Online Dispute Resolution
~The next frontier of alternative dispute resolution~
Less than 15 years ago, the legal community struggled to implement alternative
dispute resolution (ADR) into the case-management programs of federal and state
trial courts. This effort was largely motivated by overcrowded trial dockets
which allowed cases to remain pending four and five years before a trial date.
Now, ADR is an accepted component of most case-management programs of any trial
court and reaches into almost every segment of our lives. Schools, prisons,
communities, businesses, consumers and families now have ready access to alternative
dispute resolution training and specialists. And Maryland is leading the way
nationally through the vision of Chief Judge Robert M. Bell, Maryland Court
of Appeals, and the highly-effective and award-winning Mediation and Conflict
Resolution Office (MACRO) of the Maryland Judiciary
ADR has been around since the 1920s and the founding of the American Arbitration
Association. During that time, many barriers have been overcome; however, the
barriers of time and cost still remain. While face-to-face and paper-based
alternative dispute resolution is not as time-consuming and expensive as litigation
in the courtroom, the time and expense of paper and in-person meetings denies
many parties the opportunity of a fair and neutral resolution of a genuine
The ability of technology – especially the Internet – to make
many business processes more efficient is now making it clear that online dispute
resolution is the next frontier of alternative dispute resolution. The Internet
promises to make more disputes reachable by ADR and to facilitate the resolution
of disputes faster and at a lower cost. But like many shifts from paper to
technology, a clear strategy has yet to appear.
Online Dispute Resolution (ODR) had its beginnings in the late-1990s with
several forward-thinking experiments, such as the Virtual Magistrate (www.odr.info).
These early experiments were soon followed by dispute resolution technologies
directed to disputes generated by business on the Internet. ICANN, the Internet
domain-registration coordinator, commenced the arbitration of issues about
the rights to domain names. Square Trade developed the technology used by eBay
to mediate eBay trading disputes online. (For a complete listing of ODR sites,
visit www.omnemii.org, a site maintained by Anne Arundel County lawyer
and neutral Nick Sloan.)
What is becoming clear is that certain case criteria lend themselves to online
activity, while other criteria lend themselves to the physical world. Online
activity works best when there are only two parties and where the substance
of the dispute is only monetary. Online dispute resolution is difficult when
there are many parties and the substance of the dispute is emotional or there
is a large amount of money in controversy.
ICANN and Square Trade have demonstrated these factors. ICANN disputes involve
two parties: one who has a domain and the other who claims that their rights
are violated by the domain. Likewise, eBay's use of Square Trade involves two
parties – in this case, the buyer and the seller.
Cybersettle, ClicknSettle (now National Arbitration and Mediation)
and Webmediate provide services to two parties who wish to do "blind" monetary
negotiations on the Internet.
VirtualCourthouse.com, now conducting pilots with GEICO, State Farm
and MAIF, provides both claimant and insurance company with a fast-binding
or non-binding valuation of the monetary value of a personal injury. VirtualCourthouse
technology allows the parties to negotiate online for the neutral that will
provide the valuation and provides for a fast online decision – in days,
rather than months or years.
ODR still remains in its infancy as there are significant barriers to the
use of the Internet to handle what is often perceived as a highly-personal
event. Some of the barriers are just traditional resistance to change; others
are more focused on the use and adoption technology.
The broad adoption of online dispute resolution will follow the broad adoption
of technology in the businesses and homes of this country. However, it will
not occur without strategic approaches to overcoming resistance to change.
Old habits are hard to eradicate. The three major reasons that change does
not occur are leadership, communication and stubborn resistance to change.
A successful online dispute program must have a strategic component to address
each one of those reasons.
Every law office, business office and home has individuals who do not want
to change. They must be won over by leadership and communication in order to
enable the successful adoption of change. The dot-com bust of the early-2000s
has demonstrated that the principal of "build it and they will come" does not
work. A strategic approach is the key.
The Honorable Arthur M. Ahalt (Ret.) is CEO of VirtualCourthouse