vs. Arbitration: Webinar Series Concludes with Discussion of Alternate
March 24, 2009
When it comes to profitability, a lot can be said for the way a
company manages information. That's been the overall theme of the
Construction Specification Institute's three-part webinar series,
"Maintaining Profitability in Your Construction Business," which
concluded this afternoon. Bill Dexter, a risk-management consultant
and trainer, Mary Jones, a California attorney specializing in alternate
dispute resolution and Marge Mellody, a mediator specializing in
real estate-related disputes, continued that focus when they discussed
dispute resolutions during today's session.
"There is always the possibility that someone will file a claim
against you for almost anything," said Dexter. "And we've already
established that [construction] is a high risk/low margin business
and it's full of disputes. Lawsuits are expensive and time-consuming
and we also know that a satisfied customer is easier to deal with
than one who is unsatisfied."
When facing risks and disputes, Dexter said there are a lot of
alternate dispute resolutions (ADR) that can help. "These are alternatives
to litigation," he said, "and can be effective ways to preserve
the relationship of parties involved."
While there are several types of ADR, the session focused primarily
on two: mediation and arbitration.
"With mediation, no one can force a decision upon you; a mediator
is only the facilitator of the process and not a judge," said Mellody,
explaining that with arbitration the parties actually meet with
a "private judge."
"Arbitration is a voluntary submission of dispute for final and
binding judgment. The judge has ultimate control over the outcome,"
The session next gave a detailed look at the characteristics of
both mediation and arbitration.
Mellody explained that mediation is a very informal process and
in many cases it simply allows both parties the opportunity to tell
their sides of the case.
"The mediator helps get them over the past and to move forward,"
Mellody explained. "But they have to have a cooperative mindset;
attitude is very important."
She added that while the goal is to reach an agreement, it's not
binding until both parties sign it.
"If you're going through a mediation, do not leave until you have
that agreement signed," said Dexter, who explained that if the parties
leave before the agreement is signed they could come back and change
There are also obstacles to settlement that must be considered,
such as anger or ego-impairing judgment.
"There has to be a reduction in ego and getting down to the business
of resolving the dispute," said Mellody. "You cannot think clearly
if you are angry."
It's also necessary to understand what's important to the other
side and also knowing your own bottom line and what you are willing
While mediation is rather informal, arbitration is a more formal
process. When it comes to arbitration, one of the most important
features is that it is very rare that the decision could be appealed.
As Dexter explained, the courts are reluctant to hear an appeal
because they know that the parties had agreed to resolve their dispute
through arbitration and are therefore accepting of whatever that
decision may be.
When it comes to arbitration, the panel pointed out that everything
comes down to the cost of the job itself. In other words, the amount
of the dispute will determine how much time actually needs to be
involved. For example, if the dispute is under $10,000 the individual
involved may prefer to represent him or herself rather than investing
in the cost of an attorney.
Whether going with mediation or arbitration, that decision must
be written into every contract-between the architect and the owner;
the owner and the general contractor; the general contractor and
"Everyone is agreeing to this," said Dexter, who added, "It's never
to late to add this to a contract, however, once a dispute arises
it's not going to be easy to get the other side to agree to it."
Some advice he offered to ensure a successful resolution included
keeping complete records, documenting everything and sticking to
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