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Readers may be forgiven for thinking that "online dispute resolution" is just some whizzy new idea, the general application of which is currently several light years away. It is true that very few disputes are currently being handled by ODR, but systems are now coming on stream and, more importantly, their use is being encouraged on a worldwide basis from the highest level of influence.
I can demonstrate the last statement by referring to a two day conference on ODR held in Geneva in June by the United Nations Economic Commission for Europe. The breadth of interest represented throughout the two days proved that ODR is welcomed the world over. Participants came from Governments, national Chambers of Commerce, trade associations, the European Commission, the European Forum for Electronic Business, the Organisation for Economic Co-Operation & Development, the United Nations Conference on Trade & Development, the United States Special Trade Commission and the World Trade Organisation.
So ODR, or as it is better known to solicitors wrongly fearful that it may lead to reduced fee earning, "Oh Dear", is going to be big. But what do we really mean by ODR? Firstly, it is not limited to resolving disputes created online. The word "online" is a general description of the method of resolution not of the subject of the dispute. Secondly, it covers both the online delivery of traditional methods of alternative dispute resolution involving third parties, e.g mediation, as well as the online resolution of disputes directly between the parties themselves (whether or not with legal representatives).
ODR offers possibly the best way to sidestep the jurisdictional and confidence hurdles that lie in the path of a faster uptake of global online commerce. Although e-commerce, particularly in the Business to Consumer (B2C) market is rising at a fair pace, most of the business is still being transacted with "high street" names with whom the consumers are already familiar. Further, cross-border trade, whether to consumers or in the course of business, is also hampered by a combination of general fear over problems in relation to jurisdictional conflict, and the more mundane concerns over product delivery.
The position in Europe has been exacerbated recently with the Brussels Regulation on Jurisdiction, which can invalidate jurisdiction clauses in on-line consumer contracts. Removal of many of these fears will improve confidence in trade. People will be more likely do business on-line with those who agree to an accessible method of resolving any on-line disputes that may arise.
A fundamental issue is whether using e-mail alone as a medium for communicating messages justifies the term "ODR". There are many mediators who claim on their web sites to offer on-line dispute resolution but who simply apply their skills at a distance using e-mail as the medium. In my view that no more justifies the term on-line dispute resolution than exchanging chess moves by e-mail is on-line chess. A true on-line chess game involves a mutually accessible database driven representation of the board with moves played out in real-time.
In fact, there are a number of benefits in not using e-mail. It is so easy to mis-address an e-mail, e.g. by sending it to johnsmith33@hotmail.com instead of johnsmith332@hotmail.com. If the error is made to a POP3 domain, especially one for that firm, then the chances are that it will simply bounce back since there is likely to be no person with the mistyped prefix. However, with a web mail account there is more likely to be a johnsmith33 who will then receive your confidential mail and not respond. Many of us will have also suffered from other e-mail nightmares such as clicking on the wrong, but similar, name in the address book, or commencing to type a name in the "TO" box without noticing that the mail program had filled in a totally different person as the addressee. There is also the dreaded "REPLY ALL" button which can copy in someone who ought not to be privy to your response. Using a confidential and secure password, or other security protected intranet facility, with privately selected users invited onto each case avoids those risks. Further, as the database is encrypted there is no need to take inconvenient steps to follow Law Society guidelines, (currently followed by less than 1% of all solicitors) to encrypt all electronic communications on client business.
Other problems with e-mail use lie in the management and proper retention of e-mail. While some of us may be diligent in daily filing all mail into the correct folders, the more mail we receive, the more difficult this becomes.
There is also the issue of when e-mail is no longer retained on the server, especially that of an ISP, since any such removal then makes the e-mail inaccessible from any other network. How more convenient to know that, by using a web based database driven system, it is always available. Finally, it goes without saying that using a web based system avoids all the danger from virus and hacker attack to your own network. Your casework will still be available.
In summary, a true ODR system has a database on which to store messages within a structure that contains various Chinese walls of confidentiality surrounding the various participants. This allows a virtual representation of traditional methods of alternative dispute resolution, i.e. that the mediator can carry out confidential caucusing sessions with both parties together with plenary sessions.
It must also be possible to create multi-party discussions, with some users also empowered to read and monitor the discussions but not contribute. This, for example, would enable a client to read discussions that his solicitor may have had with the solicitor on the other side, but not be able to write messages in that area, whilst at the same time being allowed to write messages in the client area that only he and his solicitor can read. Further the solicitor and any mediator would have areas to which only they can gain access and which would be suitable for private notes that no one else would be able to read.
There would also be an archive of all discussions that can be re-read and re-considered at any time in the future even after the case has been disposed of (useful for training and mentoring purposes) and also, of course, with the advantage of global 24/7 accessibility from any browser.
One can go further and say that an ODR system should also incorporate tools that technology can only provide through an on-line system. For example, blind-bidding can enable both parties to enter bids and counter-bids that are not revealed to the other side. At the outset, the parties can agree a settlement margin whereby, if the most recent bids from either side come close enough as to be within that margin, then a settlement at the mid point is reached. A ceiling/floor, above/below which bids could not be made, can be set up enabling less experienced staff to operate the system safe in the knowledge that they cannot make a settlement outside of the authorised range.
Blind bidding enables speedier settlement by reducing the calendar time elapsed between first bidding and settlement rather than reducing time spent. When an offer or counter-offer is made and rejected one doesn't want to come back with a further offer too quickly else it be interpreted as a sign of weakness. Further, the mere declaration of the amount of the bid is itself significantly revealing to an experienced negotiator of the way in which the other party sees their case. With blind-bidding, there is a freedom to make bids frequently so that many bids and counterbids could take place within a matter of hours.
Insurers are concerned less with the oft claimed rise in compensation claims than with the high level of costs. It would make sense for an insurer in the UK, where costs follow the event, to offer at an early stage a figure higher than the case is worth in order to make the significant costs savings in early settlement. But, of course, they do not do this in with open bidding since the claimant's solicitor would simply rub his hands with glee at the prospect of a settlement in excess of expectations and never receive any later reduced bid as credible. Under blind bidding, in contrast, should the case not settle and the insurer seek to revise their bid down to a more realistic level to take into account the potential liability for much higher costs, they can do so safe in the knowledge that their failed high opening offer has not been revealed to the claimant.
For the provider of alternative dispute resolution services, ODR brings the benefit of being able to provide mediation skills to a much wider market place, i.e. those disputes in which the parties are at distant locations and those disputes whose value may otherwise be too low to justify the cost of professionals gathering at one location.
There are some who will argue that not being able to see the whites of the eyes of the participants reduces the ability of the mediator to encourage concessions necessary for a settlement. This is undoubtedly true for certain persons but there are others who, no matter what concession is sought from them, will not budge until they have the personal time to reflect offered by ODR. At the end of the day the greater and more informal accessibility of an on-line system will undoubtedly play a major role in encouraging greater use of mediation itself. In the words of Richard Susskind, writing in the Times Law section, 18th June 2002, "it is likely that ODR will flourish in the UK".
Graham Ross is a solicitor and also Managing Director of TheClaimRoom.com
Ltd which has developed an ODR platform to meet all the above requirements.
See, in particular, their collaboration with the ADR Group at
ADR.TheMediationRoom.com and their general negotiation facility at
www.TheClaimRoom.com.
Email g.ross@theclaimroom.co.uk.
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