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October 2004

Virtual Justice: Resolving Disputes Online

By Robert J. Ambrogi

As use of the Internet to communicate and conduct business grew, disputes were inevitable. Thus it was that alternative dispute resolution took a foothold early on in the history of Cyberspace.

The range of potential disputes in the virtual world is as wide as in the tangible one-copyright or trademark infringement, misappropriation of trade secrets, defamation, fraud, deceptive trade practices, invasion of privacy-the list grows ever longer.

Early in 1996, operating on the assumption that disputes that arise online are best resolved online, a group of Internet trailblazers established The Virtual Magistrate, the Web's first forum for online arbitration and fact finding. Proceedings were to be conducted entirely by e-mail, and moderated by an impartial magistrate drawn from a pool of neutrals with experience in computer and Internet law.

But when The Virtual Magistrate issued its first decision a few months later - an unenforceable default judgment against the non-participating America Online in favor of a complainant who was affiliated with The Virtual Magistrate - it drew controversy, and the program by and large became dormant.

The Virtual Magistrate still lives on the Web, now "new and improved" and hosted by Chicago-Kent College of Law, at www.vmag.org. But while it appears largely inactive even today, other online ADR programs have sprung up in its wake. In fact, this field of dispute resolution has come to have its own name - online dispute resolution, or ODR.

A superb resource for keeping track of developments in this field is ODR.info. Launched in November 2003, it is the newest Web home of the Center for Information Technology and Dispute Resolution at the University of Massachusetts, Amherst. The center exists to explore the use of technology and the Internet in dispute resolution. Directed by UMass Professors Ethan Katsh and Janet Rifkin, the center has been an innovator and leader in online dispute resolution since the early days of the Web.

Through this site, the center publishes a Web log about ODR as well as a monthly newsletter, ODR Monthly, and hosts an electronic discussion list about ADR, "dispute-res." The center consults with a range of organizations to assist them in developing their own online ADR programs and resources, and it has ongoing programs of study and research. Its site is home to a wide array of resources about ODR. ODR Providers

A number of companies, organizations and individuals provide dispute resolution services online. Here are three, each with different approaches to ODR:

  • Cybersettle.com. Ever think that if you could cut through all the posturing and bureaucracy involved in insurance claims, you could settle them more easily? That is more or less the idea behind Cybersettle.com, an automated, online tool for resolving insurance claims.

    Either an insurer or a claimant can initiate the process. Cybersettle then invites the other party to participate. If it agrees, the two sides are given three opportunities - or rounds - to settle. For each round, each side submits an offer or demand. Software automatically compares these. It adds 20 percent to the plaintiff's minimum demand to create a "range" of settlement. If, in any given round, the maximum offer is greater than or equal to the minimum demand, the claim will settle for the average of the two amounts.

    Started by two former trial lawyers, Cybersettle now has the participation of a number of insurers and self-insured companies. Parties to a dispute pay only if they successfully reach a settlement. The fee ranges from $100 to $300, depending on the amount of the settlement.

  • iCourthouse. iCourthouse is a sort of virtual judge and jury, providing jury trials via the Web. Parties submit opening and closing arguments, documentary evidence, and "testimony" (actually written statements), collected into a "trial book." Jurors - who can be any Web surfer who registers - select the cases they would like to decide from a docket of open cases. They review the contents of the trial books, and are able to post questions to the litigants.

    After all the jurors have rendered their verdicts, the parties receive a verdict summary that includes the number of votes cast, the median award to the plaintiff, if any, and a compilation of juror comments about the case. The parties can choose whether the verdicts are to be binding or advisory. This, of course, assumes both parties agree to the proceeding in the first place, since, not being a real court of law, iCourthouse has no way to coerce defendants to participate.

    Of far greater interest to lawyers is iCourthouse's JurySmart, a feature that allows lawyers to test the strengths and weaknesses of a case by previewing it to a pool of Internet jurors. Upon completion, they receive a written report of the results, which includes each juror's verdict, comments and questions, along with a profile that includes each juror's age, sex, occupation, education, and annual income. At a cost of $189 per report, this is an economical and effective way for lawyers to assess the merits of a case.

  • SquareTrade. When an eBay sale goes sour, the Web auction site refers its users here for help in resolving their disputes. SquareTrade uses unique technology together with a roster of more than 250 trained mediators to provide online dispute resolution. (Note: This author is a SquareTrade mediator.)

    SquareTrade employs a two-tiered process. Parties to a dispute begin with the Direct Negotiation tool. The parties exchange messages regarding their positions using a secure case page hosted by SquareTrade. The Direct Negotiation tool suggests possible resolutions and helps parties work directly with each other towards resolution.

    If this first tier fails to resolve the dispute, the parties can request a mediator to assist them in coming to terms. All communication is done via the case page. Parties are charged nothing to use the Direct Negotiation tool. If they elect mediation, the cost varies depending on the Web business that referred them. For example, an eBay customer who files for mediation is charged $20.

These are just a handful of the growing number of ODR providers. To find others, see the list of links to ODR providers available at ODR.info.

Robert J. Ambrogi is author of the newly revised and expanded second edition of "The Essential Guide to the Best (and Worst) Legal Sites on the Web," now available at www.lawcatalog.com.


© 2005 Robert J. Ambrogi.