Construction Law and Alternative Dispute Resolution: A Look at Current Trends

Tue, Oct 3rd, 2023 | by Miles Mediation and Arbitration | Article | Social Share

Construction law encompasses a vast area of state and federal laws, rules, and regulations. Construction lawsuits may include issues of commercial law, contract law, employment law, environmental law, personal injury claims, property law, and regulatory claims, among others, and often involve multiple parties and millions in possible damages.

The size and complexity of the claims often make alternative dispute resolution (ADR) an appealing option for these cases. We polled three construction law neutrals from three states about their ADR work and current trends in construction law and ADR. Read on for insights from Barry Howard (Tennessee), Jennifer Grippa (Florida), and Christopher “Smitty” Smith (Georgia).

Q: How did you get into construction law dispute resolution? 

Jennifer Grippa: I was approached by a respected mediator in Atlanta and was asked to join the company’s panel of construction mediators and arbitrators as they were looking for someone with my breadth and depth of experience in commercial construction. The market needed more energetic and passionate problem-solvers who would do the necessary prep to get in the weeds and hit the ground running at mediation. They needed to be effective and efficient to navigate the legal issues and personalities to bring years of hostility to a voluntary resolution. I had a niche skill in construction from two decades in private practice, plus the right temperament, which made for a natural transition to full time dispute resolution. My background also serves me well as a AAA construction arbitrator.

Barry Howard: While practicing, I handled numerous construction cases including construction site accidents, construction defects, and contract issues. It was a natural fit to move to mediating construction cases given my experience and background.

Christopher Smith: I began working on construction cases when I graduated from UGA Law in 1999. Over the years, I was very fortunate to have excellent construction lawyers, such as David Dial and Chris Phillips, as my mentors. Having handled a variety of construction disputes as a litigator over the course of my career, I was able to bring that knowledge and experience to my construction mediation practice.  

Q: What are some of the trends you see in construction law cases today? Are there particular areas of law that are “hot” in terms of litigation/mediation/arbitration? 

Grippa: In construction, we are seeing more cost-plus contracting and fewer joint ventures and partnerships. In terms of litigation, we are seeing delay claims and claims for extended completion time as well as defect claims from materials manufactured during the pandemic that suffered from quality control or where manufacturers were forced to source component parts from new or multiple suppliers, which caused some deficiencies in materials. We’re also seeing defect claims involving building envelopes, water intrusion, and defective stucco.

Howard: Nashville and Middle Tennessee are very hot areas in residential and commercial development. Due to this we are seeing a lot of construction defects issues. In residential, this is primarily lawsuits; in commercial, it’s more arbitrations. However, all these benefit from, and in some cases require, mediation as part of the contract.

Smith: The average length of time consumed by construction disputes continues to rise as courts continue to work through backlogs. Mediation and arbitration continue to be the most expedient methods to resolve complex construction cases.

Q: What is your advice for attorneys planning to mediate or arbitrate construction law cases? 

Grippa: For mediation, have a confidential call with your mediator at least a week in advance, and even further in advance if the case has multiple parties. If there are multiple parties, consider whether it makes sense to exchange written position statements two weeks ahead of the mediation instead of doing opening statements at the start of the mediation. This allows the mediation time to be used for negotiating instead of on opening statements. It also allows the parties to be better prepared in terms of the getting the requisite settlement authority ahead of time. That preparation can prevent one side from claiming they aren’t ready to negotiate because they are hearing new information for the first time in mediation.

Send your mediator key documents well in advance — a couple of weeks before, if possible. Mediators are busy. If you’re going to send mediation statements, deposition testimony, or case law, don’t wait until two days before.

Set appropriate expectations with your client in advance and encourage them to keep an open mind during the process.

For arbitration, I like when the parties give me their exhibit lists and electronic exhibits a few days ahead of the final hearing. I prefer electronic exhibits over paper copies and use a second monitor during the hearing to access the exhibits. Attorneys tend to use only a fraction of the exhibits they pre-mark so it’s best to have them in digital format only and searchable.

Howard: Preparation is essential. Having detailed estimates for your damages in very important, especially in arbitration.

If your case relies on experts, provide the opposing parties copies of your expert reports well in advance of the mediation. Alert your mediator that you need to speak with him or her before the mediation begins if there are things you need to communicate that you don’t want to put in writing. This is especially important if the client is unreasonable or difficult.

A concise mediation statement is much better than just transmitting full deposition transcripts, thousands of pages of plans, and extensive contracts. Stick to the relevant issues; you don’t want to pay your mediator to read all this material when the vast majority is not relevant to the mediation issues.

If any of the parties have insurance coverage which may be applicable to the case, verify that the insurance representatives are prepared to participate in the mediation.

Smith: In order to successfully mediate a construction case, there must be sufficient time prior to mediation for the parties to discover and exchange information and documentation on their claims. A mediation statement outlining the issues with supporting documents not only helps the mediator, but also assists the parties in their litigation planning.

Q: Do you see attorneys making common mistakes before/during mediation or arbitration? If so, what are they, and how can they avoid them? 

Grippa: Common mistakes I see are neglecting to communicate effectively with opposing counsel, failing to assess costs and risks thoroughly, and focusing exclusively on legal issues while overlooking emotional and interpersonal dynamics. To avoid these missteps, maintaining open lines of communication with opposing counsel can facilitate finding common ground and being prepared. Additionally, evaluating the financial and strategic implications of various outcomes aids in understanding potential risks and benefits. Lastly, it’s essential to consider the human element and interpersonal dynamics when crafting negotiation strategies. Too often lawyers concentrate exclusively on the legal issues when addressing those non-legal issues can be crucial to reaching an agreement.

Howard: In residential mediations, not having the client thoroughly prepared for the process is often a problem. In these cases, usually there is no realistic provision for recovering attorneys’ fees so homeowners are seldom “made whole” even if they win in court. Psychologically this is an enormous hurdle to get over to reach an acceptable resolution. In more complex/commercial mediations, not having all the potential participants involved is a continuing problem.

Smith: The most common mistake that I see is the submission of unsubstantiated claims on the date of the mediation. Even if the claims have merit, it is impossible for the opposing party to make a meaningful responsive without advance planning. Surprises are never a good thing at a construction mediation.

Q: Finally, why is mediation a smart option for construction cases specifically?

Grippa: Mediation is a smart option for construction because these types of cases tend to be time-consuming and expensive to litigate. The typical case can last years, with thousands of pages exchanged and numerous witnesses deposed. They are also expert-intensive, which can be costly and complex. Judges don’t try a lot of construction cases and juries lack experience with the intricacies of the construction contract, payment, and performance process. When you overlap issues of indemnity, insurance, and surety law, the claims, cross-claims, and third-party claims become even more challenging to navigate.  A specialized mediator or arbitrator who understands the ins and out of these types of cases can help the parties find a resolution that is less risky, cheaper, and faster than resorting to the courts.

Howard: As I mentioned in my previous response, in residential cases early mediation avoids unrecoverable attorney fees and expenses. As the old saying goes, “when you find yourself in a hole, stop digging”. The more complex the case, the better to address and resolve these complexities in the mediation context. Hopefully, the parties have hired an experienced construction mediator who will be better able to understand the issues than a judge who may only occasionally see a construction case or even worse, a jury that knows little or nothing about construction.

Smith: Mediation crystallizes the important issues in any construction dispute.  Even if the case is not ultimately resolved, minor issues can be addressed, which can save the parties a great deal of time and expense in discovery.

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