There are many advantages to mediation over other forms of alternative dispute resolution (ADR) or civil litigation. Below are some of the major advantages that mediation and binding mediation offers to the construction industry as an alternative dispute resolution option. Keep in mind that a judge’s responsibility is to interpret and rule on matters of law. The mediators’ responsibility is to assist the parties in settling their dispute and be fair and equitable to all parties if it is a binding mediation.
1. Mediation is much less costly than civil litigation for many reasons:
a. Most mediators who specialize in construction charge by the hour and the mediation usually is completed in one or two days.
b. As most construction mediations are conducted in one or two days and most certainly less days than civil litigation, the cost of your time away from business will be minimal.
c. Preparation for mediation is far easier and simpler than is required to prepare for arbitration or litigation.
d. Attorneys are not necessary but may participate at the request of a party.
e. If you choose binding mediation, you will have a similar finality as binding arbitration offers without the formalities and costs associated with binding arbitration.
f. In many cases, the mediation can be held at the residence involved rather than needing to schedule a jobsite visit and a separate arbitration hearing at a neutral location or litigation that must be held at a court of jurisdiction.
g. In most cases, the mediator is well-versed in the issues that are in dispute and can assist the parties in the reality of their opinions and positions.
h. There should be no court filing fees and related expenses.
2. Mediation is a much faster process than civil litigation. Typically construction litigation cases can take a few months to a year or longer to actually get to trial. CRS had a case in which a party contacted CDRS on a Thursday night. We expedited the agreement to mediate and other paperwork. Four days later, on Monday, CDRS scheduled a jobsite visit at 7:30am, convened the mediation at 10:00am, and concluded with a full settlement by 4:00pm the same day. Incidentally, this was a binding mediation agreement, which guaranteed a full settlement at the end of the mediation process. The project continued on with no loss of time due to the dispute.
3. In mediation, the parties are full participants and can express their own opinions and concerns, where in civil litigation the parties’ attorneys are the only ones who represent their party unless the party “takes the stand” and is subject to cross-examination by the opposing attorney.
4. Mediation allows the opportunity for parties to work together and reach a settlement and continue to work together to complete the construction project, very often with a good customer referral at the end of the job. In civil litigation, most often there is a verdict or decision by a judge or jury and the parties accept as per the court rendered award and the parties’ relationship comes to an unfriendly end. Typically, if the parties end up in litigation, their relationship immediately comes to and end.
5. After there is a settlement, if other items come into dispute, a new mediation can be scheduled without affecting the prior settled items. If a major dispute develops in the early stages of a construction project, a quick, low cost mediation can be scheduled which will allow the project to continue in a timely manner. If binding mediation is specified, there will be a final and binding decision and the project will continue in a timely manner. It is not unusual to have multiple mediations on larger construction projects.
6. Mediation is so informal that if a construction contract does not recognize an alternative dispute resolution option; mediation may be scheduled by mutual agreement of both parties to the contract.
7. In mediation, both parties have the opportunity to check the background and experience of the mediator unless the mediator is specified in the dispute resolution section of their contract. Most contractors specify an ADR provider when they find a mediator or arbitrator who is knowledgeable and experienced in construction matters and who is fair and equitable to both parties. (See Suggested Contract Language.) In civil litigation, you have no options in the choice of your judge and limited selection of the jury, if applicable.
8. Mediation is a private process and not subject to public knowledge and possible media attention as can be the case with civil litigation.
9. If the mediation is scheduled as a binding mediation or a med-arb process, it is virtually a guarantee that there will be a full settlement on all issues by the end of the binding mediation or med-arb process.
10. If there is a full settlement or if certain items are settled and an agreement is written, that agreement is enforceable in court, if necessary, and there will generally be no appeals process. In civil litigation, there are several levels of appeals available in the continuing judicial process.
11. Mediation can protect parties from some of the extra problems associated with civil litigation, such as punitive awards, if applicable.
12. There is no jury in mediation, and the risk of a huge, unwarranted award is greatly reduced by the fact that an experienced mediator who has a full comprehension of the construction industry is usually a seasoned professional who is unlikely to be swayed by emotion or superficial arguments.
13. Discovery is limited in mediation, which usually means that disputants’ attorneys, if involved in the mediation, will rarely pursue the burdensome fishing expeditions that can occur in ordinary litigations.
14. Class action litigation is relatively unheard of in mediation, which reduces incentives to plaintiffs’ lawyers, and can avoid the danger of a large award based on an accumulation of claims. It is not unusual to see multiple parties in mediation with the expectation that several individual claims may be settled in the one mediation.
15. Insurance companies are more likely to write policies for construction companies who specify an ADR process in their construction contract for most of the above reasons.
16. Today, most of the construction cases that are filed with a court of jurisdiction are remanded to mediation by the judge to see if a settlement can be reached. If no settlement is reached, the case will then be scheduled for hearing before the court.