It is not uncommon for a construction contract to contain a dispute resolution section that typically requires the parties to mediate a dispute and, if mediation fails, they either arbitrate or litigate the dispute.

Chapter 154 of the Texas Civil Practice and Remedies Code outlines various alternative dispute resolution procedures available to parties.  Of the dispute resolution methods in Chapter 154, mediation and arbitration are the most prevalent.

Usually overlooked and seldom used are the following three dispute resolution options:

  • Mini-trial
  • Moderated Settlement Conference
  • Summary Jury Trial

Mini-trial and Moderated Settlement Conference

A mini-trial and moderated settlement conference are similar to mediation in that they involve the use of neutral parties, but the role of the neutral parties is different than mediation.

The Mini-trial

  • Conducted under an agreement of the parties.
  • Each party and their counsel present the party’s position before selected representatives for the parties or before an impartial third party.  This allows the parties to define the issues and develop a realistic basis for settlement negotiations.
  • The impartial third party may issue an advisory opinion regarding the merits of the case.  The advisory opinion is not binding unless the parties enter into a written settlement agreement.

The Moderated Settlement Conference

  • Is a forum for case evaluation and realistic settlement negotiations.
  • Each party and their counsel present the party’s position before a panel of impartial third parties.
  • The panel may issue an advisory opinion regarding the liability and/or damages of the parties, but the advisory opinion is not binding on the parties.

Summary Jury Trial

  • Intended to provide a forum for early case evaluation and development of realistic settlement negotiations.
  • Each party and their counsel present the position of the party before a panel of six jurors unless the parties agree to a different number of jurors.
  • At the conclusion, the jury panel may issue an advisory opinion regarding the liability and/or damages of the parties.

The summary jury trial is different than a mini-trial or moderated settlement conference because it is conducted in a courtroom using jurors from the jury pool.  Summary jury trials typically last one day, and each party has a predetermined amount of time to submit their arguments and evidence.  The rules of evidence are generally loosely enforced so as not to bog down the proceeding.

After the parties present their arguments, the jury is given a predetermined amount of time to deliberate, and then the jury provides its “verdict,” which is just an advisory opinion.  This allows the parties to have some idea of how a group of jurors will perceive their case.

The Benefits

There are many benefits to getting the perspective of a neutral third party through a mini-trial, moderated settlement conference, or summary jury trial.  It allows you to see what arguments or facts were well-received or were confusing to the neutral.  And it also allows you to see how a neutral will react to your opponent’s arguments and facts.  But most of all, it will hopefully give the parties a framework for settlement negotiations so that the case can be resolved.

Almost any type of case can be appropriate for a mini-trial, moderated settlement conference, or summary jury trial so keep them in mind for helping you get a case resolved.

 

 

Part 1 discussed how choosing the right mediator and watching for the right time can improve your chances for a successful construction mediation.  Here are additional thoughts on how to increase your odds for a successful mediation.

  • Prepare yourself and your mediator.  Many mediators ask parties for pre-mediation submissions, but too often parties provide very little information to the mediator.  If you have selected the right mediator, he or she will want to try and understand the case background, legal issues, damage claims, etc. before the mediation.  Help the mediator be prepared to help you.  Give them information on the claims, disputed fact issues, and critical legal issues. Also, prepare yourself for the mediation.  Before going to the mediation, parties and their counsel should make sure they have, at a minimum: (a) copies of relevant documents, deposition testimony, and important cases; (b) a strategy for how to approach the mediation, including prioritizing areas where concessions can be made; (c) thoroughly analyzed potential acceptable resolutions and identified potential obstacles that may have to be dealt with; and (d) a reality check conversation between the party and their counsel (see below) to discuss how to maximize the strengths of your case and minimize the weaknesses.  Keep in mind that there will not be time to review a large number of documents with the mediator.   So proper preparation will allow you to hone in on the key documents and areas of the case that will likely be relevant to the settlement negotiations.   Prior to the mediation, parties and counsel should discuss the mediation strategy and potential settlement positions.  If the only discussion parties and their counsel have had about the mediation is the location and time, then they’re not prepared.
  • Have a reality check conversation.  It is rare to find a dispute where the liability and damage issues are so clear-cut that it could be termed a “slam dunk” for one of the parties.  Yet, that’s what some clients want to hear from their attorney.  And sometimes, any mention by an attorney that there may be a weakness in some part of the case is met with an angry response from clients asking, “whose side are you on?”.  If an attorney avoids having tough conversations or tries to sugar coat things for a client because they think that’s what the client wants to hear, then the attorney is doing the client no favors. This approach is the perfect recipe for frustration at mediation because not only will the mediator be telling the client why the other party thinks they should win on some (or most likely all) issues, the mediator may also point out areas of weakness and question how the attorney and client plan to address those issues.   No client likes surprises.  If the first time a client hears about a potential weakness in a claim or defense is at mediation, then a resolution will be difficult, if not impossible, to achieve.  That’s why before mediation, lawyers and clients need to have a honest conversation about the strengths and weaknesses of the case.  If a client has hired the right attorney, he or she will have analyzed the strengths and weaknesses of the case and be prepared to have this conversation.

Construction contracts routinely require parties to mediate as a prerequisite to arbitration or litigation.  Even if the contract doesn’t require mediation, many judges will still order parties to mediate before going to trial.  While some disputes are resolved in mediation, too many times parties leave the mediation thinking it was a waste of time.  Despite the title, I’m not suggesting that there is a formula that will always guarantee a successful mediation, but there are things that will increase your odds for success.

  • Select the right mediator.  Just because someone is an experienced, good mediator doesn’t make them the right mediator for every dispute.  For a construction dispute, your chances of reaching a resolution increase if you have a mediator that understands construction industry concepts and construction law.  If a lawyer has to spend a lot of time during the mediation educating the mediator on construction industry concepts or construction law issues, the chances of settling the case go way down.  Too often, mediators who do not have a lot of experience with construction matters want to skip over the legal merits and simply jump to telling the parties how expensive it’s going to be if they don’t settle the case.  Or occasionally, I’ve mediated with a former judge whose resume says they have experience with construction cases, only to learn at mediation that their experience is minimal, so they spend their time telling their best trial horror stories to try and scare the parties into settling.  While these approaches may occasionally get cases settled, it usually only frustrates the parties and the lawyers. So when you select a mediator for a construction case, find someone that understands construction industry concepts and construction law.  Even if it’s someone in a different location and you have to pay for a plane ticket, in the long run it will be worth it.
  • Watch for the mediation sweet spot.  Mediation is more likely to be successful if both parties have enough information about their case and their opponent’s case, but still have enough work left to do in the case to incentivize the parties to try and resolve it. There is no scientific formula for finding the sweet spot, but it’s critical that you begin watching early on to see when the window might open.  If you mediate before you have enough information, people will be hesitant to settle for fear they are paying to much or giving up too much.  Or if an insurance carrier is involved for one or more parties, adjusters may have a checklist of information that has to be provided before they can authorize settlement.  If you wait until late in the case, however, then parties have often spent so much in attorneys’ fees and costs that it impacts how parties evaluate every offer and it becomes an impediment to reaching a resolution.  So look for the mediation sweet spot and it will increase your chances of resolving the dispute.