Building the Path to Resolution in Complex Construction Mediation

In a complex construction dispute, the pleadings identify the legal claims, the contracts define the parties' obligations and the expert reports explain competing technical opinions. Yet even after months or years of litigation and thousands of pages of project records, one question often remains unanswered: Why hasn't this case resolved?

The answer is frequently found somewhere other than the legal arguments and the evidence.

In our collective decades of litigating and mediating construction disputes, we've found that mediating complex construction cases isn't about simply evaluating claims or facilitating negotiations. It's about uncovering the issues beneath the surface that are actually driving the dispute.

Stacy L. La Scala, Esq.

When we move between conference rooms, we're not just carrying settlement numbers back and forth. We're trying to answer questions that attorneys don't always see us asking:

• Who actually has authority to resolve this case?

• Which expert disagreements genuinely matter, and which have become distractions?

• Is the dispute really about money, or is someone protecting a reputation, a business relationship or an internal decision?

• What missing information is needed before meaningful negotiations can begin?

• Perhaps most importantly, what hasn't been said yet?

The answers to those questions often shape the outcome of a complex construction mediation more than another round of legal argument or document review ever could.

Michael J. Timpane, Esq.

Not Every Complex Construction Case Is Complex for the Same Reason

One misconception about complex construction mediation is that complexity automatically means a larger project or a higher dollar value. Complexity comes in many forms.

Sometimes it is factual. A project may have unfolded over several years, producing an enormous volume of daily reports, correspondence, schedules, change orders and project documentation. Before parties can realistically evaluate settlement, they often need a shared understanding of the events.

Sometimes the complexity is technical. Competing delay analyses, sophisticated damages models, engineering questions and specialized construction issues may require experts to explain concepts that few participants outside the project fully understand.

Insurance can create an entirely different layer of complexity. Multiple carriers, multiple policy years and competing coverage positions frequently produce negotiations that run parallel to the underlying dispute.

And sometimes the greatest complexity has little to do with construction at all; it comes from the people involved. Perhaps a project executive's credibility is tied to the outcome. Or maybe an owner is trying to preserve an important relationship with an architect. Or maybe a contractor is hoping to continue working for the same client after the litigation concludes. There can even be influence from internal stakeholders who are not participating in the mediation but whose approval will ultimately determine whether a settlement can be reached.

Building the Right Mediation Process

One of the mediator's first responsibilities is determining what type of complexity is preventing resolution. Those realities influence settlement in ways that cannot be captured in expert reports. Understanding those dynamics allows the mediation process to address the real barriers to resolution rather than simply debating legal positions.

Once the mediator understands what is driving the complexity, the next step is designing a process that addresses it. In many cases, that begins well before the mediation session itself. Pre-mediation calls with counsel can identify hidden obstacles, clarify who should participate in each stage of the process and determine whether additional information needs to be exchanged before meaningful negotiations can begin.

That process may include phased mediation sessions, expert-only meetings to narrow technical disagreements and joint discussions where competing experts present their analyses and answer questions in front of key stakeholders. It may also involve identifying gaps in the facts, candidly discussing weaknesses in your side's position and ensuring the appropriate decision-makers are engaged when their participation will be most productive.

Rather than trying to resolve every issue in a single day, an experienced mediator can help the parties work through the issues in a sequence that builds understanding, narrows disputes and creates the foundation for informed settlement discussions.

Identifying the Decision-Makers

Even the best-designed mediation process cannot succeed without the right participants. As discussions progress and issues become clearer, an important question often arises: Who can move the case toward resolution?

Settlement authority may be shared among owners, corporate executives, insurers and other stakeholders. The person speaking the most during mediation is not always the one making the final decision.

Rather than assuming who has authority based on a title or organizational chart, identifying the true decision-makers early in the process and ensuring they are involved at the appropriate stages helps the mediation be successful.

That does not necessarily mean every executive should attend every meeting. Technical discussions may be most productive among experts. Insurance allocation discussions may require carrier representatives. Senior business leaders may be most valuable once the parties have developed enough information to evaluate risk.

Counsel can substantially improve the mediation process by helping identify those individuals before negotiations begin and ensuring they understand both the process and the issues they will be asked to evaluate.

Helping the Mediator Help You

Complex construction mediation works best when it is viewed as a process rather than an event. That means involving the mediator early enough to help design a path toward resolution rather than waiting until an impasse. It means being candid during pre-mediation discussions about business concerns, organizational dynamics and practical obstacles, not just the legal arguments. It means recognizing that experts may need to educate one another before executives can evaluate settlement and that some issues are better addressed sequentially rather than simultaneously.

Most importantly, it means remembering that successful construction mediation is rarely about finding a number. It is about uncovering the information, relationships and motivations that allow the parties to make informed decisions.

The legal issues define the dispute. But in many of the most challenging construction cases, the path to resolution lies beneath the surface.

Deborah S. Ballati, Esq., FCIArb, is a JAMS mediator, arbitrator and court-appointed neutral, as well as an owner and member of the board of directors. With more than four decades of experience in complex civil and commercial matters, she is a nationally recognized authority in construction and insurance coverage disputes. She has handled matters involving project delays, defects, payment claims, contract interpretation and surety issues.

Stacy L. La Scala, Esq., is a JAMS mediator, owner and member of the board of directors. Well into his second decade of mediation practice and fourth decade as a construction and insurance attorney, he has resolved a wide array of disputes, including construction (commercial, industrial, public works and residential), insurance, business/commercial and professional liability matters.

Michael J. Timpane, Esq., is a JAMS mediator, arbitrator and court-appointed neutral with more than four decades of experience resolving complex construction disputes. He has resolved more than 900 matters involving payment claims, project delays and disruptions, construction defects, surety issues and insurance coverage.