I was interested to read in Construction News last month the article by Bill Barton of Barton Legal, “Why mediate? A claimant’s guide to the pros and cons of mediation”. In it he gave an interesting view of mediation for the sector and one which I would largely agree with. I was particularly drawn to read it because much of my own mediation practice is between developers and contractors over schedules of works.
The article listed the pros and cons of mediation. Included in the positives were the cost savings for clients over litigation, the speed of the process, confidentiality, and the ability to preserve relations by not facing-off in a court room. Included in the negatives were the other side merely “fishing” for facts, mediation being perceived as a weakness of position, the idea of confidentiality being bad from some perspectives and mediation being an unnecessary cost if unsuccessful.
Unsurprisingly perhaps I will say that I do agree with these benefits but I would also say that I take issue with the supposed drawbacks. I would like to deal with each in turn.
Fishing for facts or a magic trick! What is wrong with fishing? Mediation is voluntary so no one can make you do a deal if you don’t want to. The key thing is that the other side have come to the table and that means a deal could happen. My Chief Executive, Karl Mackie CBE, a number of years ago gave an important lecture called “The Magic of Mediation”. ‘Magic’ because you can put two sides that are not talking into this process with a mediator, who is trained to unlock the dispute, and can help find a solution when no one thought it possible. We see this time and time again. This is why most mediations settle on the day – the last UK Mediation Audit showed 70% settle with a further 15% resolving in the following weeks because the issues between them had been identified and the gap had been narrowed.
Confidentiality – need not be difficult. It is a fact of dispute resolution that if one side feels ‘wronged’ they may want publicity and if the other side feel unfairly attacked they may not. Obviously in a developer-contractor context there may be an added sensitivity if there are properties to be sold as people would rather buy something that has come out of a successful relationship than a failed one. But to worry about confidentiality is probably somewhat of a red herring, as what happens in a mediation is almost always confidential but the fact that it takes place does not need to be and neither does any settlement agreement.
Perception of weakness – it’s actually about strength! To paraphrase my colleague Gregory Hunt on the CEDR Blog, “Man up and mediate, it’s not girly” it is actually very tough, as parties have to overcome their feelings and be as commercial as possible to see if they can come to a deal. It can be particularly challenging for developers and contractors. On a relationship level there may be other developments they are working on that are not part of the dispute or a history of having worked together – both of which can create a minefield for discussions but which can be managed with a mediator’s help. And then there is the money – until a development is sold there sometimes is not the money to pay for anything and frequently both sides can end up arguing about money which, at that point in time, is merely theoretical in that it is not sitting in anyone’s bank account yet. However a good mediator can help bottom out these issues and help the sides look for workable solutions (which can even take their lawyers’ costs into account).
And finally cost savings. Most mediations settle – that is a fact. Some don’t, but when the odds are in your favour and mediation is not hugely expensive and only takes a day, why would you not try it? Even in cases where there is judicial recommendation to try mediation, where parties and their advisers are coming to the table somewhat reluctantly, there is still a greater chance of walking away with a deal than not.
Resolving the dispute is what mediation is about. Construction is a tough enough business anyway, certainly in recent years, so why make it even tougher by trying to see every dispute through to litigation when there is a way to find a commercial solution both sides can live with and then move on.