Early Stage Mediation - There is no Down Side.

     Late mediation has been around for decades.  While late stage mediation (close to a trial date) may avoid trials, clients today are interested in further reducing expenses, keeping the emotional toll of litigation in check and maintaining relationships. 

     Late stage mediation results in destroyed relationships.  As the lawsuit progresses, both party’s becomes convinced the other side is hiding something.  Best of friends become polarized, even hostile toward one another, refusing to hear issues from the others perspective.  Mediation, late in the litigation produces comments from clients like “I’ve spent so much money I can’t afford to settle,” or “I will see him in hell before I settle now.”

     Although late stage mediation may save costs, the only cost saving will be the cost of trial.  With late stage mediation, the cost of document discovery, depositions and a few motions can be overwhelming, especially in a construction matter.  The courts refer to a construction case as “complex litigation.”  Costs are compounded because there are multiple issues, spread across several parties all with different interpretations of the law and facts.  If that is not enough, attorneys are trained to think forensically and leave no stone unturned.  When you combine the complex nature of the dispute with a forensic thinker, costs soar.

     At the same time, late stage mediation is a very useful process, since most cases settle using this method.  The reasons are varied.  Lack of funds to continue, the emotional toll is just too much or the uncertainties of a looming trial are just a few.  Even if a resolution is not reached, there is benefit.  The process narrows and focuses the issues usually shortening the upcoming trial. 

     Early Mediation - Before the Lawsuit.

     Early stage mediation, before litigation even starts, has many benefits, especially where relationships need to be preserved.  An example of such a relationship is the triangle between the owner, the builder and the design professional.  During construction, this relationship is critical and in many cases fragile.  It can disintegrate quickly over a miscommunication such as when two parties to the triangle interpret language in the contract differently, then reach an agreed interpretation but fail to communicate their decision to the third party.  Unfortunately, the third party performs the work based upon the other interpretation.  Nothing is worse than a project that grinds to a halt before it is finished.  Once the relationships have disintegrated, small problems become big problems, and big problems become even bigger litigation.  Early mediation provides a means to reconstruct these relationships, keeping small problems small. 

     If the project is still under construction, the parties may be able to “horse-trade” some of the issues.  The increased cost of changed subsurface conditions might be traded with a slight change in the design and allowing the contractor to keep the savings.  This type of creative resolution is not available in late stage mediation. 

     A form of early stage mediation is the successful Dispute Resolution Boards used on many public projects.  While these DRB’s proceedings are more Quasi-Judicial than mediation, the result is similar.  Solving the dispute early keeps the dispute manageable and preserves the relationships of the various parties. 

     Unfortunately, early stage mediation before the lawsuits have stated is rarely used on private projects. 

     Early Mediation - After the Lawsuit has Started.  

     Early stage mediation, once the lawsuits have started, provides benefits that normally do not occur in litigation.  Counsel has a unique opportunity to learn about the case.  By spending an entire mediation with their clients, talking to them about the case, and listening to the arguments and some of the evidence from the opponent provides counsel insights in the case that typical discovery does not provide.  Mediation is not a discovery tool, since doing so would violate both the letter and the spirit of the “good faith” rule.  Yet, it cannot be denied that the information learned at a single day of mediation will benefit the parties in the form of refined discovery, early witness evaluation and streamlined trial preparation, significantly reducing litigation costs. 

     A lawsuit between friends, neighbors, and business partners typically destroys the relationship.  Early mediation is a natural fit if there is a desire to preserve a relationship.  Friendly neighbors that want to remain friendly but disagree about the location of the fence, or the construction of a 40-foot tall windmill that is going to block the view.  Developers whom desire to form a relationship with the adjacent property owners in an effort to streamline the permit process.  Contractors have special relationships with their favorite subcontractors because those subcontractors always finish on schedule with little fuss.  Contractors want to maintain a relationship with owners that might have repeat business.  If the relationship is important, early mediation will foster an atmosphere of working together to solve issues rather that fighting over them.  This keeps costs and emotions under control, resulting in a saved or improved relationship.

     Early mediation to preserve a relationship takes on a different form than late mediation.  Shuttle type mediations typically start with a “joint caucus” (all parties in the same room at the same time) providing the mediator a chance to lay down some ground rules, answer procedural question, and when appropriate, give the parties a chance to explain their issues to the opposition.  In late stage mediation, discovery is complete and the parties and their attorneys have a full understanding of the other side’s factual and legal arguments.  After several years and the expense of preparation for trial, disagreement with the opposing side has become hostility towards the opposing side.  In this situation, a party presenting their case in joint caucus has little or no value and may exacerbate the situation if the parties are allowed to speak.

     The tone of early mediation is very different, often looking for creative solutions that are never available in late mediation.  In early mediation, a joint caucus where both sides present their case may be useful.  Because of early calendaring, incomplete discovery or the mailbox rule, neither party may fully understand the others legal theories and facts.  A joint caucus, under the guidance of the mediator, will define or refine the issues.  Both parties are likely to hear something they have never heard before. 

     Early mediation will save at least a portion of the discovery and the cost of trial.  Still, the parties need to exchange information before mediation.  Early mediation will generally be unsuccessful if the parties have not communicated the description and amount of their claim.  With a homeowner claim, this might be limited to the contract, some photographs of the issue and estimates from a contractor for repair costs.  For larger claims, such as defective work by the contractor verses offsetting claims for delays caused by the owner’s defective plans, more detailed information will be necessary but long and expensive discovery can still be limited.  Proper, but limited discovery plus good preparation for mediation will pay big dividends: less money will be spent on attorneys, less anger and hostility will be generated by the parties, and there will be more resources to invest in the resolution as opposed to the dispute itself. 

     One type of construction matter cries out for early mediation.  When the value of the dispute is too large to ignore but so small that any recovery will disappear in the cost of a lawsuit, early mediation is a good option.  In these cases, the cost of “leave no stone unturned” is simply not cost effective.  While early mediation may leave some stones unturned, the risk is acceptable when missing something is out weighted by the saved time, cost and relationships. 

     One disadvantage to early-stage mediation is the possibility that a resolution process commences before the parties have an adequate understanding of their respective legal cases.  However, parties in a dispute have some basic understanding of their positions, even if they don't fully understand the legal consequences of those positions.  Therefore, there is worth in having the parties sit down early with a trained mediator to discuss the parameters of the dispute.  They may well find shortcuts to settlement by talking early.

     Even where the parties understanding of their case is inadequate, the inadequacies are usually a small part of the case in need of additional research.  An experienced mediator will resolve all the other issues reserving that particular issue that is causing the mediation to stumble.  The mediator may recommend reconvening the mediation in a week, asking the parties to research the narrow issue causing the stumble.  Experience shows the mediator is rarely called back in this situation.  After further investigation of the remaining issue and discussion at the mediation of how these findings may affect the case, the two attorneys wind up working out the remaining issue. 

     Choosing a Mediator for Early Mediation.  .

     An experienced mediator can be successful even if the dispute is in an area that is foreign to the mediator.  Their experience along with the techniques they have refined over the years will be successful across a wide range of disputes. 

     In the early stages of a lawsuit, the emotion of the parties may be driving decision more than the facts of the case.  After all, it’s all the other sides fault.  This mind set may result in the party spending a lot of money before the party has calmed down enough to really see their own case.  A reality check, early in the litigation can result in huge savings. 

     A good mediator will not tell you what they think you should do, but they can force a party to reevaluate their case.  Because the mediator brings a fresh set of eyes and ears to a construction mediation, the mediator will see and hear things that were passed over by the parties because we all tend to see what we want to see.  Once discovered, it can be presented in the form a question that causes the party to look for an answer.  The search for that answer causes the party to reevaluate the issue with the new information.  A good mediator finds and presents the information and the question and lets the party perform the evaluation.  Because the party figures it out on their own, the reality check may be immediate. 

     A fresh set or eyes and ears may not have much value in early mediation if the mediator does not know what they are looking at.  If that’s the case, the mediator may never find the right question that forces a reevaluation.  Early mediation, no matter what the issues are, benefit from someone with a background in the issues of the mediation.  There are experienced mediators that have worked in construction (contractor, vendor, design professional, surveyor) and are experienced attorneys that focus their practice on construction issues.  An experienced mediator with such a background goes a long way in helping the parties evaluate their cases. 

     Strengths of Early-Stage Mediation - Summarized.

  • For parties that have to keep working together, contract together, or otherwise stay in a relationship, early-stage mediation produces results before the parties are so polarized, that settlement is difficult and the parties become combative. 
  • A reality check of the strengths and weaknesses in your case early in the litigation will allow the parties to make better, less emotional decisions, before they become financially and emotionally vested in continuing the case. 
  • The tone of early-stage mediation is very different.  Parties are focusing on working together rather than defending their position.  Early in the process, parties can listen to each other better, and can more easily understand each other's point of view.
  • Early settlement allows for a wider range of outcomes, including creative ways to work out their issues.  As more and more resources are spent on the dispute, the creative outcomes that may have been available will dwindle quickly. 
  • Early-stage mediation can be a cost savings to the parties.  Litigation may be avoided completely, or if not, discovery is foreshortened or minimized, resulting in immense cost savings.  Even if the parties don't settle at an early-stage, the issues can be clarified, the future legal work focused, and the possibility of the parties returning to mediation at a later time.
  • The legal system, in spite of its many strengths, tends to polarize the parties, narrow their points of view and exacerbate conflict.  The sooner the parties sit down with the help of a neutral, experienced mediator to evaluate their legal dispute and consider the risks of litigation, the sooner they shift into a broader problem solving approach. 
  • Ongoing discovery and litigation takes a financial and emotional toll on the litigants, and points them toward defending and protecting their own point of view without addressing the other parties points of view.  Early mediation provides the parties an opportunity to acknowledge what they agree with from the opponent’s point of view while still advancing and protecting their own needs and perspectives. 

     Cost vs. Benefit - Revisited

     Is the risk of missing something by not turning over every stone greater than the cost and risk of proceeding to trial, several years of emotional turmoil, and damaged relationships?  It is a fairly simple question, one that should be explored often in every dispute.  Unfortunately, the emotion of the moment may not let a party make an honest decision.  Early mediation, along with the information learned may begin to change a party’s impression of their own case and to see the opposing party’s case differently.  The mediator’s evaluation provides a new set of eyes and possibly a reality check.  Early mediation is a means to provide information so your client can make a better choice, earlier in the lawsuit.  In these lean economic times, that is worth a lot.

     In the final analysis, there is no downside to mediating early. 




     Mr. Knight focuses his practice on early mediation.  With a background in construction, a licensed architect in Washington, an attorney for the last two decades and over a decade of experience as a mediator, Mr. Knight provides a unique skill set.  With the ability to speak the language of construction, Mr. Knight can grasp the relevant factual issues quickly.  Blending this skill set with his knowledge of the law gives Mr. Knight insights that few mediators possess.  Mr. Knight is a member of the executive committee for both the Construction Law Section and the Alternative Dispute Resolution Section of the WSBA.  For more see:  http://www.knightdisputeresolution.com/

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