Guided Choice: Emerging ADR Trend
Guided Choice is an emerging trend in the resolution of complex construction disputes. Implementation of Guided Choice to resolve such thorny construction claims will save your construction clients valuable time and money and will alleviate the strain which a protracted dispute inflicts on a construction company’s management team.
As you have likely experienced, most construction disputes settle prior to trial or arbitration. Preparing for trial or arbitration, however, can be incredibly expensive and extremely draining on a construction company’s morale. Guided Choice is a multi-phase alternative dispute resolution (“ADR”) process which enables parties to settle their disputes more quickly, more efficiently and less expensively.
Guided Choice is a multi-faceted process, epitomized by a robust pre-mediation phase, through which a neutral mediator/facilitator serves as a guide to the dispute resolution process. The mediator works independently and confidentially with the parties to develop the customized ADR process. Guided Choice is implemented by a basic agreement to mediate, which is contained within most standard construction contracts. The key for Guided Choice is getting the mediator involved early in the dispute resolution process before the parties spend excessive monies and become entrenched in their respective positions. A skilled Guided Choice mediator recognizes that “one size does not fit all” for the resolution of the dispute; so the Guided Choice mediator customizes the process to comport the intricacies of the dispute, the personalities of the key decision makers and the corporate cultures of the involved companies.
In many instances, a construction mediation is an event for which the parties prepare by exchanging reams or terabytes of documents/data, taking numerous depositions and exchanging Pre-Mediation Briefs, which can be polarizing. Typically, parties resolve the dispute at the mediation, or they don’t; and if the mediation is unsuccessful, the parties forge ahead to trial or arbitration.
Guided Choice views mediation as much more than a “negotiation event.” Rather, the Guided Choice mediator assists the parties in preparing for negotiations, anticipates potential impasses, develops means to avoid those likely stalemates in settlement discussions and designs the most efficient ways to resolve the disputes when those log jams occur.
Acclaimed Chicago construction lawyer/arbitrator/mediator, Paul Lurie, is recognized as the mastermind of Guided Choice; and he, along with a team of experienced trial lawyers and mediators, have developed seven core principles for Guided Choice: (1) obligation to mediate; (2) retention of mediator as early as possible; (3) mediator’s confidential investigation and diagnosis; (4) information exchange; (5) anticipating and overcoming impasse; (6) continued use of mediator after suspension of negotiations; and (7) customizing arbitration for disputes which do not settle. A brief description of the Lurie group’s seven core principles for Guided Choice follows.
Obligation to mediate: In order to trigger Guided Choice, the parties must be required to mediate either, typically, through agreement or operation of law. Normally, the details of the Guided Choice process are not specified within the contract to enable the skilled Guided Choice mediator to customize the process to fit the particular dispute. After some confidential pre-negotiation investigation, the Guided Choice mediator, in conjunction with the parties, then develops the detailed settlement process.
Retention of mediator as early as possible: As stated above, retaining the mediator as early as possible is key to the success of the Guided Choice process. All too often, parties and their counsel retain a mediator after significant money has been spent on the discovery process, attorney’s fees and expert fees. At that point, the parties might be ready to negotiate, but they also might be further entrenched in their respective positions. Under Guided Choice principles, the mediator’s pre-negotiation phase determines when and how the parties will negotiate. Additionally, the Guided Choice mediator determines what specific information the parties need to exchange before they are ready to negotiate, who should participate in the negotiations and how the settlement process should be designed. Therefore, the parties should retain a mediator as early as possible.
Mediator’s confidential investigation and diagnosis: The Guided Choice mediator works independently and confidentially with the parties to develop the appropriate settlement process. During this process, the mediator investigates and diagnoses the reasons why the dispute remains unresolved. Sure, certain laws, facts and expert opinions may serve as barriers to settlement; but a skilled Guided Choice mediator understands the human behavioral factors which might prevent the decision makers from changing their minds. The Guided Choice mediator can identify these issues of personality, risk tolerance and corporate culture which might impede resolution. The Guided Choice mediator can then design the dispute resolution process to avoid or bypass such potential impasses.
Information exchange: In order to make a sound business decision whether to settle a dispute, the parties must have sufficient information to base such determination. The Guided Choice mediator can assist the parties in identifying what vital information needs to be exchanged, in an expeditious fashion, in order to settle the dispute. For example, with the Guided Choice mediator’s direction, the parties might agree to postpone the expensive exchange of “electronically stored information” during the negotiation phase. The Guided Choice mediator can help the parties in pinpointing the crucial information, which needs to be exchanged, to enable them to settle the dispute.
Anticipating and overcoming impasse: The parties should embrace a settlement process which focuses on avoiding and overcoming impasse. The Guided Choice mediator’s creative talents come to the forefront in identifying potential impediments to settlement and then customizing the settlement process to bypass those causes for stalemate. As referenced above, personalities, corporate culture and other human behavioral factors are just as important as the facts underlying dispute. The Guided Choice mediator can use impasse-breaking tools, such as referral to an expert for a non-binding ruling on a disputed issue, to overcome the stalemate.
Continued use of mediator after suspension of negotiations: The parties must recognize that impasses in negotiations are normal; however, such stalemates do not create reasons to completely terminate settlement discussions. Guided Choice requires a continued commitment from the parties to utilize the mediator even when negotiations are suspended. The Guided Choice mediator can help the parties get back to the negotiation table.
Customizing arbitration for disputes which do not settle: Some construction disuptes simply do not settle; but in order for the arbitration to be successful, the arbitration process must be customized to meet the parties’ needs. In such instances, the Guided Choice mediator can assist in: (1) selection of the appropriate arbitrators; (2) minimization of discovery costs; (3) simplification of the issues to be adjudicated; and (4) reduction in the length of the arbitration hearing. The Guided Choice mediator can also remain involved during the arbitration hearing by continuing to explore settlement alternatives with the parties.
Not all mediators will be effective Guided Choice mediators. The Guided Choice mediator must be willing to utilize creative techniques in order to customize the ADR process. Obviously, the Guided Choice mediator should have subject matter expertise, such as extensive experience with complex/high-dollar differing site conditions or delay/impact claims. The Guided Choice mediator should be trained to investigate and diagnose the actual causes of impasse, and this person must be skilled in identifying the emotional components which create impediments to settlement. The Guided Choice mediator must be a good promoter throughout the process. Besides having subject matter expertise, the Guided Choice mediator must have sufficient litigation or arbitration experience to be able to understand the procedural issues encountered by the parties.
Many construction executives and in-house counsel do not want to give up control of managing the potential settlement of a dispute, particularly to a third-party neutral. The Guided Choice mediator is the construction company’s resource, not the company’s negotiator. Under Guided Choice, the mediator serves as a guide to designing the ADR process; the company maintains control of it.
Guided Choice is not a brand new process; however, it is gaining momentum, with success in the resolution of complex construction disputes. Guided Choice is an emerging ADR trend utilizing best practices in the resolution of disputes. To learn more about Guided Choice, please refer to www.gcdisputeresolution.com, which contains great FAQs and an outstanding bibliography on Guided Choice.
Guided Choice offers practical means to resolve construction disputes more quickly and less expensively. In doing so, Guided Choice lowers the stress imposed upon a management team resulting from a protracted dispute. Your client’s construction company should embrace an emerging trend and implement Guided Choice for the resolution of its next complex construction dispute.
In 2017, William G. (“Bill”) Geisen served as the first President of the Construction Lawyers Society of America. Mr. Geisen is a partner with Stites & Harbison PLLC and serves as the Chairperson of the firm’s Construction Service Group. Mr. Geisen practices exclusively in the area of construction law and has represented parties across the entire spectrum of the field, including owners, developers, general contractors, design builders, prime contractors, subcontractors, design professionals and sureties. As a result, he has handled construction matters from all perspectives of the industry. Mr. Geisen drafts and negotiates construction contracts, but the bulk of his practice focuses on various forms of dispute resolution, including arbitration and litigation. During the course of his career, he has litigated cases in 14 states and the District of Columbia. He also serves frequently as a mediator and arbitrator of construction disputes. One of the highest honors and most challenging engagements of Mr. Geisen’s career was representing Chief Justice John Milton of the Kentucky Supreme Court, who, by statute, oversees the Commonwealth’s $800 million Kentucky Courthouse Construction Program. In 2009, issues arose regarding the manner in which those courthouse construction projects were bonded; and in order to be legally compliant, the Chief Justice had to modify the manner in which the projects were bonded by requiring that the general contractor or construction manager furnish performance and payment bonds equivalent to 100 percent of the contract price. Such an unpopular change absorbed much more of each general contractors’ or CM’s bonding capacity, added millions of dollars to the costs of the judicial center construction projects and called into question previous construction practices relative to them. Through Mr. Geisen’s counsel, the Chief Justice was able to avoid litigation following the change. Mr. Geisen’s advising the Chief Justice and the six other Kentucky Supreme Court Justices about bonding requirements for the program has been a highlight of his career.