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The value of online dispute resolution for commercial disputes

by Antony Collins on 18 Mar 2015

online dispute resolution for commercial disputes

Technology has become an intrinsic part of the legal market, from the humble video conference to e-discovery, online billing systems and client portals. How best to utilise digital solutions within dispute resolution, however, remains a sensitive topic.

There have been recent moves to embrace digital solutions for litigation cases, such as the RTA Portal for undisputed low-value road traffic claims. In February, Lord Dyson, the master of the roles and head of the civil judiciary in England and Wales, raised the topic of online dispute resolution (ODR) again after giving his blessing to a report into reforms the courts by Prof Richard Susskind, president of the Society for Computers and Law.

 The report recommended a revamp of the UK justice system to embrace the modern era, including establishing a bespoke online court for claims of up to £25,000.

The concept envisages that the court would adopt systems similar to those used by companies like eBay. The court would have a three-tier model of evaluation, facilitation and a judge-led resolution. Crucially, Susskind has explained that the second tier would see “facilitators” liaising over the internet, review the relevant documentation and assist in mediating, via online platforms, telephone calls or even automated negotiation tools.

Is the age of digital mediation really dawning? There are already a number of ODR platforms and software on the market, offered by companies such as Modria and Juripax, but seasoned mediators claim they have not experienced a great deal of ODR. Andrew Paton, risk management and PI partner for Pinsent Masons, says his only personal experience of technology in mediation was one instance of a call over Skype. “A settlement was reached in the case but such use of media can be sub-optimal compared to being in a room with somebody.”

Andrew Manning Cox, a partner at Wragge Lawrence Graham & Co, says he has no experience of technology in mediation but thinks small claims or consumer issues, as seen with eBay, could lend themselves to being conducted digitally where people want “cheap and cheerful and almost any deal will do to get rid of a nuisance”.

The belief is that ODR processes may work much better for low-end disputes because they are less about the merits of the case but are almost transactional in their nature. Paton observes: “I have seen examples of e-disputes software that allows both sides to make blind bids of their upper and lower offers. They are given three attempts and if they match, they reach a settlement. That is not mediation. It is more like a bidding process.”

Such a model is more workable for a traffic prang or a divorce case, where the contentious points are about a few thousand pounds of damages for whiplash or splitting personal assets. The stakes are much higher in commercial claims and the issues, context, contracts and legal interpretations can be much more nuanced. This is where an experienced mediator comes excels.

While money is often the central point of a dispute, inputting offers into an automated system or digital/telephone communications can create a barrier to the kind of personal trust and rapport that is central to a successful mediation. Tone of voice, facial expression and body language are grasped intuitively in a face-to-face context, and are of greater importance when emotions run high and risks are substantial. Where repairing damaged commercial relationships, gaining apologies or securing new agreements is the aim, many still prefer to be in the same room as their opponents.

Indeed, Manning Cox has reservations about the future impact on mediators should ODR become more common. “If digital mediation becomes regularly used, such as in County Court small claims, then the scope for trainee and junior mediators to hone their skills, for instance on a pro bono basis, will reduce and the ability to gain good experience and training will similarly reduce,” he adds.

As such, this may create something of a divide between low-end “mediation”, which is more like a commoditised automated system, and the more complex, high-value cases that will require top mediators to resolve rather than a computer program.

“I do not think the push towards ODR will reduce the demand for a traditional mediator,” Paton says. “Most of the disputes I work on usually range from £100,000 to £2 million in value and I don’t think parties would be willing to put their faith in settling a dispute into automated systems or portals. They want to be physically there, in control and have direct contact, which mediation provides.”

Mediators stress that successful mediation is not merely about the words, whether provided over the phone or over email. There are many other factors to consider, such as the sentiment behind the words, how they are spoken and the body language. A video conference just does not provide the same insights.

The much-cited research by Dr. Albert Mehrabian found that just seven per cent of any message is conveyed through the words themselves (the bigger influences were factors like vocal range, tone of voice, body gestures, facial expressions, posture, etc.). The same approach is applicable for mediation and the automation of the process runs the risk of the meaning being diluted.

Manning Cox concludes that in any claim of substance, where emotions or personal agendas are in play it is not just about money. He adds that “personal interaction, rapport building; eyeballing and body language assessment” is critical.

This post was written by Antony Collins who is a freelance journalist. He can be contacted at ac@acollinsmedia.com

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Topics: Mediation

Antony Collins

Written by Antony Collins