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### BATNA, WATNA, MLATNA Probability in Mediation: Effect of the Variables: You can do more than role the dice

31 March 2022

Conceptual constructs for mediation often use the best, worst, and most likely alternative to a negotiated agreement as considerations in achieving a settlement. But, what are the variables that help you determine the BATNA, WATNA, and MLATNA?

While every case will have different variables, and some will be more relevant than others, the principal variables could be selected from the following list (which is not exhaustive).

A.Strength of legal case

i.Legal precedent

ii.Jurisdiction

iii.Judicial experience

iv.Degree of connection to statutory, regulatory, or contractual obligations

B.Strength of technical case

iii.Reliability of expert data and report

iv.Time linkage to the events in question

C.Leverage of people involved

i.Relative experience of the litigators

ii.Historical relationship with the judge

iii.Quality of the mediator

iv.The persuasiveness of the expert in oral testimony

These don’t include factors such as the parties’ intransigence, the effect of venue, emotional or cultural levers. The factors are also not necessarily independent.

The detail you want to apply to the calculation is up to you, but in a probabilistic analysis, each variable (%L, %T, and %P) would have a percentage from 0 to 100% certainty or 0 to 1 for easier math. Also, each of Categories A, B, and C would be ranked in relative importance by percentage or 0 to 1 and would sum to 1 or 100%.

For example, suppose you believe that the result would rest mainly on the technical case, as in a battle of experts. In that case, Category B could be rated at, say, 70% (0.7), perhaps with the legal and people-oriented factors each equally ranked at 15%. If you believe your expert is no better than the other side’s expert in report quality, expertise, reliability, and timing from the event, you may give your expert’s report (in Category B) a 50/50 chance of being better than the other party’s expert - or a %T of 50% (0.5). If you believe that your legal case is far better in terms of precedent, application of statutes, etc., %P may be given a rating of 80%. If you believe that your relationship with the judge, quality of mediator, personal experience and expert’s oral testimony are exceptional, you may give Category C 90% (0.9). So, where does that leave you?

Mathematically, your chance of success would be the sum of the factored categories. If you are confident that the percentages you have assigned are a best-case scenario, the probability could be your BATNA. In this case, that would be:

PBATNA = A●%L + B●%T + C●%P

PBATNA = 0.15 x 0.8 + 0.7 x 0.5 + 0.15 x 0.9

PBATNA =0.6 or 60% chance of winning

If your case is worth \$1,000,000, perhaps a BATNA of \$600,000 (60% of \$1,000,000) would be logical. That value would require adjustment for expenditures going forward and the likelihood of recovery of costs, but it is a starting point.

If you want to consider the WATNA, you could be more pessimistic about the %L, %T, and %P and arrive at a lesser figure (though the percentage still must sum to 100%). For example, if the proportions of A, B, and C are still 15/70/15 and %L, %T, and %P are 30/35/35, the resultant WATNA could be:

PWATNA = 0.15 x 0.3 + 0.7 x 0.35 + 0.15 x 0.35

PWATNA =0.3425 or 34.3% or \$343,000

So, your settlement value is somewhere between the BATNA and WATNA or \$343,000 to \$770,000 adjusted for future costs.

The same analysis could be done if you are the paying party. The overlap, which may be known only to the mediator, assuming both parties share this analysis, would be the Zone of Possible Agreement or ZOPA. The mediator has to work to close that gap.

Arriving at the A, B, C, and %L, %T, %P factors will take sincere and dispassionate consideration. Moreover, the values are not fixed. They can migrate as you learn more about your opponent’s case. If you are handy with a spreadsheet, you can adjust the values on the fly as you work through your mediation.

Jerry is the Principal of Genge Construction Adjudications.

### Technical Subject Matter Expertise in Arbitration"Whose bias is it?

14 February 2022

A longer version of this article was published in the Canadian Arbitration and Mediation Journal, (vol. 30, No 2, Fall 2021)

As introduced to me more than twenty-five years ago, ADR welcomed persons with subject matter expertise as decision-makers because that expertise cut the time, expense, and anxiety of teaching the subject matter to the trier of fact. Unfortunately, such welcomeness has not been my experience. As an engineer who is also a trained arbitrator and ODACC Adjudicator. I would be so bold as to say that real subject matter expertise is very low on the decision hierarchy for parties and lawyers who are in a position to choose an arbitrator for construction and professional negligence claims. I have some thoughts as to why that is.

Presumed technical bias could affect the decision

I think there is a presumption that, if allowed to be arbitrators, engineers who are also arbitrators, would substitute their own experience and expertise into the decision for available evidence, thus, incorporating unchallenged evidence into that decision. I believe that potential is not all bad and that its relative contribution to the reasons should be managed by the engineer/arbitrator themselves. It is not a very good reason to indiscriminately exclude engineers who are qualified arbitrators. Besides, the engineer/arbitrator who substitutes his/her evidence for that of a party would be sifted out fairly quickly.

Pigeonholing

My own experience leads me to conclude that many lawyers think of engineers as number-crunching ruffians with scuffed boots and dirty hardhats. That is hardly the image of a person capable of sorting through evidence to weigh credibility and reliability. Actually, some engineers spend most of their time writing well-reasoned, thoroughly-referenced reports with a logical progression from obligations through evidence of damages to the valuation of damages. Such is the foundation of a sound decision on liability—no?

Language skills

Writing right requires more than a command of the language, and certainly, a lot of engineers could polish up their writing skills to produce clear, concise, and defensible output. More than 40 years of editing engineering reports forces me to agree that, let’s say, some work is needed there. But I have also seen some pleadings that are nothing short of befuddling. So, if lawyers are honest about it, poor language skills are not the sole domain of engineers.

The result is that qualified engineer/arbitrators tend to be excluded because they are thought to lack objectivity and the analytical and communication skills needed to do the job. So, time and time again, the same gang of lawyers, and retired judges who don’t have the depth of engineering knowledge needed to understand the nuances and normal irregularities in construction and design are chosen to arbitrate or mediate construction and professional negligence claims. That results in a slowed process, likely less “just” results, and greater expense overall. Isn’t that contrary to what ADR was supposed to be all about?

So, if you are an arbitrator asked to decide a dispute that involves engineering principles or professional negligence and you are provided with conflicting engineering opinion reports, the relevance of which is key to your decision, perhaps you might wish to consider if you are the best qualified to understand what went wrong, who was responsible, and what it should cost to remedy. Maybe your parties should be looking for an “engineered” solution.

### 10 Things you need to know about Payment Claims

13 December 2021

There are major changes to the old Ontario Construction Lien Act (now the Construction Act) that significantly affect payment and claims for non-payment.

Here are 10 things that you should know.

1.Building repairs that are not normal “maintenance”, like servicing equipment or landscaping, are included in the provisions of the Act. Nobody can contract out of the payment provisions in the new Act.

2.The prompt payment provision in the new Act get started once a “proper invoice” has been received. Then, Owners have 28 days to pay undisputed amounts

3.Disputed amounts can be withheld but proper notice of disputed amounts must be given within 14 days specifying which amounts are in dispute and why. Undisputed amounts must still be paid by 28 days.

4.The “proper invoice” goes to the Owner. If there is a payment certifier, the “proper invoice” goes to the owner, they may pass it along to the consultant to review/certify.

5.If Owners don’t comply with these provisions, a contractor can require a payment adjudication. Adjudicators (read “inquisitors”) can be chosen by agreement but only from those rostered by the ODACC Authority.

6.Adjudication fees are usually fixed for claims up to \$9,999 and range from \$800 to \$3,000. If the claim is more than that, hourly rates apply. It is more affordable than other options.

7.Adjudicators can order payment amounts as well as payment of interest and adjudication costs if the adjudicator decides the payment denial or claim was frivolous, vexatious, or an abuse of process.

8.You can appeal an adjudicator’s determination with “leave” of the court - meaning that you had better have a good reason to appeal the decision other than that you don’t agree with the finding.

9.The funds held back in trust to comply with the lien provisions of the Act must be traceable by detailed records on all money in and out of the trust account.

10.There are several complicating issues that may affect how the payment provisions are interpreted by an Adjudicator. For example, the effect of unapproved Change Orders, Change Directives, and Site Instructions that affect costs and the content of a proper invoice. It will make the process of payment and claims for payments far more interesting as this unfolds.

Gerald Genge is an ODACC appointed Adjudicator, a firm specializing in dispute resolution.

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