ACCL References & Links
Using Guided Choice Mediation to Resolve Construction Disputes Earlier While Minimizing Expense and Business Disruption
Traditional Mediation Does Not Focus on Earlier Resolutions
A high percentage of construction industry disputes eventually settle. Unfortunately this is long after expensive experts and attorneys are at work on the case. Lawyers often prefer not to settle early because they first want to procure information and develop strategy using research, discovery, and motion practice. Construction cases often face long delays in obtaining trial or hearing dates because of crowded dockets, the number of parties involved, the time necessary for full discovery, and disagreements among construction lawyers and party experts over causation, contract and statutory interpretation, and calculation of damages. Insurance and re-insurance coverage issues also contribute to delay. These disputes open the door to expensive additional discovery and motion practice which in turn delays attempts at settlement. The same time and cost issues can impact arbitrations. Although arbitration is supposed to be more efficient than court, in practice large case arbitrators and case administrators are often reluctant to limit discovery and motion practice.
In addition, the processes commonly used in traditional mediation are unlikely to get the best results for clients. Traditionally, the parties select a mediator and agree on a mediation date and seldom plan to meet before the mediation date. In most traditional mediations, the mediator is likely to have received mediation statements from the parties that read much like briefs, and then the mediator arrives at the mediation session to attempt to settle the dispute.
Based on the written statements received, the mediator shows up on the date set for mediation and meets the parties and attorneys for the first time. While the mediation may kick off with a joint session or party presentations, the initial joint session does not usually involve back and forth discussion and at this point neither the mediator nor the parties have a good opportunity to understand the views of the other client decision makers about their perception as to who is right, who is wrong, and why. Nor is there a good understanding of what has to happen for parties to change their positions and how that understanding can be efficiently achieved on a collaborative basis. Splitting the parties up into separate rooms following the joint session does nothing to change that dynamic. Delay in understanding the perspectives and underlying reasons for those perspectives often causes delay in reaching settlement and unnecessary increases in costs.
How Guided Choice Mediation gets earlier resolution with less expense.
Guided Choice Mediation (“GCM”) differs from traditional mediation in that the mediator is engaged as early as possible to confidentially learn from all the parties whether their settlement positions are impassed. If so the mediator’s initial job is – to confidentially diagnose all the causes of impasse. Based on that diagnosis the mediator helps the parties design their mediation process with a structure aimed at obtaining the information that will allow them to consider changing their impassed positions. GCM uses an information gathering phase called “Process Facilitation” prior to settlement negotiations (including demands, offers, or changes in position). What happens in the Process Facilitation phase depends on what the mediator confidentially learns from the parties about all the reasons for impasse.
Only mediators have the statutory-based confidentiality needed to uncover the causes of impasse and do so early and efficiently. The mediator can nudge the parties to collaborate on information exchange to reduce opinion differences. In the Process Facilitation phase, the mediator offers no opinions on strength and weakness of positions. Because demands and offers are not part of the Process Facilitation phase, this phase facilitates cooperation and minimizes antagonism between the parties. This creates a trust that the mediation process is useful. Because there are no settlement negotiations occurring at this time, Process Facilitation phase meetings can be scheduled quickly and handled inexpensively using a virtual platform such as Zoom or Teams.
If and when the parties decide to engage in settlement negotiations, they may participate live or via a virtual platform. These negotiations can be done with the same GCM mediator or another mediator or co-mediator.
Several ACCL Fellows began developing the concepts underlying GCM more than ten years ago, calling the process Guided Choice www.gcmediation.com. The Guided Choice website continues to be popular in the United States and around the world. ACCL Fellows have also trained lawyers and mediators on how to use GCM and how to find mediators who follow GCM principles. The purpose of the ACCL GCM Committee is to share our information pro bono with the goal of helping the industry achieve earlier resolution of disputes and improve project and client economics. The industry and practitioners want the type of mediation procedures that GCM offers. In a survey of over 330 construction lawyers, they clearly favored the use of GCM techniques, but they are not receiving them from the mediators they are using. See Julia J. Douglass and Dean B. Thomson, “Guiding Mediation to Meet Demand.” (ABA Forum Committee. May 2022) which can be found on this ACCL website.
What is better about the Guided Choice Mediation process?
The GCM process relies on hiring a mediator as early as possible whose initial job is to confidentially diagnose the causes of impasse before the parties attempt to settle. Opposing parties are often accused of being “unreasonable.” Adverse parties, however, often lack understanding of the underlying reasons for the other party’s positions. A GCM mediator uses a phased process approach in which through dialog with the mediator the parties and mediator uncover the reasons for impasse and agree on a process to exchange targeted information which can inform and shift each party’s view on the benefits of settlement as compared to litigation. The hospital industry has proven the success of the early use of mediators to get quicker settlements of patient claims, which is in the best interest of patients, hospitals, doctors, and all their lawyers.
The GCM mediator is skilled in diagnosing a range of causes of impasse and not just relying on what lawyers tell them. While differences in claim valuation and expert opinions are often cited as the barriers to settlement, true causes of impasse go far beyond those basic issues. Causes of impasse can include prior experiences, personality conflicts, conduct requiring apology, cultural influences, cash flow restrictions, limitations on authority and the need for “up the chain” approvals, and fear that a settlement will be viewed as a loss. The earlier a mediator gets involved the easier it is for the mediator to learn what is really affecting settlement positions. Based on the diagnosis, the mediator can then prescribe a treatment process which uses collaborative rather than adversarial methods for exchange of the information needed to break through the parties’ impasse.
How GCM uses collaborative rather than adversarial tools to educate parties about strengths and weaknesses.
Impasse can be overcome when the parties understand the causes of impasse and how those causes impact the parties’ decision makers in deciding whether settling or proceeding to a judgment or award is in their best interest.
Overcoming impasse usually requires some level of information exchange, but the exchange should be direct, limited, and targeted – smart bombs rather than Rule 34 carpet bombs. Most of time this can be done collaboratively, and without fear of admissions being introduced in court or arbitration. In-person depositions may still be necessary for the most important witnesses, but the parties can agree to reduce the number and length of depositions and document exchanges with an agreement to expand if adjudication becomes more likely.
Expert disagreements over causation, legal issues, and economics can be reduced through non-binding meetings between experts under the guidance and control of the mediator. These meetings are most cost efficient when virtual rather than in person. Insurance issues too may be addressed separately and virtually since the information needs of insurers often are different than the needs of the parties. One of the advantages of GCM is that the mediator can contact the insurers well in advance of the scheduled mediation session to ensure they are fully informed, engaged, and ready to negotiate when the final mediation session occurs.
Choosing the right party decision makers is an essential part of determining the best process to reach settlement, especially if there are cultural differences among the parties or where apologies need to be part of the resolution. The GCM mediator is uniquely qualified to confidentially discuss these issues in advance of any settlement negotiations.
In the Process Facilitation phase, the GCM mediator does not encourage settlement negotiation until the parties are ready. “We are ready” means the parties have obtained the information needed to consider changing positions, and each party is ready to consider whether it is in their best interest to accept settlement offers or demands or proceed to an adjudicated result. The GCM process helps the parties understand what process is in their best interest earlier than in traditional mediation. Too often parties first consider whether to settle or adjudicate late in the game after avoidable expense and business damage have been incurred.
Overcoming resistance to the early hire of a GCM mediator.
Some attorneys resist early hiring of mediators because they don’t feel “they are ready.” Attorneys may also resist early hire of a mediator because the expense is considered a waste of money—”why hire a mediator when our opponents have no interest in settling until we convince them that they are wrong.” These attorneys rely on expensive and time-consuming discovery and motion practice before approaching settlement. They hope to discover facts that will help them convince the opposition that they are wrong. Some litigators also believe that they can change the positions of the opposition by being tough or by using large teams of lawyers. This often doesn’t work because the litigators don’t understand their opponents or their opponents’ underlying positions until “serious” settlement negotiations begin, late in the dispute resolution process. The GCM mediator can privately work with resistant attorneys to convince them that the Process Facilitation phase will be of value because it focuses on information exchange and not on settlement positions.
Finding the best mediator.
Lawyers and their clients should be involved separately interviewing GCM candidates. The most important questions involve what kind of processes the mediator would use after their impasse diagnosis based on confidential discussions. These interviews can be efficiently done using virtual platforms – e.g., Zoom or Teams.
Rather than just scheduling a formal mediation session, good mediators use a phased approach which involves a pre-settlement negotiation or pre-mediation phase which GCM calls Process Facilitation. Discussions about offers and demands should be avoided during this initial phase. Knowing that the mediator uses a phased approach helps develop trust between clients and the mediator.
A GCM objective is to have all parties agree on retaining a mediator as process facilitator as soon as possible and before the parties begin to make serious settlement offers and demands. This can even occur before the parties’ executives meet in a step negotiation session. It also can occur even after a party has commenced a court case or arbitration.
Parties’ attorneys should seek recommendations from their colleagues and case manager for mediators who understand the importance of using a process facilitation phase that (1) includes impasse diagnosis prior to the start of settlement negotiations; (2) shortens the time for targeted information exchange; and (3) identifies which processes can best help parties understand the strength and weaknesses of their positions.
Understanding when in the dispute process the GCM mediator candidates settled past cases is just as important as how many cases they have settled, since the point at which a case settles directly affects the economic impact of the settlement. Ask the mediator candidates (1) how they achieved early resolutions of cases they have settled; (2) whether their impasse diagnosis process includes looking beyond the legal and factual issues to the personalities and negotiating style of the decision makers and the corporate culture of the parties, especially if based outside the U.S.; and (3) to provide examples of their successful experiences when insurance companies were involved.
Mediation is most successful when clients trust the mediator and have had a chance to interface with the mediator and understand the mediator’s style. Use of virtual platforms such as Zoom helps the mediator accomplish this without the cost of travel.
Contractually agreeing to GCM.
The following language can be in a pre-dispute contract. The following has been drafted to append to Section 15.3 of the AIA A 201:
§15.3.5.1 A mediator shall be engaged by the parties as soon as one party thinks that resolution of the Dispute would benefit from the active involvement of a mediator. The mediator shall consider and utilize Guiding Mediator principles and techniques to the extent appropriate and helpful to resolve the Dispute.
§15.3.5.2 Guiding Mediator principles and techniques considered by the mediator can include, but are not be limited to, the following:
§15.3.5.2.1 Contacting each party and its representative on a confidential basis to familiarize the mediator with the parties, identify decision makers, and learn each party’s perspective on the Dispute before either scheduling or conducting a mediation session with all parties;
§15.3.5.2.2 Contacting each party and its representative on a confidential basis to determine its perspective of impediments to resolution of the Dispute;
§15.3.5.2.3 Exploring, discussing, and designing various approaches to and structures for the eventual mediation session with all the parties;
§15.3.5.2.4 Determining whether any discrete and limited information needs need to be met that would materially increase the chance of resolution of the Dispute and how the parties might cooperatively meet those needs;
§15.3.5.2.5 Identifying and attempting to secure the participation of all parties necessary for resolution of the Dispute such as, without limitation, insurers, sureties, subcontractors, design professionals, subconsultants, or other entities or individuals not currently participating in the mediation.
JAMS has a form Sample Project Neutral Clause. The project neutral has duties are similar than those of Guided Choice Mediation mediator. The JAMS clause, however, does not refer to the neutral as a mediator and an enforceable confidentiality clause will be needed. The parties may also agree to use a different case administrator than AAA or JAMS and adjust their language accordingly.
The impact of traditional legal processes on the environment.
One of ACCL’s goals is to reduce the amount of energy and fossil fuels consumed in live court and arbitration proceedings including hearings, discovery, motion practice, and document and file storage. In person proceedings have a significant carbon impact because they require the transportation of people and documents and the utility costs of using and maintaining meeting places. Using GCM can help minimize our carbon footprint through virtually attended Process Facilitation meetings and settlement of cases before they require the in-depth discovery and hearings of traditional litigation or arbitration.