Avoid court—and lawyers’ fees—with on­line dis­pute-res­o­lu­tion plat­forms

▶ On­line tools that are cheaper than lawyers im­prove ac­cess to jus­tice ▶ Most lawyers in the U.S. “feel un­com­fort­able about the process”

Bloomberg Businessweek (North America) - - Contents - —Carol Matlack Edited by Jeff Muskus and Dim­i­tra Kessenides Bloomberg.com

Buy­ers and sell­ers on Ebay use the site’s au­to­mated dis­pute-res­o­lu­tion tool to set­tle 60 mil­lion claims every year. Now, some coun­tries are de­ploy­ing sim­i­lar tech­nol­ogy to let peo­ple ne­go­ti­ate di­vorces, land­lord-ten­ant dis­putes, and other le­gal con­flicts, with­out hir­ing lawyers or go­ing to court.

Cou­ples in the Nether­lands can use an on­line plat­form to ne­go­ti­ate di­vorce, cus­tody, and child-sup­port agree­ments. Sim­i­lar tools are be­ing rolled out in Eng­land and Canada. Bri­tish Columbia is set­ting up an on­line Civil Res­o­lu­tion Tri­bunal this sum­mer to han­dle con­do­minium dis­putes; it will even­tu­ally process al­most all small-claims cases in the prov­ince. Un­til now, says Suzanne An­ton, the prov­ince’s min­is­ter of jus­tice, “if you had a com­plaint about noise or water com­ing through your ceil­ing, you might have to go to the Supreme Court,” spend­ing years and thou­sands of dol­lars to get a rul­ing.

These on­line le­gal tools are sim­i­lar to Ebay’s sys­tem, which uses al­go­rithms to guide users through a se­ries of ques­tions and explanatio­ns to help them reach a set­tle­ment by them­selves. Like Ebay, the ser­vices can bring in hu­man ad­ju­di­ca­tors as a last re­sort. Sev­eral of the new plat­forms were de­signed with help from Colin Rule, who started Ebay’s dis­pute-res­o­lu­tion unit in 2004 and ran it un­til 2011. Soon af­ter leav­ing Ebay, Rule started Mo­dria, a San Jose­based com­pany that mar­kets dis­put­eres­o­lu­tion soft­ware for e-com­merce.

Em­ploy­ing on­line tools to set­tle rou­tine le­gal dis­putes can im­prove ac­cess to jus­tice for peo­ple who can’t af­ford to hire a lawyer, while free­ing up court dock­ets for more com­plex cases, en­thu­si­asts say. And “ci­ti­zen ex­pec­ta­tions are be­ing driven by the pri­vate sec­tor,” Rule says. Courts and gov­ern­ment agen­cies that adopt the tech­nol­ogy “stand the best chance of keep­ing their con­stituents” sat­is­fied, he says.

The Dutch gov­ern­ment’s Le­gal Aid Board has op­er­ated a plat­form called Rechtwi­jzer (Roadmap to Jus­tice) since 2007 for cou­ples who are sep­a­rat­ing or di­vorc­ing. It han­dles about 700 di­vorces yearly and is ex­pand­ing to cover land­lord-ten­ant and em­ploy­ment dis­putes.

Cou­ples pay €100 ($111) for ac­cess to Rechtwi­jzer, which starts by ask­ing each part­ner for their age, in­come, education, and other in­for­ma­tion, then guides them through ques­tions about their pref­er­ences. Cou­ples with children, for ex­am­ple, are asked whether they want the children to live with only one par­ent or part time with each.

The plat­form uses al­go­rithms to find points of agree­ment, then pro­poses so­lu­tions. There’s a tool to cal­cu­late child sup­port and soft­ware for draft­ing agree­ments. Cou­ples can re­quest

a pro­fes­sional me­di­a­tor for an ad­di­tional €360 or, if talks break down, a bind­ing de­ci­sion by an ad­ju­di­ca­tor. That hap­pens in about 5 per­cent of cases, says Jin Ho Ver­don­schot, a lawyer at Dutch non­profit Hiil who led devel­op­ment of the plat­form. The or­ga­ni­za­tion uses new tech­nolo­gies to im­prove the jus­tice sys­tem.

As with the sys­tems be­ing in­tro­duced in Eng­land and Canada, use of Rechtwi­jzer is vol­un­tary—and em­pow­er­ing, says Ver­don­schot. “When peo­ple hand over an en­tire di­vorce or sep­a­ra­tion case to a lawyer, it doesn’t al­ways feel OK,” he says. Ver­don­schot, work­ing with Mo­dria founder Rule, helped Bri­tish non­profit Re­late build a sim­i­lar plat­form that will be launched this year in Eng­land and Wales. Mo­dria’s tech­nol­ogy also pow­ers MYLAWBC, a di­vorce-ne­go­ti­a­tion plat­form run by Bri­tish Columbia’s le­gal ser­vices bureau that’s sep­a­rate from the prov­ince’s small­claims on­line tri­bunal.

The U.S. trails Europe and Canada in de­vel­op­ing self-help tools for dis­putes, though some state and lo­cal ju­ris­dic­tions use on­line plat­forms for prop­erty-tax ap­peals and no-fault in­sur­ance claims. En­trepreneur­s have started web-based dis­pute-res­o­lu­tion sites with names such as Claim­set­tle and Equib­bly, but most have shut down af­ter fail­ing to at­tract busi­ness, says Robert Am­brogi, a Mas­sachusetts at­tor­ney who writes about on­line dis­pute res­o­lu­tion. Some star­tups were hurt by a lack of pub­lic aware­ness, while oth­ers suf­fered from clunky user in­ter­faces. Still oth­ers had planned to re­cruit lawyers and re­tired judges to ne­go­ti­ate set­tle­ments, but few were in­ter­ested, Am­brogi says. Most U.S. lawyers “feel un­com­fort­able about the process.”

Dutch lawyers ini­tially were wary of the Rechtwi­jzer sys­tem and feared a loss of bill­able hours, Ver­don­schot says. But now, many view the on­line plat­form as an ef­fi­cient way to process sim­pler cases, while more com­pli­cated mat­ters still re­quire their ex­per­tise. “It doesn’t di­min­ish the mar­ket for le­gal pro­fes­sion­als,” he says, “it just reshuf­fles it.”

The bot­tom line Dis­pute-res­o­lu­tion tools sim­i­lar to those used by on­line mer­chants are gain­ing wider ac­cep­tance in many coun­tries—but not in the U.S.

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