The Mediation Process
Construction mediations are generally conducted over one or two full days.
Prior to the Mediation, counsel for the parties will submit a very brief (5-8 pages) on the main points of the dispute. It is extremely helpful if these materials include the critical documents, such as copies of letters, documents, checks, meeting notes or other helpful materials that will help the Mediator understand the issues.
The briefs should be submitted at least five days before the Mediation. If the parties have confidential information to present, they may do so informally during the Mediation. It is not necessary to copy other counsel, but many mediators find it helpful to the mediation process if the parties agree to do so.
The Mediator will generally circulate a confidentiality sheet with various terms and conditions for the Mediation that also serves as a sign in sheet.
The principal parties and any person whose approval is needed for resolution must attend unless other arrangements are made in advance with the Mediator. Failure to have the ultimate decision makers personally present will quite probably result in failure of the mediation.
The Mediator must disclose any prior relationships with the parties as well as the law firms, especially if the Mediator has conducted a mediation for either firm or party in the past.
The Mediation generally proceeds as follows:
First, there will be a joint session, in which the attorneys for the parties will introduce everyone and the Mediator will explain the process to the participants.
Second, the attorneys or their principals, will present a 15-20 minute presentation on their side of the case, with all parties present. At the conclusion of that session, the Mediator will summarize his understanding of the positions of the parties. The parties may also ask the other side key questions, as might the Mediator.
Third, the parties will meet separately with the Mediator for sessions of 30-45 minutes each. These are confidential sessions. It is however, important that any particularly sensitive information be discussed in the context that the material should not be revealed to the other side.
Fourth, the Mediator will eventually advise the parties whether the matter is ripe for settlement, and if the matter can be settled, upon what terms.
Fifth, the parties and their counsel will draft a simple, enforceable settlement agreement that the parties shall sign. A more formal settlement agreement may follow, but the fundamental points must be included in the settlement agreement.
THE CHECKLIST
This checklist will assist in gathering the essential knowledge critical to resolving multi-party construction cases, especially those with insurance coverage issues:
Parties
Are all parties present? (Owner, General, Subcontractors, A/E)
Do they have ultimate authority?
Are their insurance carriers (past and current) present with authority?
Are company owners present?
Will the responsible elected officials be present?
If not, can a Committee Chair attend?
Initial Presentation
Can each side present its case in 30 minutes?
Are there blowups of project photographs?
Is there an "as built" and "as planned" schedule?
Are the daily reports and financial records available?
Are the most credible witnesses present?
Are the testifying experts in attendance?
Disputes
Have all claimants exchanged written claims and demands?
Are all claims detailed and supported by reports and documents?
Has each defending party responded to the claims in writing?
What are the a) original contract amounts, b) agreed adjustments, c) paid amounts, d) outstanding claims, e) asserted backcharges, f) punchlists, and g) retentions?
Pleadings
Are the basic pleadings in place?
Have all parties answered?
Are there absent parties?
Are all parties served?
Are there any jurisdictional issues?
Is there a bankruptcy stay on any party?
Claim Analysis
Are full copies of the contracts available?
Who had primary responsibility?
What subcontracts assigned that responsibility?
What are the contract defenses?
Who is indemnified for the loss?
Who is entitled to attorney's fees and costs?
What is the venue for the dispute?
Have inspections and testing been completed?
Insurance Coverage
Have all parties tendered to past and current carriers?
Are the carriers accepting defense and coverage?
If not, have all carriers provided reservations of rights letters and detailed coverage opinions?
Are full copies of insurance contracts available?
Do the principals have coverage counsel?
Are the policy limits and deductibles known?
Is there a chart of the additional insureds?
What is the total amount of insurance?
Are sureties on notice and fully informed of their risks?
Legal and Expert Costs
Do the insurers and principals have an estimate of defense costs?
Are there defense costs that are uninsured?
Can the carriers later seek to recover those costs?
Are experts a recoverable cost?
Is there any False Claim allegation?
Is there Bad Faith by any carrier or surety?
Damages
Is there an itemized and complete written claim?
Is it supported by written documentation?
Is there an independent expert report on causation?
What is the economic rationale for the damages?
Is there a remediation or rehabilitation plan?
Did the parties mitigate their damages?
Strategy and Planning
Are the parties and their carriers informed?
Do the principals know the case or only the lawyers?
Do the parties have readily available funds?
Are the key factual, contractual and legal positions known?
What are the likely alliances among parties?
Settlement Mechanics
Can the case settle piecemeal or only globally?
Are the parties emotionally and financially prepared for settlement?
Is there a financing mechanism available?
Are there personal problems that foreclose settlement?
Settlement Obstacles
Does one party wish to punish another party?
Is there anyone who cannot compromise?
Can the uncompromising individual be removed from the process?
Can the parties agree on a settlement draft?
Has each defending party responded to the claims in writing?
What are the a) original contract amounts, b) agreed adjustments, c) paid amounts, d) outstanding claims, e) asserted backcharges, f) punchlists, and g) retentions?
Pleadings
Are the basic pleadings in place?
Have all parties answered?
Are there absent parties?
Are all parties served?
Are there any jurisdictional issues?
Is there a bankruptcy stay on any party?
Claim Analysis
Are full copies of the contracts available?
Who had primary responsibility?
What subcontracts assigned that responsibility?
What are the contract defenses?
Who is indemnified for the loss?
Who is entitled to attorney's fees and costs?
What is the venue for the dispute?
Have inspections and testing been completed?
Insurance Coverage
Have all parties tendered to past and current carriers?
Are the carriers accepting defense and coverage?
If not, have all carriers provided reservations of rights letters and detailed coverage opinions?
Are full copies of insurance contracts available?
Do the principals have coverage counsel?
Are the policy limits and deductibles known?
Is there a chart of the additional insured?
What is the total amount of insurance?
Are sureties on notice and fully informed of their risks?
The Mediation Facility
Are the mediation facilities adequate?
Do the parties have private meeting rooms?
Can the adversarial parties be physically separated?
Are lunch, refreshments and A/C available?
Can the parties communicate freely via telephone, fax and email?
If there are separate languages spoken, do the parties need a translator?
Can the parties and their counsel stay late?
CAVEAT
The foregoing describes a generalized mediation process and a generic checklist for construction disputes. Careful thought by the parties and their counsel will result in supplementing or shaping these lists for individual cases. Experienced legal counsel may find this paper useful in assisting their clients in understanding the mediation process and assuring they are fully ready for an effective mediation experience and a satisfying case resolution.