Online dispute resolution saves firms time and money

By Monica Goyal
Those among us who have been in business disputes know that business disputes are inconvenient and stressful, and drain precious resources. We want them to be resolved as quickly and fairly as possible, so that we can focus on our customers and products. For some online services, having a way to mediate disputes online can be critical to its success – Elance comes to mind.
Monica Goyal
Online dispute resolution (ODR), emerged over the past decade, is dispute resolution facilitated by online information and communication technology. Computers are not making legally-binding settlements (yet). But ODR does change the way in which concerned parties access and participate in the resolution process, by giving technology an essential role in that process. This means that parts of that process can be done online, saving companies and people time and money.
  1. assisted negotiation: the software helps the two disputant parties reach agreement by themselves.
  2. automated negotiation: the software, with the help of the disputants, decides on a suitable settlement.
  3. online mediation: if the disputants fail to negotiate a settlement, the software requests the concerned ODR firm to assign a human mediator to the case.
  4. online arbitration: if mediation fails, the disputants or a third party (with the disputants’ consent) can choose an arbitrator.
Making interjurisdictional dispute-resolution mechanisms more efficient and accessible is a boon to buyers and sellers on ecommerce Web sites. Ebay and PayPal are already doing it, to the tune of 60 million cases every year. PayPal’s system facilitates negotiation between disputants. If they do not come to an agreement within 20 days, then the buyer can send the case to PayPal for arbitration.
On Elance, all transactions have the option of going through assisted negotiation. Only escrow transactions can advance to the mediation and arbitration stages. What I really like about that dispute resolution system is that it provides notice to vendors and users that there are consequences for not complying with their terms. It provides users the assurance they need to trust a vendor in another country to fulfill the terms of a contract.
But there are limits to these company-specific ODR processes. Imagine that you hire a company through Elance, and that company stops operating. Outside of blacklisting the defunct company, Elance has very little power to compel the company to do anything. If you lost months of work in the process, and wanted some of the work product, Elance would not be able to give you that product. So two interesting questions are: will these services ever be able to appeal to a court-like service that we see locally? If so, then how?
Generally, ODR technology can facilitate speedy resolution and help avoid expensive court fees. When the other side also wants the dispute to be resolved as quickly as possible, ODR presents a win-win situation for all sides.
Written with Josh Patlik, a Social Media Intern with My Legal Briefcase and a student in the University of Toronto’s International Development Studies Specialist program.
Monica Goyal
Monica Goyal
Monica Goyal, Entrepreneur, Lawyer and Innovator is the founder of Aluvion, a legal solutions company offering technology, paralegal and lawyer-driven solutions with a special focus on the quality, cost, and accessibility of legal services for both businesses and individuals. Monica began her career working as an engineer in R&D for companies like Toshiba, Nortel and Nokia while earning her Masters of Engineering at Stanford. Monica's history conditioned her to solve problems in a efficient and tech-savvy manner, an approach she brings with her to legal solutions. Monica currently sits on the Canadian Bar Association's Futures Initiative, and will be teaching a course on Legal Technology at York University’s Osgoode Hall. She was recently named one of 10 Women to Watch in Tech in the Journal of the American Bar Association.

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