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ODR in Canada getting a boost

|Written By Glenn Kauth

After years of fits and starts, online dispute resolution in Canada is about to get a boost with the launch of two new computer programs next year.

‘We’re trying to develop a system that will really be geared towards litigation in Canada,’ says Allan Stitt.

“From the mid-90s, things were coming along fairly well. Then, they kind of ground to a halt,” says Brampton mediator Colm Brannigan, an advocate for using the Internet to facilitate potentially cheaper and more efficient ways of dealing with disputes.

Now, he expects hard times caused by the recession will give online dispute resolution a boost as people look for ways to save money. “I suspect the downturn in the economy will help that,” he says.

Already, two Canadian companies are jumping on the ODR bandwagon with the expected release next year of new web-based programs in 2009: Chambersettle and Smartsettle.

“We’re trying to develop a system that will really be geared towards litigation in Canada,” says Chambersettle’s Allan Stitt, who is also the president of ADR Chambers Inc. in Toronto. For the last few years, his company has been working U.S.-based Cybersettle Inc. to create a program applicable to Canadian law.

Cybersettle has been up and running for some time, but as Stitt points out, the Canadian version will represent an expansion on a tool that’s been mainly used for insurance claims and by New York City to deal with claims against it.

With Chambersettle, parties will be able to attempt to resolve all sorts of disputes, including contract breaches, wrongful dismissals, and torts.

“Basically, it’s a form of the double blind,” says Stitt, explaining how the process begins when one side initiates a negotiation via the web site. Both parties then begin making settlement offers without the other side knowing the final amount the opponent would accept in a worst-case scenario.

“If the offers overlap, a deal will be reached, and they’ll split the difference between what each side said they would do,” he notes.

So far, attempts to broaden the use of ODR programs has suffered in part from worries about how the technology would play out. For example, the software could fail or discussions between the parties could focus more on the technology itself rather than on the substantive issues, Brannigan points out.

At the same time, one party might have better access to the technology or have an advantage by being able to type faster or handle English-language software better than an opponent. As a result, ODR has mainly centred around small-scale, web-based commerce transactions, such as disputes between buyers and sellers on eBay, for example.

Fees for ODR programs, of course, have been another barrier. “Part of it is the entrance cost,” says Brannigan. “But the entrance costs are dropping.”

So far, Brannigan has mainly had to make due with makeshift ways of holding ADR sessions via the Web. “You can actually compile the technology for free,” he says.

Services available through Google, for example, allow for information storage that can function as electronic discovery programs, he notes. “The discovery process is awfully expensive. By using information communication technology, it’s very easy to set up a repository so that everyone is on the same page.”

Brannigan has also used videoconferencing to conduct an arbitration session. “We basically did the cross-examination of these parties by videoconference, and it worked extremely well,” he says.

Perhaps the most fundamental roadblock, particularly for mediators, is the loss of the personal touch. But Brannigan argues ODR still has value in specific circumstances. “You may lose out on face-to-face communication. But some people are better off if they don’t have to be face-to-face with their opponent,” he says, citing cases where an imbalance of power, such as abuse, exists.

For his part, Stitt acknowledges that in-person sessions are ideal. “But face-to-face is certainly more expensive and time consuming,” he says, noting that parties, and their lawyers, are often far from each other. “The beauty of this system is [that cases can be dealt with in] a very short period of time.”

As with Cybersettle, which has largely come into play with disputes between insurance companies and claimants, Stitt expects Chambersettle will mainly apply to arguments over money. He notes as well that the double-blind aspect of the negotiation can be an advantage to settlement, since it removes the legal posturing that often characterizes disputes.

“The system is designed to deal with cases where it would settle if people were perfectly honest about what their bottom line is,” he says.

With B.C.-based Smartsettle, meanwhile, president and founder Ernest Thiessen says his system will apply not just to strictly monetary questions but also a broad range of issues in dispute.

While Stitt doesn’t foresee parties in family law cases using Chambersettle, Thiessen says Smartsettle can help solve a range of problems, including custody and access arrangements, spousal support, and property division.

“Basically, the key is that the parties work on a framework for a final agreement,” he says. The

program would come into play to help deal with the unresolved issues. It generates packages of suggestions and, if the parties accept the same one, they have a deal.

Smartsettle, in fact, has been available for some time, but Thiessen says that the company has avoided promoting it while it refines the product. Although he lists labour disputes as one area where the program could be helpful, so far Canadian companies have yet to use it. “It’s not being used extensively,” he says.

“But we’ve developed models and done our testing in that area. It’s being used by a firm in Israel more than it is here.”

For his part, Brannigan has also been involved in a pilot project under Ontario’s Consumer Protection Act to allow aggrieved parties with complaints about a defective purchase, for example, to file claims online. A government mediator then gets involved if the complainant is unhappy with a proposed resolution.

The program, he notes, involves what is called asynchronous communication, meaning the parties negotiate sequentially rather than simultaneously over some form of chat or videoconference forum. It’s a platform similar to dispute-resolution mechanisms used by eBay, which Brannigan says that as a way of dealing with low-value disputes with large numbers of potential claimants are ideally suited to ODR. Still, he says, “I think we can go way beyond that.”

But that’s exactly what Stitt says he will be trying to do along with the release of Chambersettle. Using web cams and other software, he’s in the process of developing a system that he hopes will make online mediation easier.

“You can in effect have all the conversations that you’d have in person,” he says, noting it will allow for private caucuses between the parties and their lawyer or the mediator. “Right now, everybody has got to drive to the same city.”

Still, the question is to what degree lawyers and their clients will use the programs, especially given concerns over trying to resolve disputes over the Internet. Stitt hopes the fact the parties only pay the $175 fee to use Chambersettle if they reach an agreement will encourage lawyers to consider it.

“Everybody I call says it’s a great idea,” he says. “The real difficulty is it’s the kind of thing that we’re not going to know until we launch.”

But Brannigan admits even he has yet to find the ideal way of doing ODR. “I have not found one [program] that I’m really happy with,” he says. “I expected that to happen by now, quite frankly.”

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