Guest Post: Why Mediate? Because You Run a Business

Christopher Hill (no relation to yours truly) is a longtime construction law attorney and mediator practicing out of Richmond, Virginia. His blog, Construction Law Musings, has always been one of my must-read sources of news and insight pertaining to construction law ever since he started it in late 2008. Be sure to follow @constructionlaw on Twitter for the latest updates from a true thought leader in the art and science of resolving construction disputes. Without further ado, I am proud to present Mr. Hill’s guest post on a topic that I couldn’t agree with more — the business case for why the mediation process is so critical to the A/E/C industry.

First of all, thanks to Brian for his invitation to discuss a passion of mine, mediation, at his great AEC Forensics blog.  I read it regularly and so should you.

Now, on with the discussion.  As anyone that has read my Construction law Musings blog on anything resembling a regular basis knows, I absolutely love mediation as a way to resolve construction disputes.  I love it so much that I went ahead and got certified as a mediator here in Virginia.

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Whether your dispute is big or small, has to do with interpretation of your, hopefully well drafted, construction contract or the allegedly poor quality of the work, or any other reason why a payment dispute (and in commercial construction, it is always some form of payment dispute), mediation is almost always a good option.  Remember, litigation and arbitration are expensive and even if you win, your construction business will take a hit, mainly because you cannot and should not budget for litigation (I mean, really, everyone should just do the right thing, correct?).

Now, on with why you should always consider mediation even if you think you are in a strong litigation position.  Frankly, you could have stopped at the title of this post and gotten my view in a nutshell.  However, I’m sure if you have read this far, you want a bit more than that, so here goes.

1.

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First of all, and as I said before, litigation is not a money maker.  Every dollar you spend on a construction lawyer and every minute that you spend dealing with the litigation is money down the drain.  Yes, you may have an attorney fees provision in your construction contract and yes you may get a rousing victory with a piece of paper that says the other construction company or the Owner owes you everything that you believe is due, but that doesn’t mean you haven’t lost money.  Even with an attorney fees provision, your attorney will require that you pay him or her as the litigation proceeds.  The fees provision merely allows you to add those fees to any judgment at the end of the case.  Also, any time spent in his or her office or with your administrative personnel rifling through paperwork on a project long since either completed or terminated for another reason is time that you aren’t doing something productive like building something new or bidding new work.  In other words, litigation is not only not the way to make money, but it eats into that bottom line.  Mediation is a way to end the drain on your terms much earlier than you could with the year to two yearlong litigation process.

2.

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Secondly, mediation eliminates risk.  Contractors and subcontractors think about risk every day.  What is the risk of non payment?  What risks are inherent in the contract I’m reviewing?  What are the safety risks?  All of these risks go through your heads on a regular basis.  What does not (and frankly should not if you’re running your business well) is the risk that you may lose should you have to go through the courts or arbitration to enforce your rights under that contract.  As an experienced construction lawyer, I can safely state that no case is a “slam dunk.”  All cases have a risk that the result will not be what was anticipated.  Murphy was an optimist and everything from a judge that is grumpy to a witness that is not as good as you’d hoped can derail even the best factual case.  If you’re looking for certainty, and you can’t resolve your dispute without some assistance, then mediation is the way to go.

3.

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Thirdly, you are in control of your fate.  It is my experience with those that own and run construction companies that they like being in control of as much of the situation as possible.  Mediation allows you to control the result.  In mediation there really are no rules aside from be ready and willing to try all options and compromise where appropriate.  There are no rules of evidence so you can discuss whatever you feel will give the mediator and the other side the best idea of your position.  Often the key to settling a dispute is not the money or even a contractual provision.  In court or arbitration, the emotional side of the issue may be seen as irrelevant and therefore a judge may never hear it.  A good mediator will listen to it all and none of it will see the light of day outside of the mediation because of confidentiality rules governing the process.  You can also come up with creative ways to resolve the dispute that are totally unavailable in less flexible forums.  A judge picks a winner and that’s his or her only choice.  A mediated settlement can be whatever the parties decide to do.  In short, you can use your business sense and creativity in mediation in ways that you can’t in court.

And Finally…

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Finally, even when mediation does not result in settlement, it is a worthwhile process.  On more than one occasion, I have had a mediation supposedly “fail” and gotten a lot of benefit from it.  One obvious one is that the mediation could have moved the parties closed to resolution and a settlement occurs later because of what was discussed in mediation.  An additional benefit is that even though the parties can’t use what was said in the mediation directly, each side still gets some benefit of seeing where the other parties are coming from.  It is a form of free discovery that can assist your construction counsel moving forward and, importantly, could save you money by making the inefficient litigation process a bit more efficient.

Conclusion

To wrap this up, why should you consider mediation in almost every construction dispute?

Because your bottom line is worth it.


hill-001-lowresupdateChristopher G. Hill, LEED AP is Virginia Supreme Court certified mediator, construction lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC.  Chris has been nominated and elected by his peers to Virginia’s Legal Elite in the Construction Law category on multiple occasions (2007-2017) and is a member of the Virginia Super Lawyers “Rising Stars” for 2011 and 2012 and to the Virginia Super Lawyers in Construction Litigation for 2017. He specializes in mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.  Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.  Additionally, Chris is active in the Associated General Contractors of Virginia including membership on the AGC-VA Richmond District Executive Committee and the Board of Governors of Construction Law and Public Contracts Section of the Virginia State Bar.

Images used with permission