Effectively Dealing with Construction Disputes

As a mediator myself, I often advocate for mediation as an effective tool to help resolve construction disputes.  Due to the high number of construction projects throughout the region and the long list of individuals potentially involved in each project, construction disputes are quite common.  Realizing this, many construction companies, contractors, subcontractors and other parties include or request a mediation provision in their contracts.  Others simply suggest it after a problem arises.

Mediation is an alternative to dragging a case out for months or years by having to wait on a trial.  Mediation often helps resolve issues that develop in the construction industry regarding performance or payment.  It is much faster and affordable than litigation.  Mediation also takes into consideration that when a contract is terminated, both parties often pay the price.  New teams may need to be hired for a higher price point while the old one loses out on the expectation of income and possible future projects.

When mediation is entered into voluntarily and in good faith, it can be a positive experience for all parties involved.  More often, parties are able to resolve their issues in a professional manner.  Many construction disputes involve interpersonal and emotional issues.  In court, these issues may not be considered relevant, or the parties’ attorneys may advise their clients not to bring up such information.  However, by addressing these issues, the parties can confront them directly.  This allows them to then focus on how to resolve the current dispute in an amicable fashion.

While a judge can find that one of the parties is the “winner,” the remedies are usually limited.  Often, the party may only receive money damages.  Filing bankruptcy or avoiding payment can make it more difficult for the “winner” to actually win anything.  Mediation gives the parties the opportunity to come up with more creative solutions.  If payment is an issue, the parties may agree to a payment plan.  They can also agree on new deals or exchange services.  The possibilities are only limited to the creativity of the parties and mediator involved.

Even if the parties cannot find an agreeable solution to the current issue, most people feel that mediation is still a valuable process.  A mediator is a person trained in conflict resolution skills.  He or she helps the parties communicate better.  Parties may adapt the skills and techniques demonstrated during mediation.  Additionally, the parties often acquire a better understanding of how the other is thinking.   Even though the parties cannot bring up in court the information discussed during mediation due to confidentiality, the information learned at the mediation can help the parties incorporate a legal strategy that takes this information into consideration.

Additionally, mediation may help the parties develop the skills and respect necessary that may help them settle the case down the road, even if they do not settle on the day of mediation.   Therefore, mediation acts as a win/win for the parties.  If the case is resolved, the parties save the time, money and frustration associated with litigation.  If it is not settled, they still gain valuable insight into the other party’s perspective on the underlying cause of the legal issues.