A Bad Deal With Good People

I recently enlisted the help of a wonderful general contractor to help me out with a construction claim I’ve been dealing with. This contractor provided me with an insightful repair bid that helped me settle the case.

After the case was concluded I contacted this contractor to let him know the case had been settled. He took a moment to share with me an experience that has stayed with him for nearly thirty years. After the 1991 Oakland Hills fire this contractor was hired to repair some fire-damaged property. It wasn’t a big job, but it made a difference to him. After doing the work he approached the owner about getting paid. The owner looked him square in the eye and said, “You know, I just can’t see paying you.” And he didn’t.

It’s not that the contractor’s workmanship was bad or that he did something wrong. Rather, this was simply an opportunity for the owner to stiff the contractor because he knew a claim by the contractor for the unpaid amount would not be worth pursuing.

The contractor was enraged. He consulted an attorney and said he wanted to sue the owner. After listening to the facts, the attorney told him it wasn’t worth pursuing. He said that if this contractor wanted to press the issue then he would have to write the attorney a check up front for most of the unpaid amount. The attorney told the contractor that he couldn’t guarantee the contractor would get anything; he thought the contractor should walk away. This attorney then gave the contractor this sage advice: “It’s better to be in a bad deal with good people than a good deal with bad people.”

The contractor walked away from the money, but not from the advice. He’s used that advice during the past 30 years to turn down jobs that looked perfect in every way except for the vibes he got from some owners. This contractor says that this advice has served him well.

Experienced litigators and mediators know that the personalities of the parties will be key in shaping the eventual settlement and resolution of many disputes. If people are fair-minded, reasonable, and (relatively) willing to listen, then at mediation the risks of trial can be evaluated in the light of the costs of litigation and a settlement can presumably be reached. But if one side is trying to take a bite out of the other or shove them into a corner then a day of mediation can turn into a very long day indeed.

Parties to a business deal or a contract can often control the personalities involved in their transaction by choosing who they do business with. But as mediators we don’t have that luxury. We have to take the parties’ personalities as we find them. Sometimes the personalities match up well with the dispute. Sometimes they don’t. The genius and the magic of mediation rests in a mediator’s ability to size up a difficult situation involving imperfect people and then in short order identify (and to the extent possible to meet) the needs, values and objectives of the parties involved. When this happens, great results are possible. When it doesn’t, the parties’ dispute moves forward to another day of mediation or to a decision at trial or arbitration. But most mediators would agree that it’s easier to settle a difficult case with reasonable, fair-minded people than it is to settle even the most simple case with impossible people. My contractor’s timeless advice applies not only to business or real estate transactions, but also to settlement, mediation, and many, many other life activities.

The foregoing article is provided for general information purposes and should not be used in connection with any specific legal matter. Persons with legal issues or matters should consult competent legal counsel.

Robert B. Jacobs is a mediator and arbitrator in the San Francisco Bay Area. He mediates cases throughout California. Reach him at [email protected]

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