Online Dispute Resolution in the U.S.

Introduction to:  Mediate.com; Resourceful Internet Solutions, Inc. (RIS); Online Resolution, Inc. and Online Mediators

John Helie and Jim Melamed founded The Mediation Information & Resource Center (MIRC) at www.Mediate.com in 1996. Mediate.com is owned by Resourceful Internet Solutions, Inc., (RIS) which specializes in Internet development for conflict resolution organizations and practitioners. RIS is unique in both operating the largest conflict resolution portal on the web and controlling all aspects of Internet development, including managing our own server farm with over 200 domains and sophisticated development of our Resolution Room technologies to best support online conflict resolution.

Jim Melamed, CEO of RIS and Mediate.com, is former Executive Director of the Academy of Family Mediators and a leading mediation practitioner and trainer. Jim currently teaches at the Straus Institute for Dispute Resolution at Pepperdine Law School and also at the University of Oregon School of Law. Jim has mediated well over 1500 cases. John Helie, the other founder of mediate.com, was also the founder and former Director of ConflictNet (1989-96). John also teaches at the Straus Institute for Dispute Resolution.

Mediate.com is the most visited conflict resolution site in the world with approximately 2,000 daily user sessions for an average of over 12 minutes each visit. Mediate.com features over 500 articles about conflict resolution, categorized into approximately 30 topical categories and also full text searchable. Mediate.com and has the largest database (over 5500) of conflict resolution practitioners in the world. Mediate.com makes over 1200 monthly referrals of cases to conflict resolution practitioners that meet participants’ stated criteria.

Recognizing the huge need and opportunity for online dispute resolution, Resourceful Internet Solutions, Inc. created a new corporation, Online Resolution, Inc., to exclusively focus on this development and hired mediate.com general manager, Colin Rule is the CEO of Online Resolution.

The Obstacles in the Way: Legal, Psychological, Economic, Social and Possible Solutions

Legal

There are few legal obstacles in the US regarding the development of online dispute resolution. In fact, as is clear from dialogue with the Federal Trade Commission and Department of Commerce, the US government is strongly supportive of the development of online dispute resolution in a way that is consistent with best conflict resolution practices in the face-to-face world. President Clinton recently signed an Executive Order confirming that contractual understandings may be reached online, without an original signature, based upon the digitally expressed intent of the parties. Assuming that online mediation is fully consistent with well-established ethical standards, and recognizing that participation in mediation is voluntary (a participant can end the process at any time, for any reason) and that all decision-making resides with participants, US courts and agencies are strongly supportive of such voluntary dispute resolution efforts.

Perhaps the most challenging legal issue facing mediation in the states is the degree of confidentiality for mediation discussions, be those online or face-to-face, in the event of legal review challenging the propriety of a mediated agreement.

On the one hand, the courts have been very supportive of the confidentiality of mediation discussions. On the other hand, there is concern that there may sometimes be participant incompetence, over-reaching, mis-representation, fraud or duress, and the courts are somewhat confused about under what circumstances, if any, a reviewing court may look at the mediation discussions themselves to determine whether a settlement agreement was properly reached or not.

For example, this UMA draft (which is not law anywhere, but, rather, leading academics seeking to develop recommended law, includes the following less than complete confidentiality language:

SECTION 9. EXCEPTIONS TO PRIVILEGE.

(a) There is no privilege or prohibition against disclosure under Section 5, 6, or 7: . . .

(3) for a threat made by a mediation participant to inflict bodily harm or unlawful property damage;

(4) for a mediation participant who uses or attempts to use the mediation to plan or commit a crime;

(5) for a mediation communication offered to prove or disprove abuse, or neglect, abandonment, or exploitation in a judicial, administrative, or arbitration proceeding in which a public agency is protecting the interests of a child, disabled adult, or elderly adult protected by law.

(b) There is no privilege or prohibition under Section 5, 6, or 7 if a judicial, administrative, or arbitration tribunal or court finds, after a hearing in camera, that the party seeking discovery or the proponent of the evidence has shown that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the importance of this [Act’s] policy favoring the protection of confidentiality and:

(1) the evidence is introduced to establish or disprove a claim or complaint of professional misconduct or malpractice filed against a mediator, a party or a representative of a party based on conduct occurring during a mediation;

(2) the evidence is offered in a judicial, administrative, or arbitration proceeding in which fraud, duress, or incapacity is in issue regarding the validity or enforceability of an agreement evidenced by a record and reached by the parties as the result of a mediation, but only if evidence is provided by a person other than the mediator of the dispute at issue; or

(3) for a mediation communication that evidences a significant threat to public health or safety. . . .”

The reality in the United States is that confidentiality in mediation is not a 100% guarantee. There are emerging exceptions and these will need to be capably shared with mediation participants, both online and face-to-face. The mediator’s duty relative to confidentiality is to share the extent of confidentiality with participants, and any exceptions to that confidentiality.

As meaningful as these mediation confidentiality issues are, there are far greater legal concerns regarding arbitration. The basic concern is that participants in arbitration may give up all of their legal due process rights without understanding what that means. There are increasing restrictions and requirements on situations where people may be asked, as part of the contracting process, to irrevocably sign away their legal rights and commit exclusively to binding arbitration.

Another critical issue regarding arbitration is the issue of the enforcement of an arbitration award. In this sense, the online ICANN domain name dispute arbitration program is not typical. In the ICANN system, compliance and enforcement are relatively easy as ICANN can order that a domain name stay or be transferred. There is complete control over the critical issue of who owns the domain. With regard to the payment of money or compliance with other arbitrated results, enforcement and compliance, even for ICANN, will not be so easy.

Unless one literally controls the fruits of the dispute (as with domain name ownership), any need to enforce an arbitrated decision must under current systems go through the courts. The arbitration award needs to be reduced to a court order, judgment or decree. But, by what court? And what laws apply? And what about physical jurisdiction over the person, not to say the practical ability to enforce payment and other terms even with the award being reduced to a court order.

These difficulties with enforcement (even if and specifically when one side “wins” in arbitration) are far less with regard to the “enforcement” of online mediation agreements. Repeated studies show that mediation participants much better understand and support their mediated resolution and are nearly twice as likely to fully comply with the results (about 75% will reach agreement and over 80% will fully comply with those terms) compared either with unassisted negotiation, attorney negotiated settlements or court awards. All of this has mediate.com and Online Resolution concluding that it is best to emphasize online mediation.

For those, particularly in the insurance claims sector, who feel that they need strong direction and a recommended settlement, we are now developing “Online Evaluation” which is, essentially, an evaluative, rather than facilitative, mediation environment. Even with desired evaluative recommendation, participants retain full decision-making authority.

Other legal issues include what is to be done with the digital records of online mediation, evaluation and arbitration. Another issue is the extent to which such records and transcripts can be utilized for research.

Psychological

We are finding that there is a broad range of attitudes about online dispute resolution. Needless to say, for some, the computer and the Internet are irrelevant. There is some measure of people who will simply not use the Internet to resolve disputes, nor for any other purpose. For others, there is a growing strong preference to do nearly everything on line, including their shopping, socializing and dispute resolving. Clearly, this group is growing daily. For the “younger” generation, the Internet is a way of life.

Clearly, the greatest numbers of consumer today are people who have some familiarity with the Internet and are increasingly coming to use the Internet to make purchases and to conduct numerous aspects of their personal and business lives on line. It is hard to beat the convenience and affordability of the Internet! But, dispute resolution on line?

At Online Resolution, we recognize that there will be some dispute situations where, for reasons of a long-standing relationship, practical ability and/or a complexity of issues, that getting together face-to-face will be preferred. It is our experience and belief, however, that participants who are attracted to Online Resolution very specifically do not want to be in the same physical environment to resolve the dispute. Most commonly, the reasons are purely practical: Online Resolution is faster and cheaper and gets to job done. There may also be a preference for online dispute resolution as it is “safer” (no one has been punched in the nose through their monitor yet).

Particularly in the world of online commerce, we are experiencing a strong preference to resolve disputes on line. In most cases, there is a purely electronic relationship. In is somewhat presumptive to tell people who have a purely electronic relationship that they need to get together to resolve a difference between them!

Clearly, there are challenges to Online Resolution. For example, what is the best way to achieve a psychological rapport with participants? And how is it best to facilitate the sharing of what are often righteously held views? These issues exist and are also challenging in the face-to-face world.

At Online Resolution, we are convinced that no fully automated process can deal with the critical issues of rapport development and perspective sharing. We have designed our system where participants and the mediator are brought into a Resolution Room, the structure of which, we believe, maximally supports discussion and resolution. The resources of the Resolution Room are available on an as needed basis by the mediator. Ultimately, we seek to give the mediator the quality environment and tools needed to best work with participants online and support them in reaching agreement. Our conviction is that people are still people online and that a fully automated dispute resolution process is neither realistic nor desired, except perhaps with regard to relatively unsatisfying and incomplete blind bidding processes.

Economic

The economic issues are perhaps the ones that are most challenging for online dispute resolution. Needless to say, there are the capitalization costs for developing most capable systems, but, given the potential size of the marketplace, we do not see this as a major impediment.

It also goes without saying that, to participate in Online Resolution, one needs a computer with access to the web. While this situation will always be imperfect, more and more of our worldwide population is getting online. For example, more than half of American families have both a home computer and access to the web. The rate of online access is even higher in certain European countries. The costs of equipment and online access will continue to drop and will successively approximate free access (which is already available if one is willing to see ads along the way).

The real and critical cost issues associated with Online Resolution is that of paying for impartials, particularly mediators. While we appreciate that automated tools will work in some situations (such as blind bidding of insurance claims), and that automated case development can go a long way toward economizing the process, we are convinced that participants in most disputes will desire some measure of human assistance. Participants need to have the experience of being heard, they want to be assisted to be at their best in dispute resolution, and they want as much satisfaction of their interests as they can possibly get. Capable human mediative assistance continues to be essential for these purposes and also to integrate the participants’ ideas and give voice to new ideas.

The challenge is that capable human mediative assistance costs money. At Online Mediators, we are paying our consumer ecommerce dispute professionals $100 per case for up to two hours of their professional time. We believe this rate of, essentially, $50/hour is about half of what most US mediators make in the face-to-face world. We believe that our mediators are willing to work at below market rate prices as a support for this noble development and also because of the convenience to them in being able to fit online mediation work between face-to-face cases and the ability to do this work at any and all hours from home.

 

If one presumes for a moment that the cost of impartial facilitation for a garden variety ecommerce dispute is $100 USD, then this means that it may not make sense to seek resolution to a dispute when less than $100 in value is at issue (and in reality, there likely needs to be a dispute of at least $200-$300 for services to be engaged in this context). There are some possible solutions, such as having online mediation clinics run by trained law or other graduate students, or staffed by volunteer community mediators. Mediate.com has a close working relationship with the National Association for Community Mediation (www.nafcm.org) and one of the issues that we are discussing is the the staffing of online mediation for low dollar disputes by volunteer community mediator utilizing the Online Resolution Room platform.

There are also economic and management issues for Businesses utilizing online dispute resolution services. Who specifically will negotiate for an enterprise? What authority will they have? How can we best support efficient and economic decision-making in the corporate world?

There are also interesting issues regarding the form of payment for online dispute resolution services. Do parties pay at all? Do they pay in Euros, US Dollars, by credit card, Paypal type services, or other means? . .

Social

Presuming that online resolution is voluntary, we do not see large social issues. Obviously, there is the larger issue of access to computers and the Internet, but these access to resources issues are no different here than elsewhere. These access issues do become very large when online dispute resolution is required (should that be the case).

In the world of online ecommerce disputes, access should not be a substantial issue in that the consumer somehow managed to place the order online and, if this can be done, presumably they can also participate in a dispute resolution process online. Assuming that face-to-face dispute resolution options will still be available to those who conduct commerce off-line, there should not be substantial tension here.

An interesting note is that we will almost certainly find more and more “brick and mortar” transactions, should they not work out, desiring to be resolved on line. The fact that a dispute is created online or in the “real world” does not itself determine the form of any dispute resolution initiative. Similarly, while electronic contracting for services disagreements are also very appropriate for online dispute resolution, so are many face-to-face contacting and employment disputes. Online Resolution is currently in discussion with the US EEOC regarding a pilot program to see the resolution of discrimination claims online on a voluntary basis.

It is our prediction that a good measure of consumers who purchase goods face-to-face from a geographically proximate seller will, if they choose to seek resolution of a dispute, prefer to do that online notwithstanding that the original purchase was other than online! Why: cost and convenience.

The greatest challenge, and one that we are hesitant to endorse, would be that of requiring dispute resolution, including arbitration if necessary, online. So long as participation is truly voluntary and informed, there are no problems. But, to the extent that choice is seemingly or actually limited, we run the risk of imposing both dispute resolution processing and technology on people. There would be substantial resistance for sure. So long as we continue to have both participation in process and technology to be voluntary, we can both offer services consistent with best face-to-face practices and minimize any resistance to our pioneering efforts.

Plainly, one of the greatest set of social issues that exist are those relating to different languages, translation and cultural differences involved in international disputes. While neither easy nor cheap, we see no immediate way around the need to have a capable and available team of translators (ideally trained in dispute resolution as well). While automated translation does exist, our experience to date is that such automated translation does not carry with it sufficient clarity and nuance to be most effective. On the other hand, automated translation programs will certainly continue to improve and it may be that we can, in due time, give participants themselves the choice of whether they would prefer to invest in human translation or to initially try to work with automated translation.

Market cultural differences are also becoming apparent as we use the Internet to cross from one market culture to another. In FTF markets, we see that it is not our familiar market place and we adjust accordingly. We haggle if we see that haggling is the mode of the market. We pay the price if it is clear that the market operates that way. When we are online, there is risk that the culture of the marketplace will be hidden by the façade of a web page. A consumer who is accustomed to a high level of customer satisfaction may be shocked by a lack of concern by a vendor who has different beliefs and values.

To the extent that online negotiations, like all negotiations, take place within the “shadow of the law,” there are also challenging issues about just what “shadow” to consider in a particular situation. Still, this is not substantially different than the world of face-to-face dispute resolution where the legal context is often not clear. To the extent that more and more commerce is done internationally and online, this uncertainty as to the controlling law and principles will make online negotiation both more difficult and easier. It will be more difficult in the sense that the legal result is less predictable but, perhaps, easier in the sense that, as soon as participants realize that the law and courts are, essentially, irrelevant for most consumer disputes, they will likely be that much more motivated to resolve the matter online.

The Advantages of Online Resolution

Online Resolution is strategically designed to take advantage of the following:

    • Highly experienced and trained (both face to face and online) impartials
    • Highly automated case development
    • Utilization of our Resolution Room environment
    • Reliance upon highest integrity dispute resolution practices and experienced professional discretion
    • Full breadth ADR services: process advisor, mediation, evaluation and arbitration
    • Economy, Efficiency and Convenience
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The Most Typical ADR Cases

Online Resolution is focusing on development in the following areas:

    • Consumer ecommerce (e.g. Paypal/x)
    • Business to Business e commerce (e.g. PurchasePro)
    • Workplace, employment and contracting for services (e.g. EEOC)
    • Multi-party public policy and resource disputes (e.g. RuleNet)
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Given our large, qualified panel, and the flexibility of our Resolution Room environment, we look forward to adapting our systems to provide maximum support in these market niches.

                        author

James Melamed, J.D.

Jim Melamed co-founded Mediate.com in 1996 along with John Helie and served as CEO of Mediate.com through June 2020 (25 years).  Jim is currently Board Chair and General Counsel for Resourceful Internet Solutions, Inc. (RIS), home to Mediate.com, Arbitrate.com, ODR.com and other leading dispute resolution sites. During Jim's tenure, Mediate.com… MORE >

                        author

John Helie

As a co-founder of Mediate.com (1996), John Helie extended his commitment to dispute resolution and the Internet. John earlier founded ConflictNet in 1988 as a communication forum and information sharing network for the Conflict Resolution Practitioners community. A trained mediator and facilitator, John pioneered work with online conflict and communication from the… MORE >

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