Resolving Construction Conflicts Efficiently: A Guided Mediation Approach

With more than 40 years of experience in construction mediations, I've seen how early mediator involvement can significantly streamline the resolution process. By engaging a mediator early—before discovery heats up—parties can benefit from a structured, privileged exchange of information that reduces litigation costs and supports a more informed and efficient path to settlement.

Such a process often includes the following components:

Preliminary Mediation Sessions

Laying the Groundwork: The Case Management Order or Agreement

Preparing a case management order or agreement is the first step in organizing the case. The order or agreement allows the parties and mediator to develop a preliminary schedule for the exchange of information, expert meetings, the production of the plaintiff's statement of claims and the defense's response, and mediation sessions. This work can be done before the start of depositions and the exchange of written discovery and is designed to save litigation costs while allowing the parties ample time to understand the scope of claims and defenses. The case management order or agreement should address the following:

1. Document exchange
2. Preliminary stay on formal discovery
3. Predrafted case-specific interrogatories to identify:
   • Scope of insurance
   • Scope of work by defendants
   • Homeowner maintenance and complaints
   • Persons most knowledgeable about the project
4. Dates for site inspection and destructive testing
5. Plaintiff's statement of claims and cost of repair, including expert reports
6. Defense's response to statement of claims and its scope of repair
7. Joint expert meetings in person or virtually
8. Mediation session for case settlement
   • Multiple sessions may be necessary to address case-specific issues.
9. Percipient and expert deposition dates if early mediation is not successful
10. Trial readiness date

Addressing these also helps the parties with the privileged exchange of information and other necessary documents that must be analyzed in order to engage in meaningful settlement discussions, whereas depositions can scheduled toward the end of the case in the event an early settlement is not achieved and trial or arbitration is imminent.

Building the Case: The Plaintiff's Statement of Claims and Cost of Repair, Defense Response(s) and Joint Expert Meetings

A key component to the evaluation of the plaintiff's claims is the production of a statement of claims that sets forth the issues in the case and alleged defects and damages at the project. The statement of claims may be accompanied by a detailed expert report identifying each of the alleged defects and the scope of recommended repair. Because it is produced as part of the mediation process, this document is initially a privileged report.

After the production of the plaintiff's report and cost of repair, the defense should be afforded the opportunity to inspect the project with its experts and perform whatever destructive testing it believes is necessary. This is then followed by a defense report responding to the plaintiff's statement of claims and defects list and identifying areas of agreement and disagreement. The defense also should produce its own expert response and scope and cost of repair.

Following the production of these documents, the mediator should schedule a joint expert meeting to discuss areas of agreement and disagreement. As part of the mediation process, this meeting should be considered a privileged settlement discussion. This allows the mediator to have open conversations with the experts as the meditator seeks areas of compromise in order to narrow the scope of dispute. In some instances, it may be helpful for the mediator to visit the project with counsel and the experts to better understand and the areas of dispute.

Bridging the Gaps: Mediator Retained Expert

The exchange of the plaintiff's and defense's expert reports allows the mediator to identify key areas of significant disagreement where compromise between the experts may be difficult or impossible. This may include disputed issues of liability and/or the scope of damage or cost of repair. In these situations, the mediator may consider proposing retaining an independent expert to help evaluate the claims of both plaintiff and defense experts and provide the mediator with the means to resolve such expert disputes. Independent experts are paid equally by plaintiff and defense. The parties should agree that the retained expert will not testify at trial and the expert opinions and findings will be privileged.

Insurance Coverage Mediations

The mediator should determine, during the early stages of the case, whether the claims exceed the primary layers of insurance, the status of any excess insurance coverage and if the insurers have raised insurance coverage issues. To work through these questions, the mediator may schedule a conference with coverage and personal counsel to discuss the coverage issues and how such issues may impact the resolution of the case. In such circumstances, the mediator may be asked to help mediate coverage issues between the parties before engaging in a settlement conference with both plaintiff and defense parties.

Also, before the final global mediation session(s), the mediator should determine whether all applicable insurance has been placed on notice of the claims, whether additional insured issues exist and whether all necessary carriers and clients will be present at the mediation.

Multiparty Defense-Only Mediation Sessions

If the case involves numerous defense parties, such as subcontractors, product suppliers and design professionals, the mediator may choose to meet separately with each of the parties to understand and address issues unique to that party. For example, design professionals may face reporting requirements as part of a settlement and satisfaction of large deductibles or self-insured retentions. Design-build subcontractors may face coverage issues raised by a general liability insurer and may need to place their professional liability insurers on notice in the event of an alleged design error. The mediator can also explore whether settlement between defendants and cross-defendants is possible.

Final Settlement and Mediation of All Issues

Once the parties have exchanged expert reports and had adequate time to evaluate liability, they should be ready to discuss settlement. Often, the mediator may find that numerous mediation sessions over several weeks will be necessary to reach settlement.

If structured correctly, such a guided mediation process should save parties significant fees and costs while allowing for the exchange of information necessary to enable them to engage in meaningful settlement discussions.