CREJ

June 2018 — Development, Construction & Design — Page 7 www.crej.com A prompt, cost-effective and well-reasoned set- tlement should be the winning strategy for all dispute resolu- tion procedures. Experience tells us that near- ly all real estate and construc- tion disputes will settle prior to trial or arbitration hearing, and also that traditional civil litigation and arbitration will, at some point, involve voluntary or court-ordered nonbinding mediation. So, it is often in the parties’ best interests to begin the mediation process during the initial stages of a dispute. The settlement of real estate and construction disputes – or any complex commercial dis- pute – often proceeds most smoothly with a guided medi- ation process, rather than the traditional mediation approach. Many industry professionals doubt the efficiency and cost- effectiveness of the traditional mediation approach, which involves picking a fight, picking a mediator, picking a date for the formal mediation session, submitting confidential preme- diation statements prepared by the attorneys, and then having both parties show up for a one- day mediation session hoping to reach a mutually agreeable settlement. Not only can the traditional m e d i a t i o n process be i ne f f i c i en t , but experi- ence has also proven it is often un s u c c e s s - ful. In all, the e xp e r i e n c e can increase the frustra- tion level for all partici- pants and negate any positive momentum that may have been achieved during the first formal mediation session. By default, then, the failure to reach an early settlement results in the need for protracted one-on-one follow up by the mediator and/ or a second formal mediation session weeks later. Meanwhile, the underlying dispute festers and generates further legal expense for the parties. By comparison, every guided mediation can be designed by the mediator, in cooperation with counsel and the parties, to be a proactive and intentional process that best suits the spe- cific needs of the parties under the unique circumstances of the dispute. There are several keys to a suc- cessful guided mediation. The first is the selection of an experi- enced, independent third-party neutral who has the desired per- sonal characteristics and profes- sional experience. During the selection process, consideration should be given to the potential mediator’s unbiased attitude, patience, fairness, industry knowledge, legal expertise and availability to adequately pre- pare for and conduct the formal mediation session promptly. Second, the mediator should be engaged early in the claim evaluation process to help guide the parties through their volun- tary exchange of critical records. This exchange of information should occur well in advance of the formal mediation session so there is sufficient time for the mediator and parties to fully consider their respective posi- tions. It takes the cooperation of all mediation participants to bal- ance the parties’ needs for suf- ficient due diligence discovery with the parties’ desire to main- tain control over the outcome of the dispute. The parties should be encouraged to ask them- selves, “Howmuch more are we willing to invest in this dispute to prove that we are partially right?” Third, the mediator should work closely with counsel and the parties’ representatives prior to the formal mediation session so he can begin to understand the key evidence that will deter- mine the factual and legal issues in dispute. Separate, informal premediation meetings between the mediator, counsel and party representatives will almost always be more educational for the mediator and more cost- effective than traditional confi- dential premediation statements prepared by counsel. These private meetings with each side also provide the media- tor an opportunity to gauge the knowledge level and motiva- tions of the parties to help shape expectations about a reasonable net recovery. Even when the mediator is unable to facilitate a settlement, there is still value in a guided mediation process to help the parties evaluate the weaknesses and strengths in their factual and legal arguments. This, in turn, will allow counsel and the party decision makers to nar- row or refocus their arguments to better position their case for presentation to a judge, jury or arbitrator. Businesses that seek proac- tive strategies to resolve future business disputes in a prompt, cost-effective and well-reasoned manner should also carefully consider including mandatory binding arbitration provisions in their contracts. Tradition- al civil litigation in the state and federal court systems has proven to be slower and more expensive than arbitration, with clear evidence that binding arbi- tration is the significantly faster and less expensive manner for resolving business disputes. An added benefit is that project site visits often can be incorporated into the arbitration process. A March 2017 report pub- lished by Micronomics Inc., an economic research and consult- ing firm, concluded that, on average, it took more than 12 months longer to get to trial in the district courts than to receive a final, binding arbi- tration award in proceedings administered by the American Arbitration Associatioin. Micro- nomics also concluded that the civil litigation delays resulted in substantial additional direct and indirect costs for the litigants, which in the aggregate resulted in remarkably negative impacts on the nation’s economy. Commander is former Denver managing partner for Polsinelli PC. He serves as president of Gene Commander Inc., providing media- tion and arbitration services to help industry professionals avoid and resolve business disputes. V Proactive dispute resolution strategies can save time, money Construction Gene Commander President, Gene Commander Inc.

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