Mediation case study - professional negligence

Mediation case study – architect’s negligence

I acted for a private client who had instructed a firm of architects to design and oversee the building of a pool house, which over a short period of time evidenced substantial defects and was in danger of collapse.

With 6 months to go before a 7 day trial, mediation was suggested by the insurer for the architects. The costs of repairs were about £800,000.00 but the legal costs by then were over £350,000.00 plus VAT a side. The solicitors for the insurers of the architects had fought us tooth and nail throughout. This is not unusual nowadays as professional negligence actions cost the insurance industry millions of pounds each each year.

How we helped our client achieve a mediated settlement

• Created the conditions for a mediated settlement - whatever the outcome of the mediation on the day itself, it more often than not sets the parties on the path to settlement. Often, the skill of the lawyer is to work with a client so that the client recognises the value of trying mediation and that the timing is right. A good and experienced lawyer also positions the case so that the opponent also recognises the risks of not mediating,

• Prepared the client for the mediation - A mediation bundle needs to be prepared for the mediator which should include all the key documents in the case and a Position Statement which sets out the case in outline as they see it.

What was the architect’s defence?

The architect’s defence essentially was that it is no part of an architect’s duties to design and building which will stand up – which is true. They denied instructing the structural engineers who do have a duty to get the building to stand up – which was untrue and flew in the face of the volume of emails passing between the architects and the engineers. With such a position we were not hopeful of a positive outcome.

How and why did the case go to mediation?

Ideally a mediation, if it is appropriate, should either take place at the outset before costs start to be incurred but that is only possible if both parties desire early resolution, perhaps because they have a valuable existing commercial relationship. More often it takes place after each party has disclosed all relevant documents to their opponent as that is when the strengths and weaknesses of a case can be seen much more clearly. To take place just before a trial means that maximum pre-trial costs have been incurred which inevitably makes resolution more difficult, as they have to be factored into any settlement agreement.

Preparing for the mediation

Whilst it is important for the lawyers to prepare their case, it is essential to remember that mediation is not a legal process but rather a day where the parties should be given the opportunity to take back control of the process and talk in layman’s’ terms of what is important for them in the matter. The case might be about a defective building but are there other things that might be important – the architect may be keen to protect their reputation locally for example. They might be prepared to settle for a higher price if they can keep the disagreement private and confidential, so effectively would trade more money for a non-disclosure agreement. Lawyers should be prepared to stand back and let the clients have these non-legal discussions with the mediator to explore the full range of possible settlements.

What happened at the mediation?

We had accepted a mediator of the opponent’s choice – one could worry about this but if the mediator is someone to whom they relate and trust then actually hard talking and bad news from that mediator tends to be accepted more easily by them.

The insurers made a first offer but this was so laughable that my client was on his feet and about to walk out. It took the skill of the mediator and my advice to get him to sit down again in our private room. We knew our case was strong and the client was prepared to go to trial. I reminded him that it had taken us 3 years to get to this point and we would never have another chance to settle. Whilst he was in the happy position to be able to afford the trial, the risk of losing is always there. We sat down with more fresh coffee and delicious fresh biscuits.

The day went on and we spent most of the time with our expert talking about what might look like a reasonable outcome for our client. He was a sensible businessman and did not really want to spend a week of his life in a court room, nor did he relish the uncomfortable truth that no matter how strong a case one has there is always what I call the “idiot feature” at play. Judges can take unexpected stances and not all witnesses come up to proof. No case has a better than 80% chance of success.

In the end we did not settle that day as the insurers had not expected that our claim was likely to succeed. They did not have the authority to offer as much as the lowest figure our client would accept. This is now not an uncommon outcome. Though I had asked for, and had been given, a written assurance beforehand that the insurers did have such authority, they only had authority to a certain level.

The mediator generously offered both sides to remain on hand, at no further fee, should post mediation discussions be desirable. He finally helped broker a deal some 6 weeks later.