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There have been several attempts in the past to establish a publicly-accessible online service that could be used by individuals and businesses to resolve their disputes and disagreements without the need to attend court in person. Most have failed to gain traction and some have shuttered their virtual doors completely.
We have learned over the past several years that to survive, many businesses eventually need to either transform their business to one conducted mostly, if not wholly, online. Netflix versus Blockbuster is a prime example. Or businesses that cannot be wholly online due to their very nature, must at least have a solid online presence.
Although success has been elusive for all but a few established brick & mortar alternative dispute resolution providers, such as the American Arbitration Association, the time is right for Online Dispute Resolution (ODR) to emerge as a force for change and supplant, or at the very least enhance, traditional methods of resolving a dispute whether it is the courts or traditional brick and mortar arbitration and mediation.
There are many reasons why ODR has a much better chance now of being successful than at anytime in the past:
- There are already excellent examples where online dispute resolution has worked well. One oft used example is eBay. Another is Wikipedia – there are constantly disputes between contributors that must be resolved.
- Enforcement of an ODR outcome is much easier now than ever before. Online businesses using ODR like those mentioned above have always had an advantage over other traditional businesses when it comes to enforcement for a few reasons, including that the disputing parties typically rely on continued use of the service and do not want to have their access blocked, or receive a black mark on their public profile.
Now the courts in North America have moved a long way to leveling the playing field, making it much easier than ever before to enforce arbitration awards and mediation settlement agreements for all individuals and companies. Partially due to budget cut-backs for the judiciary and a huge backlog of cases, the courts are now in favor of private dispute resolution and willingly recognize and enforce arbitration awards with very little fuss, time and cost. It is now easier than ever before for anyone with an arbitration award to convert it to a court judgment with a simple summary application to the court and enforce it just as any court judgment could be enforced.
- Due to the nature of our ever more connected and accessible global community, there are a lot more cross-border (State, Province & Country) transactions and contracts – both consumer and commercial. Trying to decide on a legal jurisdiction in which to try the case when the disputing parties are in separate jurisdictions is often a fight in and of itself. If that is overcome the next problem is enforcement of the judgment in a jurisdiction outside of where it was awarded; if it is even possible, this is often a time-consuming and costly task. There are no such issues with ODR since it does not rely on any one jurisdiction. Many countries, including the U.S. and Canada, are signatories the New York Convention which allows for enforcement of ODR decisions in either of the parties’ jurisdictions. Many businesses prefer arbitration over litigation for this reason alone.
- ODR is gaining credibility as some governments move forward with initiatives to take some cases out of the physical courts and put them online to save money and time. For example, British Columbia passed legislation recently that will pave the way for an ODR system that will see most small claims under $25,000 be decided online beginning in 2013 or 2014. It is expected to take about 60 days to resolve a dispute online, compared to 12 to 18 months in small claims court. Another example is the European Commission’s initiative to put in place a Europe-wide ODR platform for cross-border online consumer transaction issues. The idea is to create an EU-wide single online platform which will allow consumers and businesses to solve contractual disputes entirely online within 30 days.
- The Millennial Generation, those now aged 15 to 30 grew up with the Web and computers and find it very easy keeping pace with technological changes. With the advent of online banking, shopping, dating, file sharing and almost every other activity that does not require face-to-face interaction, it is second nature for them to conduct most aspects of their lives online. They are as comfortable, and often even more comfortable, living their lives online as off-line. The number of activities they would prefer to be doing online increases every day. How many people under 30 go to the library to do research, or pick up the hard-copy of a newspaper? How many people under 30 do you see waiting in line at the bank to initiate a money transfer or pay their Bills? You also can’t discount the 30 to 40 year olds, most of whom are avid users of technological innovations they never dreamed they would ever be able to figure out when they first started appearing 5 or 10 years ago. Let’s also not rule out many of those over 40 who have managed to learn to like, if not love, many of the online services. More and more I see 65 and 70 year olds posting on Facebook and using their shiny new iPhones and iPads to do things online they never thought possible.
- Of course there’s also the advancements in technology factor. Compared to only two or three years ago, it is now much easier to communicate online in an effective, efficient and economical manner. Access to the internet, internet speeds, instant communication via voice or text, and video are no longer only available to those with deep wallets. Now, almost everyone can take advantage of these features.
Why does eQuibbly specifically have a better chance of success than its predecessors?
We keep it simple, offer options, and people can use most of it for free. eQuibbly functions much like many modern apps do; it’s intuitive and easy to understand, making it simple for those unfamiliar with technology to use it without the need for a manual. eQuibbly is a one-stop shop for resolving many types of disputes, from the minor family quibbles to the more serious breach of contract disputes. Individuals and businesses can choose to either have their disagreements resolved in a public forum, in a virtual private room using mediation, or in a virtual private room using legally-binding arbitration. The arbitration award provided by eQuibbly is enforceable in courts throughout North America upon a summary application.
No other company in the past has offered an ODR solution that is as comprehensive and as simple to use as eQuibbly.
Some eQuibbly users have asked me how an arbitrator or mediator can do as good a job resolving disputes as a judge or an attorney given that they haven’t had the extensive training in the law.
This is a bit of a red herring.One of the main tenets of Alternative Dispute Resolution (ADR), and indeed a significant benefit of ADR, is that it is not subject to the “law of the land” of any one country or state. That’s one reason why arbitration is so popular for cross-border disputes; if they chose to go to court they would have to pick one jurisdiction’s laws to apply to resolve their disagreement.
Although some ADR institutions apply the law of the land when making decisions or steering the negotiation, in the vast majority of mediations and arbitrations, the formal law is not applied. Of course some general laws are taken into consideration as a matter of common sense and fairness; for instance if two people sign an agreement it is generally considered a very good indication that they both intended to honor that agreement. But laws that are applied by a judge in court, such as strict time limits and laws on what is considered admissible evidence, are not applied in ADR or ODR (Online Dispute Resolution which is a type of ADR).
More important than the law, is that the arbitrators and mediators remain unbiased and fair, follow the procedural rules agreed to by the parties (like the “Rules of Arbitration” listed on eQuibbly), and consider the dealings between the parties leading up to the dispute, any contracts or other evidence, and the specific facts and circumstances presented to the extent they’re credible. Decisions are based on fairness, equity, common sense and the specific facts and circumstances, rather than the rigid laws of a court.
So there is no need to know the laws of the land, nor is there a need for an attorney or a judge with expertise in the law to resolve your dispute. That being said, many lawyers and ex-judges do become mediators or arbitrators.
Do you think the law of the land has to be applied to arrive at a good resolution to a dispute?
Although there are many other compelling reasons to use online dispute resolution rather than small claims court, one of the most significant is the cost savings. Even when attorneys are not used, there are simply more costs associated with trying to resolve your dispute in small claims court. It should be noted, however, that it is extremely difficult to provide an accurate cost of going to court since many costs depend on the actions and decisions of the other party and the judge. It also depends on how “cost” is defined. It should be noted that rules and procedures vary by State and specific jurisdiction where your case is heard.
To file a suit in small claims court, you will need to pay a filing fee. The amount varies from about $15 to $200 depending on the State as well as the amount being claimed.
Some States do not allow attorneys in small claims court. However, since there are some complicated procedures and technical rules that could cause problems for your case if not followed correctly, to give yourself the best chance of winning, you might want to consult with an attorney. For a decent attorney you can expect to pay at least $250 per hour and often much more. Assuming a 2 hour consult, that is at least $500.
As the saying goes: time is money. Filling out all the forms correctly, reading, and understanding and following the rules and procedures, often takes longer than one would expect. One example is the requirement in most jurisdictions that your signature be notarized – typically by a lawyer, a court clerk, or a licensed Notary. Assuming you value your time at an average of $40 per hour, the following is how much your time alone will cost, disregarding all other hard costs:
(travel to court to file suit and for trial, waiting in line, filling out forms, signing forms in front of a notary)
|Supporting Your Case
(collecting evidence, finding witnesses, serving defendant)
|Reviewing claim closer to trial
(since the trial will be months after the incident and months after you filed the claim you won’t remember the details)
(You’re not given a specific time – you’re given a window of time where you must be in court waiting for your case to be heard)
These costs above do not include the extra time you will have to spend if the defendant does not show up in court and later asks for the case to be re-opened and heard, or does show up and asks for an adjournment to a later date. In some jurisdictions there also is a mandatory pre-trial hearing where you have to meet with a representative of the court to discuss your case and see if there is a way to settle it before trial.
Time Off Work
In most cases you will have to attend court during the work week, both to file the initial paperwork, and to attend trial, and possibly a pre-trial hearing. So you will need to take some time off work on two or three days. This could be anywhere from 5 to 10 hours. Assuming an average hourly wage of $40, that is between $200 and $400 of lost wages.
When you file suit, the defendant must be given formal notice in writing that you are suing them. In most States, you will have to bear this cost which could be upwards of $30 to $100 for a courier or licensed process server.
Total Cost of Small Claims Court
Based on the above assumptions and depending on your circumstances and how you value your time, taking your case to small claims court could cost anywhere from $100 to $2,000 if you represent yourself in court. If you want to be represented by an attorney you can add on at least another $2,000 since it is unlikely an attorney will take on a case for less given the responsibilities and liabilities.
Other Possible Costs and Points of Note
There are other possible costs – they are not standard, but circumstances may require them. For instance, since written witness statements are typically not allowed in small claims court, if you need the testimony of a witness you will have to convince the witness to attend the trial and pay them a small fee for doing so. In some jurisdictions there is also the slight possibility that if the defendant loses, the judge may grant an appeal to the defendant which means another attendance in court for you. The other party may also bring a motion for one reason or another that may require you to attend court again at a later date.
Most people expect that if they go to court their case will be heard in front of a judge, but that is not often the case for small claims court. Often small claims cases are heard and decided by Magistrates who are lawyers appointed by the Court, or possibly by a clerk who are not required to have a law degree. It should also be noted that small claims judgments are public information and could appear on your credit report, affecting your credit rating.
Cost of Online Arbitration
The cost of arbitration is generally broken down into three categories:
- The cost of the arbitral institution’s fees;
- The fees and expenses of the arbitrator; and
- The party’s direct costs. These include costs of legal representation, the costs of any experts, and the costs of any out of pocket expenses.
Costs vary widely for online arbitration depending on which arbitral institution is chosen to administer the arbitration, which arbitrator is chosen to decide the case and whether the party wants to be represented by an attorney. Arbitral institutions typically charge between $30 and several hundred dollars to file a small claims case. The parties also typically have to split the cost of the arbitrator’s time which can vary anywhere between $100 to $500 per hour depending on the complexity of the case and whom the parties choose.
eQuibbly is different. There is no charge to file a case, nor to use the platform. So if you have someone who is willing to arbitrate your case for free, such as a mutually acceptable neutral third-party, you can arbitrate your dispute completely free on eQuibbly. Of course, if you wish, you can also hire an independent arbitrator on eQuibbly – fees range from $50 per party per hour to $275 per party per hour, with some offering a flat fee of about $250 per party. These fees are paid directly to the arbitrator, not to eQuibbly.
You won’t have to spend time travelling back and forth to court multiple times, waiting for your turn to file documents with the clerk or waiting to be heard, or learning complicated rules and procedures. Nor will you risk time spent on an appeal. There’s also no need to pay attorney’s fees since decisions are based on what is fair given the facts, not on technical laws and procedures that are often difficult to learn.
So although it is very difficult to quantify costs, generally speaking, in most circumstances online dispute resolution will be a more cost-effective way to resolve disputes than going to small claims court. In any event, it is definitely a lot more convenient.
By Lance Soskin, Founder and President of eQuibbly.
eQuibbly is a web application created to help companies resolve their disputes quickly and fairly online. It’s known formally as Online Dispute Resolution (ODR). Disputes are resolved entirely online either via mediation or arbitration in a secure private virtual room. Parties can opt for the outcome to be legally-binding and enforceable in court in almost any country.
If you have already experienced the great pleasure of going to court, especially for a full-blown trial, there’s no reason to read any further as you’re already well-aware that almost any other method of resolving a dispute or conflict is better than the traditional justice system.
Once you hire an attorney, it’s extremely difficult to get away with paying anything less than a few thousand dollars for pre-trial procedures, even if it is for small claims court. And if your case goes to trial, you’re almost certainly going to be out-of-pocket at least $10,000 and often times tens of thousands of dollars. If that isn’t reason enough to convince you to try an alternate route, the time commitment and aggravation involved in pursing litigation surely are.
One alternate route that is growing in popularity is online dispute resolution using arbitration or mediation.
If you meet one or more of the criteria below, it may be time for you to take a closer look at whether online arbitration or mediation may be right for you:
- Negotiation has failed. You have tried to resolve your dispute or complaint on the phone, by email, or face-to-face and were unable to reach a satisfactory solution.
- Meeting in-person is inconvenient. You and the opposing Party live far enough away from one another that there is no convenient place to meet without wasting a lot of time traveling.
- Cost of litigation may exceed your claim. Unless you are independently wealthy, there is little point suing if the cost of litigating might be more than the amount you recover at the end of the ordeal. Many plaintiffs over-estimate their chances of winning and the amount they will recover if they do win. If you’re looking for some sense of moral victory regardless of the cost, keep in mind the old saying about ‘cutting off your nose to spite your face’; it will likely ring true a year later when you’re still trying to make your way through the justice system on your last dime.
- Confidentiality is important. You would like to keep your disputes and your confidential information private. The courts in the U.S. and Canada are open to the public and almost everything you file with the court is public record and subject to public disclosure (other than personal information that can lead to identity fraud).
- You have shopped or socialized online. The online world is part of your everyday life. If you’re comfortable shopping, socializing, and commenting on news articles online, you’re technologically savvy enough to make use of online dispute resolution.