth for an outcome that may not be all that was sought but will be acceptable to bring finality to the dispute.
Successful mediation outcomes result from careful preparation in conjunction with a planned presentation. Generally, avoid disclosing all the strengths of your position in the mediation statement. Mediations involve incremental changes of each party’s position; a ratcheting up of the emphasis being placed on your strengths and the other party’s weaknesses. A good mediation statement leaves room for building your case and moving by planned steps from position to position, while moving the other party off of their positions, so as to arrive at an acceptable endpoint.
In addition to preparation and presentation, trusting the mediator and the mediation process itself to winnow away that which is unnecessary or excess and getting to the crux of what each party will accept is key to a successful mediation. Just as the design professional engaged in a mediation is experiencing the five stages of grief, so, too, is the other party. Just as the mediator will be pointing out to the design professional what they see as the weaknesses of the design professional’s position, the other party will be hearing similar admonitions from the mediator.
Good mediators will cause the parties to reconsider their priorities, and to engage in a piercing re-examination of their own claims or defenses. The design professional who attends a mediation with on-point project documents; is patient and prepared for extended negotiations; is aware of the stages the negotiations will go through; presents their case in a planned progression; understands and trusts the mediator and the process, will either achieve a successful outcome or be content in their determination that arbitration or litigation will be required to resolve the dispute.
In the next article in this series, we will discuss preparations for successful outcomes through the arbitration or litigation of a dispute.
Scott Shannon is Senior Counsel at Lee/Shoemaker PLLC, a law firm devoted to the representation of design professionals in DC, Maryland, and Virginia. The content of this article was prepared to educate related to potential risks, but is not intended to be a substitute for professional legal advice.
Lee/Shoemaker PLLC is an Educational Program Sponsor of AIA Potomac Valley.
