Mediation for Architects 101

By B.J. Novitski

Disputes happen; whether over assigning responsibility for mistakes or rectifying payment schedules, they’re a fact of life in the construction industry. But they need not lead to bitterness or lengthy and expensive court battles. Standard AIA contracts provide an easier means of solution, through mediation, which gives architects, clients, contractors, and their lawyers an opportunity to take a creative, cooperative approach to problem resolution. The outcome of a mediation can be quick and relatively painless; indeed, some mediations end in a “win/win” for everyone involved.

The legal climate has changed somewhat for architects who adopt the new contracts published by the AIA earlier this year [RECORD, July 2008, page 59]. Like previous contracts, A295-2008 requires the parties to conduct mediation efforts before moving to binding dispute resolution. But if mediation is unsuccessful, the latest version of the contract does not allow the parties to choose between litigation and arbitration, according to Suzanne Harness, an architect and the AIA’s managing director and counsel for contract documents. “In an effort to ensure that all disputes be resolved in one proceeding (as seems appropriate for an integrated project) the owner, architect, and contractor are required to proceed to arbitration,” she says.

The new AIA contract C195, for single purpose entities (SPEs), takes a different approach. It requires that all disputes be dealt with within the SPE. Harness explains: “SPE Members are required to make efforts to resolve all disputes amicably and through mutual consensus following the dispute resolution procedures set forth in C195. In the event they cannot reach a resolution, the matter is presented to the SPE’s governance board for consideration and resolution. If the governance board is unsuccessful at resolving the dispute, it will be referred to arbitration through a dispute resolution committee for full and final resolution.”

The basics In a nutshell, mediation is a conference between opposing parties facilitated by a neutral, mutually agreed-upon mediator. The goal of the negotiation is not to assign blame and assess damages; rather, it is to find a compromise that will “make the plaintiff whole,” in the words of Irvine, California–based construction-industry mediator Paul J. Weinberg. This could mean getting the building repaired, or whatever remedy is appropriate to the situation. During Weinberg’s mediations, which can last a few hours or a few days, the opposing parties typically occupy separate rooms. He goes from one to the other, listening to each party explain the problems and then proposing solutions. Mediators cannot impose solutions, but ideally the parties eventually agree, and their written agreement is legally binding. If no agreement is possible, the dispute moves on to the more adversarial processes of arbitration or litigation.

Mediation is voluntary and cooperative in nature. The parties agree on who is to mediate, and they share in any fees and procedural costs. Unlike lawsuits, it is private and entirely confidential. On occasion, when the issues are complex, there may be two comediators, one to lead the negotiations and the other to offer technical or legal advice. According to “Preparing for Mediation,” an AIA Best Practices article contributed by Victor O. Schinnerer & Company, mediators come in several flavors. A facilitator simply organizes the process and brings the various parties to the table. A communicator is more proactive in ensuring that each party’s point of view is reaching the other. This role requires somewhat more experience in both mediation and in construction issues. An evaluator offers his or her opinions about the responsibility of the respective parties.

Weinberg believes good mediators strike a balance between facilitative and evaluative approaches. He explains: “I don’t threaten people or impose a penalty on them. I just sit them down privately and say, ‘Look, you’ve got some potential liability. Here’s what they would throw at you in a trial.’ Then they’re more likely to accept a middle ground.” Although mediators cannot impose solutions, the Schinnerer article notes, “A nonbinding and confidential discussion with a neutral third party can be extraordinarily helpful in evaluating the alternatives to settlement. The experienced mediator knows how to explore issues with the parties in a way that is helpful and will not compromise the position of the parties in front of one another.”

The desire to avoid litigation is understandable. Lawsuits can take months or years; they are very expensive; they draw architects’ attention and energy away from their own work; and they can be emotionally draining. Moreover, juries can be unpredictable, and punitive damages can be astronomical. Mediation, by contrast, can be fast and relatively inexpensive, and there’s a good possibility that the parties can emerge feeling okay — if not happy — about the negotiated solution. In some cases, though, litigation is the only option. There may be legal issues that only a court can decide, or the case may call for a precedent-setting ruling of industrywide importance. Or extensive “discovery,” a normal and time-consuming part of litigation, may be needed to enable opposing parties to uncover background information and best present their own positions.

Besides mediation, another alternative dispute-resolution technique is arbitration. As laid out in the standard AIA contracts, arbitration occurs after mediation has failed. Like litigation, arbitration is adversarial in nature and involves the opposing parties asking one or several decision makers to weigh the evidence, make a judgment, and impose a penalty on the losing party. As in mediation, arbitration proceedings are private, and the arbitrator is chosen by the parties. Unlike in mediation, however, the decision of the arbitrator is binding, the parties must accept it, and they normally do not have the option of challenging the decision in court.

website support | editorial calendar | contact the staff | about us | submissions | site map | back issues | advertise | terms of use | privacy policy | my account
© 2009 The McGraw-Hill Companies, Inc. All Rights Reserved