“Mobile” Mediation — A Practical Solution to Settling Construction Disputes on the Job Site

Have you run into a dispute mid-construction that is impacting the job schedule, causing delays, or creating tension? Communication breakdowns, emotions, and differing expectations can cause construction disputes to escalate quickly, shutting down work streams, payments, and perhaps necessitating liens and legal fees.

Join construction mediators David Matthews, Esq. and Jennifer Grippa, Esq. as they discuss “mobile” mediation, an on-the-job-site mediation with an experienced construction neutral aimed at bringing efficiency, cost savings, and a timely solution to construction disputes.

What we’ll cover:

• When and why to consider mediation for disputes between contractors and owners or between contractors and subcontractors
• How an in-person, on-site mediation would work at the project site versus a conference room
• Who to bring and how to best prepare
• How “mobile” mediation can save time and money, reduce risk, restore relationships, and bring practical solutions to solve even the most complex construction issues

Seth Bloom (Speaker 1) : (00:03)

All right. We’ll get started and people can join us. Uh, anytime during the webinar, my name is Seth bloom. I’m the senior director of attorney services for Levelset down here in new Orleans. We’re really excited today to put on another webinar. Uh, today we’ll be hosting a mobile mediation, a practical solution to settling construction disputes on the job site, hosted by Jennifer Grippa and David Matthews from Myles mediation and arbitration, uh, which is a really interesting practice, uh, totally neutrals, uh, everyone handling nothing but dispute resolution. So this is an interesting perspective and I’m looking forward to learning today. So Jennifer, David, thank you so much for doing this today. We really appreciate lawyers like you, and if anyone else out there has any questions, uh, you have live lawyers to answer these questions as well as posting them in the attorney network or sending emails to the lawyers directly. Uh, thank you so much. Look forward to it, Jennifer David. Thank you.

Jennifer Grippa (Speaker 2) : (01:02)

Thank you.

David Matthews (Speaker 3) : (01:03)

Uh, my name’s David Matthews. I am a partner with Weinberg Wheeler in Atlanta. I’ve been practicing for 30 years now and do a lot of construction work, complex commercial work, and, um, think I’ve had a lot of experience that relates in some of the issues that we’re going to discuss today. Jennifer

Speaker 2: (01:25)

I’m Jennifer grip. Ah, I am a mediator and arbitrator with miles, mediation and arbitration, uh, work. Um, nationwide. I reside in Jacksonville currently. I am a Florida, Florida mediator and arbitrator, but also a Georgia mediator and arbitrator has spent 20 years in private practice in Atlanta, um, specializing in construction law.

Speaker 3: (01:51)

So we’re going to kick off today talking about mobile or mobile mediation, and I thought it might be good for us to take a step back and talk about what mediation is to begin with. Um, Jennifer, can you tell us what mediation is?

Speaker 2: (02:07)

Yes. Mediation is a voluntary process where the parties to a dispute come together and with the help of a neutral third party, have a discussion and try to come to an agreement to resolve their dispute. It is a voluntary process. There is no judge or jury. No one’s making the decision except the two parties. The discussions just guided by an experienced third party neutral, and the process is confidential. So any offers or settlement demands that are exchanged are not admissible at trial if the case ends up in litigation.

Speaker 3: (02:53)

You know, one, one question that I hear, um, when I talk about mediation and mediations for people is, well, I’ve been to arbitration, is this the same thing as arbitration? And there’s a lot of confusion between arbitration and mediation. What’s the difference between arbitration and mediation?

Speaker 2: (03:13)

Well, mediation is a process where by the parties come together and on their own try to come up with their decision, uh, a way to resolve their dispute and come to an agreement to terms with a mediation. The parties can agree to almost anything. And so you can have terms to a settlement that you wouldn’t otherwise get. If your case was decided in court and litigation or by an arbitrator, an arbitration arbitration is different than mediation because arbitration is involuntary. It’s basically submitting your case to be decided by a neutral third party. Who’s an arbitrator and the arbitrator looks at all of the facts. Here’s all of the evidence and decides the case for the parties.

Speaker 3: (04:08)

Construction disputes are often not cost effective to litigate. Um, can you elaborate on that, Jennifer?

Speaker 2: (04:18)

Well, if any of you have ever participated in any litigation, you may know how expensive litigation can be. Construction disputes are unique in that you may have a dispute over $20,000 and it may not make sense to go and engage the cost of a lawyer and bear the cost of litigation to recover that payment. And so, um, you know, I’ve seen people engage in these kinds of disputes where they have a 20 or $30,000 claim and they’ll spend $50,000 in legal fees to recover that. And it just doesn’t make financial sense to do that. Um, as you know, when construction margins are tight and really there is no construction budget, that includes litigation phase, there just aren’t people do not contemplate that when they are budgeting for a construction project.

Speaker 3: (05:21)

Yeah. Um, from personal experience, I have found that construction disputes can be highly emotional. And, uh, and I think this particularly occurs in residential disputes, you’ll have homeowners that feel that something’s been done to them personally, this is, this is their personal identity. And, um, the contractor has personally offended them, uh, in a way that you don’t see in a commercial dispute. But, uh, my experience has been that construction disputes can become highly emotional. And I think that that in and of itself makes them excellent candidates for mediation. Um,

Speaker 2: (06:11)

The other thing is that in construction, many times the communications are oral, unfortunately, and sometimes there is very little documentation in these types of cases. Um, one example might be changes in the work sometimes that doesn’t get put into writing with a fast pace things that are going on on a job site. Another example might be details that are not in writing. So for instance, think about design details, the slope of something, maybe the slope of a shower pan, maybe the slope of a roof. Um, but when things are not put into writing and design details are, uh, left on spoken, um, think about what way of flooring is going to run, what other tile should be put into a parallel pattern or a herringbone pattern. Um, I’ve seen cases where the hearing bones put in sideways and a subcontractor says it wasn’t communicated to me. You wanted it running up and down. And someone says, well, that’s how herringbone runs. I mean, these things happen day in and day out on job sites because of oral communications or lack thereof. And you don’t see that with other types of matters as you do in construction.

Speaker 3: (07:38)

Yeah. And, and, um, when we talk about construction construction cases, um, one problem that I have seen a lot is that contractors don’t typically like to take over projects or other contractors. And the reason they don’t is that they can’t see all of the work. They don’t know what’s been done and it puts a tremendous amount of risk on them. Um, so this is another reason why mediation is, is a great solution because you’re not asking a contractor to take over for another contractor. Um, Jennifer, what has been your experience with owners? Um, bearing costs of changes?

Speaker 2: (08:28)

Well, a lot of times when disputes arise on the job site, um, I do see times where subs or suppliers or general contractors say that wasn’t communicated. We never had an understanding about this. And, um, sometimes the cost to tear something out and redo it is just too expensive. And sometimes it’s the owner. Doesn’t like the way it’s done. They end up bearing the cost to change that or have something, have materials removed at any rate. That’s an area that is ripe for disputes when things are installed. And, um, someone decides that they’re not going to pay because they’re not happy with the way that it is.

Speaker 3: (09:17)

Um, my experience has been that when people have a dispute, they immediately think about litigation. I think about litigation because they’ve seen that in movies. I’ve seen that on television and that’s the first thing that comes to mind, but it’s not always the best alternative. In fact, most of the time, it’s not the best alternative. Um, my experience number one has been that litigation by definition is uncertain. You don’t know what’s going to happen. Uh, and this uncertainty goes to the end result, but it also goes to the cost that it’s going to take to get you there. So that’s a, that’s a big unknown. And with mediation, you were able to have certainty, you are able to control your result that day. Um, Jennifer, what’s been your experience regarding, um, disputes relating to quality budgets or payment.

Speaker 2: (10:18)

Well, I think one thing that people don’t always think about when they get into a dispute, they think it’s just a two-party dispute. I’m an owner. My contractor didn’t do X. My contract says this, or if you’re a general contractor and you have a payment dispute and you say, we did this work, we’re entitled to be paid for it. Um, and you think it’s just a simple two party issue. And what I’ve seen happen is these things go into litigation and the dispute expands. So an owner may say, I didn’t pay you because I don’t like the way that your subcontractor did X, Y, and Z, or the materials that were supplied were, uh, not what I was expecting. And so next thing you know, when there’s a claim filed in court, there’s a counterclaims filed. Third parties are brought in fourth parties sometimes are brought in lots of finger pointing. And so the costs and the time can eat quickly, get out of control.

Speaker 3: (11:23)

And, um, I think another issue is liens. People think liens are a simple solution to problems and if they file a lien, it’s over. But the first thing they have to do is figure out how to file a lien and anyone that’s done this knows that it is a veritable minefield. You make one mistake and it’s over. Um, and then once the lien is filed, an action is going to have to be filed to enforce the lane. And just like Jennifer, you were saying a moment ago, uh, once you file that action, then what happens? There’s counterclaims, there’s third parties. It goes on and on, and it takes on a life of its own and says, the lien is not the end of the story.

Speaker 2: (12:07)

Exactly. And insurance can also have a life of its own in a construction dispute. So a lot of people are under the misimpression that insurance will cover defective work. It does not general commercial liability insurance policies that most contractors and subcontractors carry has nothing to do with defective work and owners are under this misconception. If they hire a contractor who’s insured, that means they’ve suddenly have some entity out there standing behind that work to pay when it’s not done. Right. And that is not the case. Um, insurance disputes and litigation can be, um, very time consuming and expensive. And also if you file a lawsuit against someone, just because you win, does not mean that some insurance carrier is gonna step up and pay that judgment that rarely if ever happens. So I can really make a cash settlement at a mediation, very important

Speaker 3: (13:12)

Public nature of litigation’s also an issue. Um, once a lawsuit’s filed, it becomes public, and this can be particularly troublesome for builders. Um, things are mentioned on social media, suddenly the entire neighborhood has, uh, has access to what has happened at your house through social media, through other types of publications and using the mediation process is good. Also, as, as you mentioned earlier, for confidentiality reasons, but this, this hits home when you have one house in a neighborhood that has issues to builders, addressing them, and suddenly the entire neighborhood has knowledge of the homeowner’s perspective of what happened in that house. And, um, mediation allows you to have a confidential result and avoid that issue.

Speaker 2: (14:08)

So David let’s talk about onsite mediation and how it can help because most mediations are actually done in an office setting. They may be done right before a case goes to trial in a court house, in a conference room, they might be done at a third party mediation site in a conference room or in a lawyer’s office. Talk about the concept of an early mediation onsite and how that works.

Speaker 3: (14:37)

Well, this concept of, of going on site probably doesn’t mean a lot to someone who has not mediated many times before, but when you have mediated in a business office, as you might imagine, it’s a completely different situation than mediating on site. If you were to take the parties to the actual location where the dispute exists, they can describe the issues in person and the mediator can see exactly what the problem is. I’ve had many situations where a mediation was done in an office and people brought photographs of what they believe to be a problem. And I remember years ago, I used to do a lot of issues with a foundation settling and the floors would become wavy and the experts would come to court with all types of photographs, making this thing look like the Pacific ocean, when you saw it in person, it was nothing like that. So when you have the ability to describe the issue and let everyone see it in person, it’s, it’s invaluable.

Speaker 2: (15:56)

And I think the timing of it is critical because in construction, time is money, right? And delays can have a domino effect with, uh, if a dispute comes up and then impacts other subspecialties that are coming down the critical path after this issue. And so having somebody come out there right away and having that discussion on the job site can really make the difference in getting that project completed on time.

Speaker 3: (16:36)

Sure. Let’s talk a little bit more about what it means to do an onsite mediation. What are the mechanics of it, Jennifer?

Speaker 2: (16:45)

Yeah. So how it works is basically you’d bring your neutral call your neutral and have them come out to the job site. And it is, it has all the same aspects of a mediation that you would have in the conference room. It’s still confidential. Any offers, a settlement offers that are exchange either way on either by either side are all still in admissible in trial. It’s still a voluntary process. The neutral’s not coming site and saying, you did this wrong. You need to do this to fix it. You need to pay this. Um, it’s really, it’s a voluntary process, but I think having someone having a neutral there, it has a way of calming people down of slowing things down and having a conversation about it. Sure. I also think it’s really important to give people the chance to be heard. So that’s another important aspect of mediation is allowing people the chance to be heard and to be understood.

Speaker 2: (17:57)

Sometimes just having something conveyed by a third party, neutral can make it completely different. Um, CA can’t people might have a different reaction to it. And that can be very powerful when emotions are escalating on a job site and people are angry, they’re upset and they automatically just think, Oh, there’s no point in even talking about this because it’s not going to get settled. But it’s interesting if you bring in an experienced attorney who does not have a dog in the fight, who’s not making the decision to really talk through the issues. Um, it, it can work.

Speaker 3: (18:37)

Sure. You’re right.

Speaker 1: (18:39)

I just wanted to jump in for a second and ask anyone in the audience we’re about at the halfway point. So if there are, um, questions, uh, go ahead and post them or let us know and, uh, they’ll be glad to answer them. So, uh, let everyone continue to the webinar. Thank you,

Speaker 2: (18:58)

David. Let’s talk about who should be there.

Speaker 3: (19:02)

Yeah, that’s a great question. Uh, well of course the clients want to be there. The people, the, the P the offended party, uh, the owner, as well as the contractor, but I think it should be expanded. If you could have the architect here, you can have an engineer there that can, that can make a significant difference. But one thing that I think helps mediations more than anything else, as far as X factors and external players are experts. Um, I did a mediation last week where both sides had experts present, and the expert is able to analyze and answer the technical questions that come up. Because if you, if you have, uh, two parties, which are warring and can’t get anywhere with their dispute, sometimes an expert can help explain the issue. And also the expert can get his or her opinion and let the other side defended.

Speaker 3: (20:02)

And it’s a good way of weighing how strong your theory is, is having the expert there. Um, all parties, all people who are at the mediation need to sign a confidentiality agreement. So this goes back to what we talked about a minute ago about keeping it all in that space, the expert, the engineer, the consultant, the parties, all have to sign confidentiality agreements, another potential party. You can have our contractors, right? I mean, the, the owner can have a contractor. They’re saying it should have been built this way. And the contractor can have a contract or an outside third party saying, this is the way it should be built. I find that these contractors are sometimes the most credible parties out there because they do this for a living every day. And their word means more sometimes than an expert who, uh, who is paid to do this on a regular basis. Um,

Speaker 2: (21:14)

And I think in these types of cases and construction disputes in particular, there’s often a blame game going on. And so I think to kind of cut through all of that, bringing everybody to the table together can be important. Like it’s, sometimes I’ve seen the general contractor point to the architect and say, well, this is the designer’s fault, the engineer or the architect, because they didn’t specify on these drawings, how this was going to be. So I had to figure it out without these details. And so bringing those parties to the job site and talking it through right then and there, and, and getting these things worked out and discussed, um, are important and really cutting through all of that, those finger pointing tactics that happen in litigation.

Speaker 3: (22:09)

Yeah. And I’ll feel like an onsite mediation is probably your best shot at getting the case settled in a construction context. Uh, if the people are there face to face looking at the problem, uh, my belief is that the chances of resolution are substantially higher. And if you can’t get it done, then you might end up, you might have a situation that has to be tried, but the vast majority of the time, you’re going to be able to resolve it. In that context.

Speaker 1: (22:42)

David, we have a question here from, uh, Donna Donna Dean, and it says if it’s only a $20,000 claim, wouldn’t it become expensive to have all the experts there and who’s to pay for them.

Speaker 3: (22:53)

Yeah. That, well, that, that’s a great question. And, and, um, you never want to be in a situation which, which I call spinning dimes fighting over nickels. Um, w w w when you’re spending more than the cost of the client, and, and I guess my first point would be, if you have a $20,000 claim, it’s unlikely that you would have hired an expert to begin with, but let’s say there’s something in the contract that allows you to recover those costs. Uh, yes, the answer is it’s very expensive and you have to do this on a case by case basis. So on a lower value claim, um, having experts in person might not be ideal. So what I do in those situations is have the expert available by phone. The expert should know the case very well, the experts photograph at the experts, it, whatever, and they can just be on the phone and you can call the expert as needed to me. That’s the best way of keeping the costs down for experts. Great.

Speaker 2: (23:56)

And I would also just add to that, you know, experts may seem Aaron expense and litigation, but if you consider it, they’re looking at the entire file. They’re looking at all the records. They’re talking with the lawyer, they’re preparing a written report. They’re sitting for depositions, all that adds up, but if you’re talking about, say roofing, and there’s a roofing issue, and somebody says this wasn’t done right, hiring a roofing consultant, who does this every day, who testifies in cases who would work by the hour and come out there onsite, it’s going to be a lot more efficient in terms of costs than you would having experts in litigation.

Speaker 1: (24:40)

Um, I think this is a good question. Uh, and thank you, Jennifer and David for those answers, but, uh, Craig asks, how do you approach the party you’re in dispute with, about going, um, with the mediation option? And I think that’s a really good,

Speaker 3: (24:53)

Okay. That’s a great question. And most of the time nowadays, there is either a provision in the contract that, that compels mediation, or if a party has filed suit, the judge is going to make you mediate. So almost every time now you’re going to end up in a situation where the parties have some type of obligation to mediate. And that wasn’t the case 20 years ago. It was, uh, w it was wide open 20 years ago, but now there’s generally a provision that you need to mediate. And, and the point that Jennifer and I are trying to, uh, drive home today is when you have that obligation to mediate, or even if you just decide to do it voluntarily, doing it on site increases your chances of success in the mediation exponentially.

Speaker 2: (25:46)

And Craig, I would also say, you know, sometimes people feel that if they’re the ones to suggest mediation, they feel like it’s a sign of weakness on their part, which is what a lot of contracts specify. Like David said, have the contract provision. I feel like sometimes people don’t read it or don’t invoke it and just go straight to calling their lawyer when they have a problem. Um, but I think even if there is no provision in the contract for mediation suggesting to the other side, Hey, maybe before we all spend a lot of money on legal fees, we sit down and try to talk about this. I mean, most people are open to at least trying that. And sometimes if there is a mediator there, then they’re possibly more likely to participate in it because they’re not going to be strictly engaging with the person they’ve had a problem with up to that point.

Speaker 3: (26:47)

This is a good segue for us to talk about how much mediators costs. I think Jennifer what’s, uh, what are radiator rates,

Speaker 2: (26:56)

Right? You saying a mediator’s rate is going to vary depending on the mediator, depending on the market. Uh, but typically they’re around $350 an hour. Um, and it’s really in the long run saves you time and money to at least try to work it out. You might also be able to work out some of the issues and narrow down the issues that are really in dispute. Um, so for example, if you had a mediator that was $350 an hour, a full day of mediation of seven hours would cost less than $3,000. Um, and that’s assuming it takes seven hours. I mean, mediations can take more or less time, right.

Speaker 3: (27:45)

And that’s, that’s less than a day of deposition costs, right? I mean, the T the transcript and deposition alone is over a thousand dollars. So it sounds like a lot, but if you, if you go forward in litigation, it’s, it’s, uh, an extremely reasonable amount. Um,

Speaker 2: (28:02)

Um, and I also think, um, when we talked about who should be there, we talked about experts and people are thinking about costs. Sometimes if you’re talking about in the residential context, bringing an inspector, there can also be helpful and maybe is less money than bringing a expert. Um, but that’s somebody else who could help kind of advance the ball on coming to a resolution.

Speaker 3: (28:32)

Yeah. Yeah. So reasons why we should try this process. Why should we try this? Um, my experience has been the construction disputes, um, are extremely difficult to tackle the issues are complex. Uh, you mentioned earlier, Jennifer, that you can, you can easily end up with many parties, many experts, uh, and they can become a mess very, very quickly. It’s also a lot of tough sledding through discovery. You seem to have more and longer depositions than you would in other types of actions. So I think that’s, um, that’s one reason it should be.

Speaker 2: (29:16)

The other thing I think is important to remember is that even if you win in litigation, it can sometimes feel like a loss and people don’t realize that, um, if they haven’t been in litigation before, so they may look at their dispute and say, I’m right, I am right. I’m gonna win this. I’m gonna go. And I’m going to prove my case. And you may spend like the, that Donna had with the $20,000 dispute, you may spend 50 to get 20. So you one 20 at the end of the day, but you’re ultimately down in the grand scheme of things. And litigation is not a, it’s not a solution that creates money for people, right. And construction people are in this business to grow their businesses and to do work, that’s going to bring money to their business. Litigation does not

Speaker 3: (30:13)

Right. Winning the battle, losing the war. Right. Um, also I’m sure your experiences ascend Jennifer, and, and I think that statistics prove this out, that most cases settle in fact, over 90% of cases settle. So if you can find a mechanism to help get a resolution in the case, by all means you should do it and you should do it quickly. So if there is a way to mediate, you should exercise that option. Um, also I feel strongly again, that if you were onsite, that people are face-to-face, uh, they don’t have that sitting across the desk business feeling. Um, and, and they are there in person, the chances of them resolving the case increase.

Speaker 2: (31:07)

Absolutely. And another way that people sometimes use mediation as a way to save money is they try this early on before they go and hire litigators to pursue the case. So coming together early on with a third-party neutral to try to work this out before you’ve spent a lot in legal fees can also be a way to try to resolve your dispute quickly and without expense.

Speaker 3: (31:37)

Okay.

Speaker 2: (31:38)

Are there any other questions from the audience Seth?

Speaker 1: (31:43)

It looks like right now, we have some coming in and I was about to ask if, uh, any more cause we’re about at that time. Um, all right. I’ll read one from Nate. Um, my small masonry company, uh, was verbally released from the job because of manpower. However, I did not receive any written notice nor was my company officially released from the contract. And to top it all off, I was not paid. The GC tells me that he will pay when the work is completed. Since my company is under contract. Do I have the right for any compensation, even, even though another masonry company is doing the work under my contract, I know there’s a lot of facts there.

Speaker 3: (32:21)

Yeah. Yeah. Well, I, I know that I would, I would have to start by reading the contracts and really trying to unwind the situation. It’s, it’s difficult to, uh, to do that in this context. Um, you re you really, you really need to unwind the situation and, and, uh, again, the point of today’s presentation was on mediation and ways to resolve it. So I think one way you could try to resolve it is to have both parties go to mediation and let the mediator take a look at the situation, try to unwind the case and hopefully bring some resolution to it.

Speaker 2: (33:06)

And I’d also just add to that for, you know, subs and suppliers out there that have these payment issues and contractual issues and disputes. Don’t always assume that the owner knows about that. Um, you know, if you’re a, uh, equipment supplier who’s supplied equipment and you haven’t been hayed, it may be that the owner does not even know that you’re out there, that you’re supplying materials with subcontractor or sub subcontractor. Um, and having a meeting onsite with the owner with the general contractor, um, can really bring light to the issues. And, um, if an owner doesn’t know that you’re out there with this dispute, um, you know, it just makes it more difficult to resolve later. Once the owner’s already paid for the work

Speaker 1: (34:01)

To the general contractor, we had one more question and then I’ll cut it off from there. Um, Donna said, would it be wise to hire a mediator if the construction issue has been rectified, but the only, but the owner simply refuses to pay

Speaker 3: (34:17)

Well, um, I think Jennifer touched on this earlier when she was saying that don’t think it’s over just when a suit is filed or even an, a judgment is obtained. So if it’s an issue of payment, um, sometimes a mediator can be helpful, but there’s, there are a lot of, uh, there, there are a lot of issues that come into enforcement of, of, of payment that, uh, it would be difficult to get into right now.