Mediation USA Style

by Dr Peter Fenn RICS, Consultant Mediator with Consensus Mediation

Proponents of ADR in construction, and particularly mediation, often point to the United States of America as the home of alternatives and a hot bed of ADR practice. What is the real position in the USA and what comparisons can be drawn between the different sides of the pond? I am fortunate in being able to examine practice and procedure in both countries; I have previously been involved in mediations in the USA and a recent opportunity allowed me to spend a year in the USA. This case study describes a recent mediation carried out in the USA and my initial conclusions.

One place to start, is with the fundamental difference between two nations which at first glance appear similar. George Bernard Shaw said the two nations are separated by a common language. I think the problem is that the two nations are thought of as being the same because they share a language. This is misleading: the two nations are completely different in culture; ethos and to use the American phrase attitude. My impression is that Americans are not bound by the restrictions their British counterpart faces. These restrictions might be explained by many things; the class system in Britain is often blamed. Americans have an attitude of making things work and nothing is allowed to get in the way of that. As we shall see my co-mediator, in the dispute I describe below, used a simple test "Does it help the settlement process". Americans are fiercely proud of the equality of all their peers and this is demonstrated by an approach to all things which is, by British standards, very informal. This does not mean that Americans are less polite; indeed the opposite, Americans are very polite and very friendly.

The difference is total and we are lulled into a false sense of security because we can understand the spoken and written word. The cultural opposites which follow are then either ignored or misunderstood.

My recent construction mediation was memorable for many reasons. Firstly the location was impressive; one of the most famous building in the world was used for the mediation meeting. Seventy-Six floors by an elevator, not a lift, and there are more floors on top of us. The view from the room was stunning; often attention had to be dragged back from the novelty of aircraft flying beneath your line of sight! Secondly the parties had a pre-meeting agreement to dress down and they stuck to it; I am ashamed to report that I did not. The parties came mob-handed; experts were extremely partisan (more of this later), and the opposite camps fostered a team spirit unheard of in my British experience. Finally my co-mediator showed a tenacity and single-mindedness which put me to shame.

The mediation had been called by the contractor. The building was considerable, 10 Million US dollars for the construction of a steel framed structure on previously prepared foundations and slab, and it sat within an overall project of 60 Million US dollars in total. The employer had some experience of construction projects and had chosen to complete this project using in-house management and by splitting the work into packages with no one contractor in charge, Multi Prime in American. The contract, between the employer and the contractor, had been terminated by the employer approximately half way through with claims of persistent and repeated delay by the contractor. The clause in the original, standard form, contract for arbitration had been deleted. No actions had been commenced in court; but both parties had consulted lawyers and considerable correspondence had taken place.

The contractor was pursuing a claim for payments under the contract for the work executed, and for the loss involved in the termination, including loss of profit, totalling almost 3 Million US dollars.

The employer claimed losses associated with the termination including the cost of completion by another; the counterclaim exceeded 3 Million US dollars.

The major issue, by common consent, was the termination of the contract. Both parties had secured expert witness who had produced separate voluminous reports that showed:

1. The contractor was in considerable delay, based on the programme, and the action of the employer was entirely justified;

2. The contractor was completely on programme and the action of the employer was entirely unjustified.

The experts both claimed prestigious qualifications and reputations; their performances were central to the mediation. I will discuss the area of expert witness to further demonstrate the difference between the two countries.

While there is some concern in the UK about the growth of expert evidence and concerns about the partisan nature of certain experts; at least we have recent clear guidance on the duties of witnesses of opinion. In the case commonly known as The Ikarian Reefer, the judge used judicial commentary from previous cases to codify the duties of experts. This was to circumvent the frustration of being faced with such conflicting reports from the parties' own expert witnesses. The judge's comments included:

1. Expert evidence should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation.

2. Expert witnesses should provide independent assistance by way of objective, unbiased opinion in relation to matters within their expertise.

3. Expert witnesses should never assume the role of an advocate.

4. Expert witnesses should state the facts or assumptions upon which their opinion is based. They should not omit to consider material facts which could detract from the concluded opinion; and if an expert's opinion is not properly researched because it is considered that insufficient data is available, then this must be stated with an indication that the opinion is no more than a provisional one.

5. In cases where an expert witness, who has prepared a report could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated.

The primary duty of the expert to give objective and unbiased opinion has been further reinforced recently in a construction case where the judge gave no weight to expert evidence drafted as a partisan tract with the objective of selling the defendant's case to the court.

What then is the position as to experts in the USA. It is axiomatic that, with a preponderance of jury trial, this topic is very important; and of course the USA has jury trials as a constitutional right for individuals and corporations. The literature certainly shows emotions running high; the anecdote is related of a lawyer who classified liars as:

The common liar, the dead liar and the scientific expert.

Equally the phenomenon of "shopping" for experts who will provide the expert testimony required is generally accepted:

Lawyers prefer partisan to objective experts and commonly refer to the partisans as 'whores'.

This was borne out in the mediation, the experts talked during their presentations of US and THEM. The concept of a client and a contractor's team was fostered by both sides and emotions ran high; at one point the meeting boiled over into a verbal brawl and the mediators worked hard to maintain order. This did not fit easily into my preconceptions. How could they behave like that and then revert to their earlier calm relationship? The answer is of course because they belong to a different culture than me. I expected the experts to fit into my preconceived idea of experts based on my British experience and culture.

The experts made lengthy presentations and I could not see their value to the resolution of the dispute via mediation. Worse still the experts broke every one of the "rules" etched into my consciousness by The Ikarian Reefer: they were grossly partisan; they acted as advocates and there was no statement of assumptions. I asked my co-mediator, an American, early during the meeting that we change the procedure; it didn't suit. I was quite properly asked to think again: what didn't it suit, the resolution of the dispute or me? The test had to be: Does it help the settlement process? The parties were happy and the answer was that it did help the process. There was no settlement on the day; but the parties agreed to meet again and freely acknowledged that the mediation had been useful in furthering their efforts to settlement which has to be the ultimate goal.

My co-mediator worked hard to convince the parties that they should try all the techniques available for resolving their dispute. A further mediation session has been arranged and the parties are prepared to consider early neutral evaluation; mini trial (executive tribunal) and have reconsidered their position on binding arbitration. It is worthwhile pointing out that arbitration is often considered part of the ADR umbrella here; there is little history of arbitration.

What conclusion can be drawn from my experience in this mediation? Good mediators are tenacious. The mediation process, and any part of it, must recognise that settlement of the dispute is the main goal and perhaps the ends justify the means. The test remains a simple one Does it help the settlement process?

What of more general issues. Is the use of ADR more widespread in the USA than the UK, is it more successful and if so why so. The USA is a huge country and any generalisations on a nation basis are dangerous. Certain states, e.g. Florida, California and New York, are at the forefront of ADR. Is it more successful is the wrong question; more successful than what? I have to say that my experience of American mediation is that it is more likely to be used, and bring about a settlement, because the parties face a trial by jury should their attempts to settle fail. This is a powerful incentive to settle since the vagaries of juries are universally accepted. Mediators use this threat of jury trial to attempt to convince the parties that they should settle.

Finally my co-mediator tried to convince me of the error of my ways by telling me not to be so anal. It doesn't translate I am afraid; but I immediately knew what was meant.