January 30, 2013 Articles

Reaching Your Audience

Have you considered the real value of doing alternative dispute resolution (ADR) research in your case?

by Ann T. Greeley

Why Study Your Construction Case Before Arbitration?

The construction project didn’t go as planned. You have been sued or you are considering suing. You want to collect moneys owed due to delays or, if you are the defendant, to avoid paying for those overruns. You dread the ensuing costs of litigation and wonder how you can shorten the process and cut the pain. You may spend considerable time attempting to assess the value of your case and even hire multiple experts at great cost in order to establish the correctness of your position. But you may not have considered doing the one thing that can help you to really assess the potential strengths and weaknesses of your case at both the arbitration and trial points. Have you considered the real value of doing alternative dispute resolution (ADR) research in your case?

Consider this: Classic “jury” research is not just for juries anymore. Arbitration experts agree that pre-ADR research (and the development of damages estimates for that purpose) is a growing trend. Particularly in the construction arena—in which there are often two (or three, or more) conflicting sides to the story, and the exposure or reward can be quite high—pre-arbitration research is essential. Because many construction cases have specific arbitration requirements in the contract, research intended to study arbitrator reactions can help you to make early determinations about how to present a case to the trier of fact and how to approach settlement. Small group research is a process that can be used in both the ADR  arena and in the trial arena in ways that are almost seamless. This article describes how traditional jury research methodologies have been used—and revitalized—to capture the things that arbitrators and mediators want most when they are evaluating your construction case. Examples from construction cases in which we have tested both jury impact and arbitration implications are described, and uses of actual construction visuals are briefly discussed.

The worlds of communication consulting for dispute resolution and trials are not as different as you would think—given a couple of basic premises:

Arbitrators and Mediators Are Human
Although this is quite obvious, many lawyers typically forget that individuals who are learning their side of a case for the first time are actually subject to the same biases (hindsight, attribution error) that jurors experience. For over 30 years, we have been studying reactions to cases—human reactions to legal and extralegal factors in a courtroom or courtroom-like setting. And far from being exclusively focused on jurors, we have conducted many studies that have actually compared reactions of judges, arbitrators, senior lawyers, and jurors to the same presentations and the same cases. In short, we know that fact finders (jurors or judges, for example) overlap significantly in what they find compelling because they are humans first and experts (either in the subject matter or law) second. Thus, they are subject to the psychology of human persuasion.

Arbitrators, Like Jurors, Don’t Like Ambiguity
There are several ways that this issue plays out in arbitrations. We know from psychological research that when there is complexity in the matter and the information is “ambiguous” or conflicting, this combination is a recipe for fostering “short cut” decisions and raising the chance that personal biases and predispositions are at the forefront and even determinative of the decision. In essence, the biases that a particular arbitrator brings to a case are exacerbated when there is a failure to communicate complex themes and ambiguous or conflicting evidence effectively. If you are the defendant in a construction case, that can mean that the arbitrator who believes, like many jurors do, that large companies may take advantage of smaller companies in business deals, then that bias may take over if the information to the contrary is not clearly presented and the rest of the case is very complicated. Arbitrators are only slightly “quicker studies” than jurors, if in fact this is their first exposure to the material. They may be skilled in a particular area, but the most likely reason this case hasn’t settled is because the issues are complicated or complex.

Arbitrations, Like Trials, Are Information Intense
Further, the arbitration’s structure increases the importance of clarity and dealing with memory loss. Some arbitrations are compressed “trials,” conducted over a single day, hence the importance of “cutting to the chase” and using clear examples is highly important. Clarity of message is the key in these situations—pick one or two key messages and show how they are determinative of the outcome. Other arbitrations may be conducted over the course of many weeks, one or two days a week or even all week, making for a long-drawn out process in which the initial reactions of the arbitrator become exceedingly important. These initial impressions guide the absorption of information and the ability to remember the material over the many weeks of presentations and witnesses. Thus, clarity of presentation with regard to the initial themes, supported by other materials and visuals that are created considering the structure of the arbitration, are very important.

Visuals Have Become Essential in Trials, But Are Even More Important in Arbitrations
We know that verbal presentations alone are ineffective at communicating information in a way that it will be understood and, most important, remembered. When both oral and visual means of communication are used, studies show that the information is remembered four times as much as through oral or visual means alone. Visuals increase the comprehension of the material as well as its “staying power”—meaning that the receiver of the message is more likely to understand that point and to recall that information at the time of the final decision. In short arbitrations, visuals are the way to capture the themes and to present the evidence so that it can easily be recalled at the end of the day or week. In elongated arbitration processes (like multi-month trials), the importance of repetition and continuity of presentation (color-coding of visuals, for example) is much more important than in a one- or two-day arbitration. Visuals capture disconnected moments and make them part of one big picture.

Research Methodologies Are Adaptable
Our small group research methodologies have been developed over the past 30 years and are specifically geared to the legal world. But as noted above, while we have been studying juries, we have also been studying judges and senior litigators who typically act in the role of arbitrators. We have done bench studies with judges, and at times, we have conducted specific research to test reactions from judges as well surrogate jurors, all of whom watch the same presentations. This dual design is most cost-effective when you have a nonbinding arbitration or mediation—in the event that you do not resolve at the ADR level, you are prepared to move forward with the jury. As discussed above, there may also be tactical reasons to have juror reactions at the ready during the ADR phase. So, unlike academic studies, which are very useful but limited in terms of type of sample, our research is always conducted in a real-world setting with real-world finders of fact, whether they be jurors from the actual venue, or federal judges who have heard cases of this type before. The methodologies have been adapted for use with arbitrations (different materials, interviewing styles and sequences, and measurement of responses), but it is our long history of real-world legal research coupled with the study of human persuasion that makes us confident that jury research and ADR research can truly be “audience” research that is useful in several ways in a construction case.

What we have learned in our research is that there are strategies for presentation that can be applied to arbitrations and jury trials, but some are perhaps even more important to the arbitration process; thus, early testing is advisable. Below are recent research findings that have been useful in construction cases specifically. The findings point to some key issues that are universal and are beneficial for moving forward in settlement talks or arbitration (binding and nonbinding).

Lessons Learned

Credibility
Arbitrators and jurors evaluate the commonsense believability of themes in the openings and the credibility of the witnesses similarly. They evaluate the openings in terms of how they lay out the case and offer “inoculation” information for the other side’s contentions. They look to the organization of the material and the ease of understanding the story. They both focus on nonverbal behavior as a way of assessing the veracity of the testimony. They look at witness’s nonverbal behavior such as eye contact and facial expressions, as well as the witness’s ability to be responsive to questions, no matter who is asking them, while also offering context and background. Even with regard to experts, arbitrators have told us that they often have to simply decide “who to trust and believe” because the material is often out of their conceptual realm. But beyond communication of specific facts, themes, and general credibility issues, there are a number of issues that prompt reactions from both arbitrators and jurors.

Consumers and Hindsight
Respondents (surrogate jurors and surrogate arbitrators) tend to evaluate construction cases by looking at consumer issues. They may try to determine the effect on the public or the specific individuals affected by the decision, for example, those who will live in the housing that has mold, or using the bridge that is considered unstable. They use their own experiences with similar conditions to make judgments about the case. Although it is a generalization, in our research experience, most individuals have a suspicion of contractors and construction engineers from their personal experiences, unless of course, they own their own contracting business. Even within “construction-related occupations,” there are suspicions of other occupations—architects and construction engineers and builders, for example, are often being accused separately in the lawsuit. In cases of construction delays, for example, jurors have often felt that the contractor or project manager has not told the paying customer the truth or predicted problems. They expect there to be cost overruns or delays—but they don’t like them, and they feel that accurate prediction of issues is more possible that it is. This is due to the tendency to use “hindsight” to judge the actions of those in charge. Studies confirm, and our real-world research shows, that when a particular bad event or particular bad events have happened, humans assume it is more predictable than it is in reality. This is true for arbitrators and jurors alike.

The Role of Management
Further, respondents will evaluate a company’s management and its day to day actions. Which company or companies had the experience to deal with unpredicted issues? Was the management ever-changing or was there continuity and consistency? What kinds of communications occurred and what was the response? What kind of history with these types of jobs does the company have? Arbitrators and jurors alike focus on the role of management in directing the project, controlling the process, and documenting the agreements made by the parties.

Fairness/Motives
Respondents evaluate the inadequacies in each side’s case and whether those weaknesses are perceived as major or minor. Who got the raw deal in the case (if anyone)? Jurors and arbitrators try to decide who was treated unfairly and how it can be made right. Are both parties equally to blame, or does one party owe the other? With regard to accepting liability, there is always a concern that acceptance of some responsibility will translate into blame for the entire process or event. However, while each case is unique, respondents will often favorably perceive a willingness to accept some level of responsibility by one party, because it indicates the party is taking responsibility, showing good faith, and being reasonable. When multiple defendants are pointing fingers at each other, a willingness to take responsibility can be particularly persuasive to arbitrators and jurors.

Damages
Arbitrators and jurors also react to damages evaluations in some predictable ways. The trier of fact may look at a damage claim and evaluate whether or not it is in proportion to an appropriate settlement. A company believed to be “reaching” can easily be seen as a naïve party—a somewhat favorable reaction—or the party that is trying to take advantage of the other party, which will often have negative implications. The case may come down to a battle of the damages experts. From a research perspective, it may be important to study the believability of the damages estimates in a large sample size so that you can give your client solid and more statistically reliable numbers on the likely damage award size. Small sample sizes, such as small group research or pre-arbitration research, can give you a sense of the damage awards, but they are more useful in determining themes and evaluating witnesses.

It is important to note that sharing partial reports with a mediator and opposition has been persuasive in the past in reaching a settlement figure in line with the research results. In some cases, the information from research can be presented to an opposing party to effectively point out the major flaws in its arguments to have that party retreat from its claims or, at the very least, reevaluate the type and amount of damages. In some cases, “repackaging” a jury research report and presenting it to the mediator on a confidential basis allows you to show the mediator that the other side is off base and is never going to get the millions it wants. Further, reworked research results become a tool to bring the mediator into alignment with your side’s thinking and to begin to put pressure on the other side to settle in a more reasonable fashion, even if not shared directly with the other side.

Examples of Specific Findings

The following are some of the important specific lessons that we have learned by conducting research on construction cases:

  • Each party must clearly identify the players in the case. This includes showing the hierarchy of the owners, general contractors, and subcontractors, and how they are all related (or unrelated) to one another.
  • The parties must educate the trier of fact about the bid process for construction projects, whether large or small.
  • It is essential for the trier of fact to appreciate the large volume of information provided to potential bidders and to understand that this information exchange is typical in the respective field.
  • A party must show why a particular contractor is selected over other bidders and the reason for the client’s confidence in the contractor’s ability to undertake the project.
  • The story must be presented clearly and slowly enough to demonstrate the deliberate and careful judgment that characterized the major construction project. Rushing through important information can lead to confusion or a perception that there are holes in an argument.
  • Change order requests must be explained. Were they contemplated by the contract as a normal and anticipated part of any construction project? Detail specifically how they are submitted and handled.

Visuals
The most important insight we have gained is that you need to use visuals to describe the players, the documents, the process, and the result in a way that strategically shows that your client was in the right. Lawyers typically start with an abundance of information. They begin writing their briefs by throwing in the kitchen sink, and then editing down. With graphics, shrewd practitioners first display everything, then redact and redact until the visual emphasis is clearly on a singular piece of information that must be communicated.

The graphic example below was developed to support the defendant in a contract dispute. Because the subcontractor was being sued by the general contractor for completing work after the contracted date, it was essential for the subcontractor to show jurors that the general contractor denied access to key areas of the site needed to finish the job. The expert report was very detailed. It provided information on the numerous reasons key areas were closed to the subcontractor. The expert’s diagrams reflected this level of detail. However, by removing details, and adding emphasis, a successful graphic was created.

Before: The emphasis is on the area available to the subcontractor.

After: The emphasis is on the area where the subcontractor was denied access. Jurors and the potential arbitrator quickly understood the subcontractor’s key message: How could we complete our work if we weren’t allowed to? This was the key message, and it was powerful.

Arbitrations and Jury Trials Require Similar Testing

As noted above, strategic thinking is as important for arbitration as it is for a jury; thus, testing is required before arbitration in the same way that it is useful in a jury trial. The themes that are developed to tell the story to the jurors or the arbitrator are likewise useful for the “opening” that will be made to the arbitrator or eventually at trial. The visuals developed for jury testing can be “tweaked,” based on feedback from the research session and used with an arbitrator or at trial. If witnesses will be observed, they can also be tested in jury or pre-arbitration research.

When deciding to run a research study, it is important to determine what you want to accomplish. You may want to analyze the most powerful themes or test the witnesses. If you are ordered to arbitration and think that testing the issues for reactions by an arbitrator is the most pressing issue, then our recommendation could be a surrogate arbitration study. However, many times we suggest that a combination study (surrogate jury and surrogate arbitrators) is the best option if you want to hear how an arbitrator views the issues but also believe that you may need jury research to convince an arbitrator of the unreliability of the other side’s demands or to use that jury research to bring the arbitrator around to your viewpoint on eventual results at trial. Further, we can conduct jury research singularly, because based on our experience, a jury study has incredible applicability to arbitration—if you don’t resolve the case at the arbitration stage, you know that you have the results to provide strategic advice for your trial. We opine based on the specific goals, timing, and potential results of any research exercise. The one thing that is clearest in our experience is that early testing gives you the most “bang for the buck”—in essence, two for one with regard to your construction case strategy.

Keywords: construction litigation, fraud, alternative dispute resolution, jury research, testing, surrogate jury, arbitrators, visuals

Ann T. Greeley, Ph.D., is with DecisionQuest's State College, Pennsylvania, office.

DecisionQuest is a sponsor of the Section of Litigation, and this article appears in connection with the Section's sponsorship agreement with DecisionQuest. Neither the ABA nor ABA sections endorse non-ABA products or services.

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