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3 reasons construction firms mediate disputes with clients

On Behalf of | Sep 5, 2023 | Construction Disputes

Construction firms depend on a good reputation to help them gain new clients. Many of the biggest and highest-value projects result from word-of-mouth referrals. When a satisfied client tells their friends, family members and professional acquaintances about the incredibly fast bathroom remodel a company performs, for example, the people who hear that glowing praise may then recall the company’s name later when they need to do similar work at their properties.

Unfortunately, the opposite is also true. When someone has a very negative experience with a construction company, they may give a negative review of the business. They might also initiate litigation against the company, which could end up being very expensive and bad for its brand. Any news about the lawsuit could damage a company’s reputation. Mediation can be a smart alternative when there is a dispute between a construction company and one of its clients.

Mediation is private

When business mediation is successful, both parties will sign an agreement about how they intend to resolve the conflict. They can discuss the dispute in depth and potentially reach a compromise that everyone agrees is appropriate. The mediation process is private and confidential under Texas state law, which is certainly preferable to court. Anything introduced as evidence in court will usually become part of the public record.

Mediation gives the people involved control

During traditional litigation related to a contract dispute, the judge will usually make the final determination. The outcome of litigation is often a winner-take-all solution, whereas mediation allows for more nuance and gives the parties involved in the contract more control over the outcome. Businesses can potentially avoid major hardship by compromising with a dissatisfied client.

Mediation can be cost-effective

Obviously, there are major expenses involved in bringing in a mediation professional to help resolve a conflict with a client unhappy with a project. However, the cost of mediation is often far less than the cost of litigation. For businesses operating on relatively small profit margins, eliminating the often devastating expenses involved with civil litigation can help keep the company solvent. Some construction companies include clauses requiring mediation into the client contracts so that they can reap these benefits if a dispute ever arises about a project.

Learning more about mediation as a solution for construction defect claims may both proactively and reactively benefit those who own or operate construction firms.