Posts Tagged ‘Mediation’

Mediation! New Service Available at Wolfe Law

On December 8, 2012 Author By Seth Smiley        

Seth J. Smiley, partner at Wolfe Law Group, LLC and author of ConstructionLawMonitor.com is now a formally trained mediator. New Orleans just hosted the AAAU’s (American Arbitration Association University), Essential Skills for the New Mediator workshop in downtown, hosted by Neil Carmichael.

Why would parties want to mediate a dispute instead of going to court? That answer is easy, yet has many factors. The most important are that mediation is less expensive and much more efficient compared to litigation. But the most important factor is that the parties control their own outcome, rather than a group of strangers (jury).

So if you are in a dispute and are looking for an economical, logical and swift conclusion that is mutually agreeable between you and your adversary, then mediation may be just what you are looking for. Contact the Wolfe Law Group, LLC for more details.

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Louisiana Arbitration Law

On May 30, 2012 Author By Seth Smiley        

Over the past few months here at Wolfe Law Group, I’ve been involved in a number of disputes where where arbitration clauses were invoked and the matters traveled the path of arbitration rather than ordinary judicial proceeding. Mediation and Arbitration have been touted as the faster, cheaper and more efficient way to handle legal disputes. While this may be true due to the enormous built in delays and catastrophic costs of “going to trial” there are a number of ways that contractors can be disadvantaged by dealing with lawyers who are not experienced with this process.

First and foremost, there is no standard for the rules. This means that, unlike the slow judicial process, the rules by which each arbitration play by can be changed and altered based on the contracts between the parties and document that they incorporate. For example, the American Arbitration Association (AAA) is one of the leaders in construction arbitration. They publish a set of rules called “Construction Industry Arbitration Rules and Mediation Procedures.” These rules are the rules that govern the entire proceeding. What this means is that there is a completely different set of operations for an arbitration than there would be for a judicial proceeding. As all lawyers know and most laymen do not, procedural tactics and expertise can make or break a case, even before it gets to be heard on the merits.

The key to getting this set of rules to apply is by having a good unambiguous arbitration clause in your construction contract. The AAA even gives example clauses that a construction company can use in its construction contract:

“Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.” See AAA’s Guide to Drafting Dispute Resolution Clauses for Construction Contracts 

On of the more important aspects of the quote above it that it incorporates the AAA Construction Industry Arbitration Rules. The same can be said for just about any arbitration company, but the AAA tends to be the leader in the commercial and construction industry. Further, you can even go as far as having a local company such as ADR, Inc., host the arbitration and then the AAA rules will apply to that proceeding.

Another reason why this is important this that the law in Louisiana governing arbitration proceedings is relatively short and references other parts of the Civil Code and the Code of Civil Procedure. Louisiana Civil Code in its Revised Statutes §9:4201 – §9:4217 encompass Louisiana Arbitration Law. These statutory provisions are helpful in filling in the gaps where other rules fall short and that point to other areas of Louisiana law that govern arbitration proceedings.

Typically the process works like this: 1) first you look to the contract to see how the parties have agreed to have the matter arbitrated, such as a clause saying that arbitration is proper and which rules apply. 2) Then you see which rules apply (if any) and then that will be the governing set of rules for the proceeding. 3) In matters where the rules are silent, then parties are forced to look to the Louisiana Arbitration Law section of the Revised Statutes as gap filler. 4) Finally, if all areas are silent, then you seek a decision form the arbitrator for what to do or how to proceed based on public policy.

Knowing the rules is critical to the success of an arbitration or any type of legal proceeding. The term “the devil in the details” cannot be more applicable. Arbitration proceedings can save a company thousands of dollars and lots of time. The one negative is that the are final and cannot be appealed, save extreme circumstances.  Always consult with an attorney before deciding to insert an arbitration clause into your construction contract and if you decide to invoke it.

Posted in:     About Our Services, Arbitration & ADR, Construction Contracts, Construction News, Litigation, Louisiana  /  Tags: , , , , , , , , , , , ,   /   1 Comment

Litigation Sucks!! Get Out Of It

On November 8, 2010 Author By Scott Wolfe Jr        

As a lawyer (and a client), the legal system has caused me significant frustration.   Why?   Because judges can make terrible decisions, opposing parties and attorneys can abuse the process, the costs can be enormous, and at the end of the day the case comes down to a decision-maker who can decide against you.

One thing I frequently tell clients is this:   The litigation process is designed to keep people out of it.  I wrote about this issue in the past here:  Why Compromise Is Sometimes Better Than A Construction Dispute.

Our friend Alan Haley recently published two blog posts related to this topic on this Louisiana Construction Law Blog.  I discuss them both here:

The 20% Rule
What is the 20% Rule?   It is the principal that you can have bulletproof evidence, the best argument and facts, and a “perfect case,” but still face at least a 20% risk of losing.   How?   Check out the quote from John Watkins who explains the rule in his article about the same:

Why is the twenty percent rule true? Because unforeseeable things happen in litigation. Star witnesses blow up in depositions or on the witness stand, even if they are well prepared. There may be a document or email out there that you (and your lawyer) did not know about when the case was filed.

But, most importantly, cases are resolved by judges and juries. Judges and juries are human beings, and, given that fact, may not see things your way. Judges and juries may seize upon facts and issues that you know are irrelevant to the dispute, but which become highly relevant, because they get to decide the case, not you.

Judges and juries may simply like the other side better than you. Maybe your confidence will be perceived as arrogance. Maybe the other side has an explanation that resonates.

Mediation As Dispute Resolution Mechanism in Construction Industry
If litigation is so unpredictable, what do you do with your disputes?   Just walk away from them?   The answer to that, of course, is usually no.   A separate post from Alan discusses the possibility of mediation taking a larger role in construction disputes.

When mediation works, it’s great.   After all, it takes away absolutely all of the risk and leaves the result of the dispute in the parties’ complete control.    It’s why Alan predicts that mediation will become more and more popular as time goes on:

Probably because of the problems currently plaguing arbitration (see what folks have to say about that here, here, here, here, and here).  Finally, mediation is a more pure alternative dispute resolution mechanism because the participants share in deciding the outcome as opposed to dealing with a decision or award.  Further, mediation is usually cheaper and faster than arbitration.

Check out both of Alan’s posts, as they’re great for folks who might be neck-deep in litigation and thinking….this sucks.

Also, after writing this blog post, I stumbled on another post out there from Melissa Brumback.   Posted on her Construction Law in North Carolina Blog, Melissa updated her “Should I Stay or Should I Go Now? (Court v. Arbitration)” post.   Another good read on the topic.

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Posted in:     Arbitration & ADR, Litigation  /  Tags: , ,   /   3 Comments

The Project in Las Vegas A Large-Scale Example of Typical Construction Dispute

On May 26, 2010 Author By Scott Wolfe Jr        

A mega-project in Las Vegas is having real problems; mega-problems.   But when you look past the large numbers, all that is left is a simple construction dispute that is played out everyday across the nation between contractors, subcontractors and owners.   The dispute – reported recently by the Wall Street Journal – serves as a good, large-scale example of how things can go wrong in a construction project.

Here are three key components of this dispute:

  • The general contractor claims the owner hasn’t paid according to the payment schedule, and the owner claims it is owed money because of construction defects.
  • Failure to pay the prime trickled down to the subs, and they have filed liens.
  • The owner further refuses to pay the prime because (i) they have a contractual duty to keep the project lien-free; and (ii) The liens are causing the owner damages in that it is more difficult to sell the condominium units.

Sound familiar?   Of course it sounds familiar, this is a summary of nearly every owner / prime contractor dispute across the country.

As your construction project approaches completion, keep these issues in mind.   Owners very frequently get tighter on the final payments because they’re afraid the prime contractor will bail before work is 100% complete.   But the budget squeeze results in subcontractor liens, animosity, catch-22s and the spark of a litigation war.

We usually recommend two ways to handle these frequent problems.

First, handle it in the contract.    Think about these issues before you sign anything, and make the contract clear about how the contract will reach final completion.

Second, set up a way to resolve the dispute out of court (mediations, initial decision makers, and the like).

What do you guys think?   Any other recommendations?

Posted in:     Arbitration & ADR, Construction News, Litigation  /  Tags: , , ,   /   4 Comments

Why Compromise is Sometimes Better Than A Construction Dispute

On April 7, 2010 Author By Scott Wolfe Jr        

Over the past two weeks, my construction law blogging buddies over in Virginia published two blog posts that largely draw the same conclusion:   a compromise is sometimes better than a fight.    As an attorney, I know that disputes are oftentimes unavoidable, but attorneys and litigants should think long and hard about compromises whenever they present themselves.

Tim Hughes’ really got me thinking about this topic when he posted “Do You Really Want A Construction Dispute?”   His post, referencing Dovetail Construction’s “Sometimes Things Go Wrong” post, points out the obvious:  sometimes, things go wrong.   In construction, it’s just a casualty of the business.

Tim’s blog post discusses a lot of the things builders can do to avoid or resolve conflict before the dispute escalates into a litigation experience.

Chris Hill of Construction Law Musing‘s  published something that addresses a possible next step:  Construction Mediation is Exhausting, but Worth It!

Even after a dispute escalations into litigation, there’s still the chance to reach a compromise.    The mediation process is confidential, it’s not binding, and if its a complete flop in getting the case settled it at least gets the parties together and helps them prepare their claims for trial.

Here’s my take on why in mediation, the juice is worth the squeeze.

In Litigation, Even Winners Are Losers

I said it.   In most cases, even winners in litigation turn out to be losers.   Why?   Because litigation is really, really expensive.

The high cost of litigation is precisely why a majority of cases settle out of court, and if you’re going to settle out of court, you might as well settle at the very beginning of the case and its expenses, rather than the middle or the very end.

The problem with getting “young” cases to settle is that the parties are still emotional about their positions, and they haven’t spent enough in attorneys fees and litigation expenses to consider cutting bait.    The mediation process is a gift to this type of circumstance.  If the parties are willing to participate in a mediation, the process is designed to keep the party’s emotions out of their decisions and to reach a compromise if possible.

They’re very successful, and they do a good job of relying to both sides that if they go forward and spend tons of money litigating the claim, even winning will be losing.

Your Attorney’s Fees Is Usually Spent Money

So what if you’re spending a lot of money on attorney’s fees, if you can just collect them after winning, right?

Wrong.

There are two reasons why this is largely an incorrect sentiment.

First, remember that a majority of cases settle before trial, and you can be sure that the case doesn’t settle for a “best day in court figure.”   In other words, the party “winning” in the settlement isn’t going to get a pie in the sky deal.  It is called, after all, a “compromise.”   One of the first things to get stripped from the deal?   Attorneys Fees.

Second, attorneys fees aren’t available to most litigants.    This is called the American Rule, and even wikipedia has a page about it stating:

The American rule provides that each party is responsible for paying its own attorneys fees, unless specific authority granted by statute or contract allows the assessment of those fees against the other party.  Under the American rule every party – even the party prevailing – must pay its own attorney’s fees.

In the case of construction disputes, this means that litigants are usually not entitled to attorney’s fees.   As such, every dollar you spend in the litigation, is a dollar less that you’ll ever have.

Mediation gets the parties to the table and does a great job of communicating the American rule to both parties, so they can analyze their risks and make a level-headed decision about whether to proceed.

Litigation Isn’t Always Bad

Litigation isn’t always a bad thing.   Sometimes, the gap between the parties is too great to bridge.   Sometimes, you do have the right to recover attorneys fees, or penalties, or some other type of damages.   Sometimes, the other party’s non-cooperation gives you no other choice.

I guess we can say this in a nutshell:  Litigation isn’t bad when litigation is necessary.

It’s all those times that litigation isn’t necessary that cause problems.  Jumping into an expensive litigation shouldn’t be a reaction.   There are ways to reach a settlement and avoid the legal complications, and if there are ways, you should explore them.   You really don’t want a construction dispute.

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