Maryland Bar Bulletin
Publications : Bar Bulletin : May 2006

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 Bar Bulletin Focus

Alternative Dispute Resolution    

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 dispute.

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 LLC.

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Publications : Bar Bulletin: May 2006

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