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Online arbitration offers faster, cheaper way to settle disputes
By: Shelley Emling, Atlantic Journal Constitution
NEW YORK - Sunday April 29, 2001 - Glenn McElroy has represented all sorts of people involved in accidents. As a personal injury attorney in Atlanta, he's all too familiar with the wrath that flows like Niagara from clients who feel they've been wronged.
In the past, he has negotiated payments for injuries either over the phone or face to face. But today he champions resolving disputes online.
"You can usually work out a settlement in a few days --- or even in a few hours," McElroy said.
A variety of arbitration services, free and paid, have sprung up on the Internet. They handle disputes as mundane as minor property damage and as personal as divorce. Some encourage the parties to work things out between themselves, while others offer help from mediators, arbitrators, attorneys and even retired judges.
The different sites share a common goal: to offer people an alternative to the often expensive, time-consuming process of hiring a lawyer, filing a lawsuit and waiting for a day in court.
Experts say it can take several months just to secure a court date.
"Sometimes it can be very difficult for plaintiffs' lawyers to actually get in touch with adjusters at insurance companies, and so this can stretch out the time it takes to resolve a dispute," said Carlton Carl, a spokesman for the Association of Trial Lawyers of America.
Arbitration has long been viewed as a cheaper alternative to lawsuits because legal costs are kept down. But online arbitration's greatest asset may be speed. In best-case scenarios, settlements can be reached within minutes, not months. And settlements can be reached at 3 p.m. or at 3 a.m.
"We do everything from contract disputes to employment disputes, and we can resolve these disputes today," said Roy Israel, founder and chief executive of clickNsettle.com Inc.
The New York company was founded in 1992 as a traditional arbitration firm, National Arbitration and Mediation Corp. The company began marketing online dispute services in 1999. It's proprietary software allows parties to swap offers until they come within 30 percent of each other. The software then calculates a compromise. If the parties still don't agree, they have the option of settling their dispute in a more traditional way, through the company's hearing officers. The cost to use clickNsettle: about $150 for a case that settles for less than $10,000.
Another leading company, Cybersettle, works a bit differently.
With Cybersettle, you log on and register a claim. As part of the registration process, you provide a list of three amounts of money that would be acceptable as a settlement.
The company then gets in touch with the other party in the claim, which, once agreeing to participate, provides its own range of settlement amounts.
Founded in 1998, Cybersettle says it is responsible for more than $40 million in settlements. "The biggest benefit to consumers will be that by insurance carriers reducing litigating expenses, the cost of insurance for all consumers will go down," said John Zissu, a Cybersettle spokesman.
Meanwhile, McElroy said online dispute settlement isn't always the best option in cases involving serious injuries and large amounts of money. "These are best negotiated face to face," he said.
Stanford Law School Professor Deborah Hensler, who specializes in arbitration and mediation, said the coldness of negotiating via a computer can be a hindrance. With some plaintiffs, an apology or a public airing of a company's mistake is the main objective, not money.
One popular kind of arbitration site is designed for people with disputes related to online transactions.
Say you log onto a Web site and buy a product that never arrives. What can you do?
"It would be difficult to take the company involved to court, because it could be in another state and could even be in another country," said Maneesha Mithal, a lawyer with the Federal Trade Commission. "By dealing with the dispute online, the business and consumer can craft their own solutions, and they don't have to leave home to do it."
Mithal said about 25 percent of all consumer complaints received by the FTC are Internet-related, adding that online arbitration is an option most often in cases involving a misunderstanding, not fraud.
The FTC has promoted Web services such as SquareTrade, a San Francisco-based firm that offers mediation on the Internet. SquareTrade's main client is eBay, the giant auction site. In many cases involving auctioned items, the cost of going to court would be greater than the cost of the disputed merchandise.
The issue of online dispute settlement sites has become so hot that several top companies, including AOL Time Warner, Dell Computer and Microsoft, have banded together to come up with industry standards, Mithal said.
HOW THE SETTLEMENT DOT-COMS WORK
A sampling of online dispute resolution firms
www.Cybersettle.com
"The first independent online claim resolution system." Fee-based service settles insurance, personal injury, property damage and other disputes by matching blind-bid offers and demands on a secure Web site.
www.SquareTrade.com
Specializes in retailing disputes occurring online. Both parties use a free automated "direct negotiation tool" to guide their talks; a mediator can guide the process for a fee.
www.clickNsettle.com
Opposing parties use fee-based system's proprietary software to swap offers until they come within 30 percent of one another. The software then calculates a compromise. If the parties still don't agree, they can ask a hearing officer to participate.
www.icourthouse.com
Modeled on the judicial system, the system lets parties present disputes for trial before a jury of volunteers. Results are enforceable by agreement between the parties. Services are free to registered members.
www.divorcedirect.com
An "alternative to the traditionally adversarial model of divorce litigation," designed for uncontested divorces and separations. Service provides a customized package of documents for submission to a court. Cost ranges up to $250.
Reprinted with permission from the author
About SquareTrade
SquareTrade is the leading innovator in online trust development, reputation enhancement and dispute resolution for e-commerce transactions. SquareTrade's critical e-commerce infrastructure gives buyers and sellers--both consumers and businesses--the confidence they need to conduct transactions online. SquareTrade addresses the all-important issue of building trust in e-business relationships, which is one of the essential enabling factors required before there will be substantial transaction volume in online marketplaces. The digitally watermarked SquareTrade Seal establishes an online seller's customer service track record, helps build buyer confidence and serves as the first line of defense against fraud. The Seal is backed by SquareTrade's patent-pending Internet-based dispute resolution service and international network of 250 mediators and arbitrators. Founded in 1999 and today with over 60 full-time employees, SquareTrade is based in San Francisco, Calif. For more information, employment opportunities or to contact SquareTrade representatives, visit the Web site at www.squaretrade.com. |
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