This is where mediation can be a real benefit. Unlike litigation where a judge makes a decision about the outcome of a given dispute, mediation offers the parties the opportunity to control their own fate by crafting a unique solution. Ideally, solutions are developed that benefit both parties.

A recent example of this occurred when a policyholder was involved in a fairly minor auto accident. The insurer had paid for the damage to the claimant’s car and for his medical bills—primarily consisting of chiropractic care. Subsequently, the injured party filed suit against the policyholder, claiming damages for the “pain and suffering” that allegedly resulted from the accident.

Roads to Resolution

The insurance carrier could have taken a couple of different approaches. First, it could have simply have allowed the lawsuit to proceed. In that scenario, if the client lost, then it would have paid the amount of the judgment as a claim. On the other hand, the insurer could have vigorously defended the client and tried to assist her with her side of the lawsuit. Either way, if the client loses the suit, then she ends up with a judgment against her that could have a negative impact on her credit.

Instead, the insurance company elected to participate in mediation between the policyholder and the other party. The result was a negotiated settlement that included a release from further liability for both the policyholder and the insurer. This resolution also served to preserve the insured’s excellent credit rating.

Let’s examine another example: A water main break occurred in condominium building, causing major flooding. To repair the resultant damages, the insurer hired a restoration firm with whom it had a longstanding—and, by accounts, generally productive—working relationship. Beyond the usual negotiations, the insurance company knew that the supplier was dependable and that it could count on the workers to adequately clean up messy floods at a reasonable fee.

This time, however, the process was anything but smooth. The workers arriving at the flood site made one mistake after another. This series of mishaps aggravated in the insured, who then made several angry complaint calls to the insurer. The insured reported that the workers were rude and unprofessional; that equipment malfunctioned; and that a door was left ajar, thereby allowing the resident manager’s beloved cat to escape and consequently suffer a broken leg. In short, the policyholder was disgusted and vowed to cancel the policy as soon as this project was completed.Calls to the restoration firm yielded only feeble excuses, although it was clear that its owner had been aware of the problems before the policyholder started complaining. This was the point at which many insurers would have elected to cut off a favored supplier relationship with the contractor. Instead, mediation was arranged between the owner of the cleanup company and a representative of the insurance company. Once the groups were able to sit down face-to-face with the help of a trained mediator, both the insurer and the restoration firm decided that the relationship was in fact worth saving.

The small restoration firm could not afford to lose this major client, and the insurance company needed a reliable supplier in that particular market. The involved parties were able to reach a deal that mandated a substantial refund for the condominium project. In addition, the contractor agreed to pay the vet bills and issue an apology to the cat owner. The cleanup company agreed to educate its workers about providing an appropriate level of customer service and professional decorum. In return, the insurer agreed that it would continue assigning the restoration firm cases. In fact, a new claim had just been filed, and the insurer agreed to assign it to the contractor. The groups also decided to keep the lines of communication open so that when problems arise in the future—as they invariably will—then the issues can be addressed and resolved without harming the delicate relationship.

Keeping Costs Low

Mediation offers the opportunity to work with a neutral third party to help resolve a wide range of differences, including those between policyholders and insurers as well as those between contractors and policyholders. If a policyholder is saying is one thing and an insurer or contractor is saying another, mediation helps the policyholder have an opportunity to be heard while also keeping all relationships intact. It provides a safe and confidential environment in which to explore a variety of options to settle disputes.

Considering the high costs of litigation or the even higher costs of leaving problems unresolved, mediation can be an extremely cost-effective solution. It is also a vital option for complex cases in which it is essential to resolve specific issues without incurring high legal fees. Mediators generally charge a lower hourly rate than attorneys, and also generally resolve cases more quickly. Although litigation may be necessary in some particular instances, considering mediation will not take much time or consume a great deal of your company’s resources and it can save you money in the long run. For example, when two business partners recently decided to go their separate ways, mediation offered them an effective way to work out many of the details before having their attorneys draw up the necessary documents to sell the business to one of the partners. Simple conversation may be all it takes to resolve an issue.
http://www.propertycasualty360.com/ August 2011

As the sun came up after yet another sleepless night, Jeff decided that it was time to action against his neighbor with the crazy dog that seemed to bark all night. He had even thought about killing the dog just so he could get some peace and quiet. Just about that same time, Amanda was coming home from working graveyard shift at the local hospital. It had been a rough night, but when she opened the gate and her beloved dog was so glad to see her, she started to relax. She knew the dog had been barking, but after all, he’s a watch dog and he did a great job of protecting her home. She went inside to get some much needed rest.

A few days later, Amanda was stunned to find a process server at her front door with a summons to come to small claims court!
Although it is called “small claims” court, the disputes are anything but small to the  people who show up in court. In fact, these local civil disputes can be viewed as models that contain many of the same elements as much larger conflicts, including the potential for escalation to violence. Many of the disputants are neighbors, former friends, coworkers or colleagues who have a lot of energy invested in the fight. They come with high expectations for drama and often leave disappointed or confused by technical or legal aspects of the court proceedings.

Into this highly charged environment, we offer mediation. We explain that it is an opportunity for the parties to develop their own solution. It’s a chance for them to control the outcome, rather than have the court decide for them. According to
Commissioner Ernest Gross of the San Diego Superior Court, mediation offers disputing parties a way to preserve relationships. It also significantly reduces the number of small claims cases that come back to court through the appeals process.
Mediation is a chance to slow down the communication process and talk about the dispute in a protected, confidential environment. Both parties have a chance to express
themselves and — perhaps for the first time — be heard by their opponent. In this case, Jeff had complained to Amanda a couple of times, but she didn’t seem to take him seriously. From Amanda’s perspective, the dog represented security for her home and she had characterized Jeff as an animal hater and a difficult person. Neither of them had slowed down long enough to appreciate the other’s perspective.
Once both parties have been heard, the mediator encourages them to develop some solutions. Often the parties find that court doesn’t offer any great solutions. In the case of a barking dog, it may be hard to prove monetary damages and even if one party
“wins”, they still have to live next door to each other. In mediation, Jeff and Amanda found that they both had an important common concern — getting enough sleep. Once they discovered common ground, they started to move toward solutions. Eventually,
Amanda agreed to keep the dog indoors at night and make sure he got enough exercise during the day. It turned out that Jeff also had security concerns and agreed that they might be able to share the cost of a neighborhood patrol service.
Once people experience successful mediation, they are more likely to use those concepts in resolving future disputes. Mediation shifts the responsibility for resolution from an
external authority figure to the disputants themselves. It forces the disputing parties to acknowledge — if not agree with — their opponent’s position. It also shifts the focus from the past, in which we relive the conflict and reinforce our own position, to the
future, in which the conflict is resolved and we are free to move on to other concerns.
As Commissioner Gross says, “I can see the benefits of mediation on the faces of the litigants.” These principles are extremely powerful in the context of relatively small scale disputes. They are no less powerful when applied to larger conflicts where the
costs of continuing the battle includes violence and extreme civil disruption.

Everyone who has ever served on the board of directors of their homeowners association is well aware that conflict is a common part of the experience.  Whether the question has to do with fees, special assessments, maintenance, parking or homeowners who refuse to comply with association rules, people disagree with each other, often loudly or unpleasantly.  Things really break down when one party or both feel disrespected or threatened.

If this kind of conflict is not resolved, the cost to the association is high.  All of the time and energy spent fighting these battles is time and energy not available for effectively managing the association.  Real issues remain unresolved and morale suffers as problems escalate.  People are distracted by unresolved disputes and if the problems continue, associations can incur legal fees as they try to resolve conflicts through the courts.  And very worst case scenarios can sometimes end in violence.

Let’s take a look at how this conflict could be resolved by trying a different approach.  It’s safe to assume that both sides feel strongly about their position and by now, many of the homeowners have taken sides in the conflict.  A tried and true process for resolving such conflicts involves four steps:

✦  First, each party needs to hear and acknowledge the other side’s point of view.  This is hard because we usually put all of our energy into making our own argument as strong as possible — and when the other person is talking, we are focused on why they are wrong and how we will present our case more forcefully.  During this phase it’s common to characterize the other party in a very negative manner:  Those families with kids are rude,

undisciplined people who don’t care about how their behavior affects me!  Or, those old folks are so fussy and controlling, they have no right to run this place like some kind of retirement home.

✦  Step two involves identifying and stating the problem as separate from the people.  For example, the problem is that currently board meetings are not effective for making operating decisions about the HOA.  Board members are not able to fulfill their duties because communications have broken down.  The roof in the community room still needs to be fixed.

✦  Step three is simply listing options for resolving the problem, such as setting time limits for the meetings,  granting one or two members decision making authority within certain limits, do nothing and hope it gets better with the passage of time.

✦  Step four is where the parties agree on a specific solution.  The more details are spelled out, the better your chance of success.  For example, the board may decide that two members will comprise a maintenance committee and take care of decisions such as repairing the roof.  They will have a budget and a timeline for reporting to the full board which projects are being done.

Finally, if the board cannot move past their combativeness, it often makes sense to bring in a third party, neutral facilitator to help the board work through the steps outlined above.  A smoothly functioning board is necessary to protect the property and ensure that decisions are made in a timely and sensible manner.  For most people, their home is their largest and most important investment, as well as being their residence.  In order to protect the value of that investment it makes sense to spend some time and energy making sure that the folks you elect to the board have the tools needed to operate efficiently and effectively.  Sometimes, spending some time with a trained facilitator or mediator can vastly improve the effectiveness of the board and reduce everyone’s frustration.

Mediation can be an excellent solution for community associations because the emphasis is on maintaining relationships and devising practical solutions that everyone can embrace.  In addition, mediations are confidential, which means that participants can speak freely without fear that their comments may later be used against them.  A wide variety of options can be explored in a non-adversarial setting, allowing for more open communications.

A recent example of this occurred when a homeowner was cited for parking violations.  The owner had been parking in a visitor’s lot near his home because a recent injury left him with a cast on his leg and that lot was easier for him to access from his home.  The board was adamant that the lot was only for visitors and that the owner was in clear violation of parking rules.  A hefty fine was levied and the board was threatening legal action, including liens to collect the money.  Unfortunately, up to this time, the only communication between the board and the homeowner had been a series of nasty comments back and forth.  The homeowner complained in writing that the board had failed to provide sufficient handicapped parking and that his temporary placard entitled him to park in the most convenient spot, which happened to be designated as visitor parking.  The owner threatened a counter suit if the board did not reverse the fine and abandon their effort to lien his property.

At this point, the board contacted a professional mediator to help resolve the case. Because mediations are confidential discussions, each side was able to speak freely about their perspective and frankly discuss reasonable ways to resolve the issue.  The final agreement included a reduction in the fines and an agreement on the part of the homeowner to park in his designated space.  In addition, the HOA agreed to reserve additional parking spaces for disabled drivers.  Besides resolving the current conflict, the board and the homeowner agreed to communicate directly if future problems arise rather than wait for things to escalate.

Another example involved a dispute between two homeowners with a shared fence between their properties.  Over time, the fence had deteriorated, and one neighbor’s dog escaped into the other yard.  Unfortunately, the dog owners were not home at the time and animal control was called to come and pick up the dog.  The following day, the dog owners were irate at having to bail their pet out of the humane society.  Furthermore, the folks who had called animal control quickly hired a contractor to rebuild the fence and presented their neighbors with a bill for $1500, half of the construction cost.  At this point, tempers were running high and neither party could use their backyard without harsh words being exchanged.  The dog owner approached the HOA board to see if they would intervene on his behalf and the board suggested using a mediator to help the neighbors come up with a resolution.

During the mediation,  both parties were able to fully express their point of view because the mediator set out ground rules that called for uninterrupted speaking time and mutual respect.  The mediator also used caucuses or private meetings to ensure that everyone felt heard and respected.  The dog owner felt outraged at the expense and hassle of having to retrieve his dog and expressed dismay that he was not given the chance to pick up his dog directly from the neighbor.  He also protested that he should not have to share in the cost of the fence that he did not agree to replace.  He felt that minor repairs could have fixed the problem.  The neighbor who had called animal control and initiated the fence repair said that he was fed up with the dog owner’s lack of responsibility about his pet and their fence.  He also explained that he was not comfortable around dogs and had been afraid of being bitten, which was why he went straight to animal control, rather than hold the dog until the owners came home from work.

Ultimately, because of the privacy of the mediation process, both parties were able to admit that they had to some extent contributed to the escalation of the problem.  This was a major step toward coming up with a solution that worked.  The final agreement included a negotiated payment for less than one half of the cost of the fence, reflecting the fact that the dog owner had not been consulted and might have chosen a less costly solution.  In addition, the dog owner agreed to keep his pet in a kennel area when he was at work so that the dog would not be able to dig under the new fence and escape.  Both parties agreed to speak calmly and respectfully to each other so that each could use their backyards without unpleasantness.

Mediation offers the opportunity to work with a neutral third party to help resolve a wide range of differences.  It also provides a safe and confidential setting in which to explore a variety of options to settle disputes.  Considering the high costs of litigation or the even higher costs of leaving problems unresolved, mediation can be a cost effective solution.