United States: Online Mediation: A Personal Look At ADR On The Internet

A cartoon appeared in the Louisville Courier-Journal commenting on the cancelled eBay sale of an abstract painting attributed to the modern master Richard Diebenkorn. The cartoon shows a rather goofy looking guy saying to his much put-upon wife: "Look at this Picasso I bought on eBay!" Proudly grasped between the cartoon husband’s hands is a framed picture of five dogs playing poker.

The eBay bidding on the "Diebenkorn" started at a quarter and ended at $135,805. When eBay cancelled the sale, it alleged that the seller, sadly a lawyer, had violated eBay’s rules by artificially inflating the sales price through "shill bidding." This much- publicized sale shed light on the exponential growth of bad faith and fraud on the internet.¹

The New York Times reported that small-business owners spent more money online in 1999 than consumers did. They spent $25 billion online, up from only $2 billion in 1998. Small-business online purchases are expected to increase to $118 billion in 2001. Consumers spent $20 billion online in 1999.²

My boyfriend, Chris, spends many hours a week trading rock and roll LPs, tapes and other memorabilia on eBay. On occasion, he has paid for things he did not get. I hear first-hand how ineffective eBay’s dispute resolution mechanism is for smaller disputes. How do you track down a seller in California who has cashed your $100 check and keeps telling you by e-mail that the Beach Boys poster you bought should arrive any day now by regular mail?

As business moves to the internet, so do commercial disputes.

Websites offering mediation and other online ADR services are proliferating. Generally, they fall into two categories: (1) blind bidding and (2) discussion based processing of disputes.³ Some of the better known sites are:

The blind bidding websites, like Cybersettle, CyberSolve, ClickNsettle and Settlement Now, can help settle the dispute when the only question is "how much?" These sites are not helpful if the question is "who is liable?" A party may initiate the process by contacting the website, which in turn contacts the other party to the dispute. The service then begins collecting blind bids from both sides at its password-protected site. The software protects each side’s bid from disclosure to the other side. Some sites permit only three rounds of bidding. Some sites offer unlimited rounds of bidding.⁵ The dispute settles if the blind bids are within a pre-agreed dollar range (say $5,000) or within a certain percentage of each other. The dispute settles automatically for the median amount. If the bids are too far apart, a party can walk away from the process without having disclosed his or her "bottom line" to the other party. Since 1988, when Cyberrsettle went online, parties have settled 5,000 disputes involving more than $20 million in claims.⁶

Discussion based processing of disputes is also available on the internet at sites like OnLineMediators or Resolution Forum.⁷ These sites are helpful in more complex disputes to convey information between parties who are located several hundred or thousand miles apart. They also can eliminate bias (by the other party or by the neutral) based on race, age, gender or disability.⁸ On the other hand, they do not capture as effectively as face-to-face mediation the interests, needs, motives and emotions of the parties. A full understanding of these components of the dispute is often essential to its resolution. And the written text of e-mail puts a greater emphasis on literacy and written communication skills. Some on-line practitioners also note that parties feel more free to exchange inflammatory comments and ad hominem attacks that would not likely occur if the parties found themselves in the same room. Some neutrals get permission at the outset of the mediation to filter these types of comments by returning them to the sender for re-drafting before the neutral exchanges them with the other side.

James Melamed has described in detail how these discussion-based online mediations work. J. Melamed, "Mediating on the Internet: Today and Tomorrow," www.mediate.com/articles/Melamed5.cfm. He also describes the online mediation protocols recommended by The Mediation Information and Resource Center, governing descriptions of the process for parties, suggested ground rules, pre-mediation responsibilities, sending and receiving e-mail, delays in sending and receiving e-mail, attachments, distribution of messages, management and disclosure of information online, and protection of privacy. Id. Rather than summarize that discussion here, I want to turn to my use of the internet as an adjunct to face-to-face mediations.

I have now used the internet in several mediations to preserve the momentum of face-to-face negotiations that have adjourned overnight or to a later date. The idea came to me from two directions. First, I have been a consumer of mediation services in three complex reinsurance cases resulting in settlements of over $22 million. Each mediation took several days to complete. Two of the mediations resulted in settlements on the final day of the mediation. The third case settled the day of trial, largely because the defendant’s CEO had had the opportunity to hear directly from my client during the mediation. Those experiences taught me that mediation sessions require much work and concentration. In some disputes, each party is processing a lot of factual and legal information. The parties may also be working through a number of emotions, including anger, loss, frustration, exhaustion and even outright dislike for the other party. It takes time to build the deep understanding of the other party’s perspective of the dispute and to build empathy for the other party’s interests, both essential components, in most circumstances, to reaching a mediated settlement. My client and I certainly needed the breaks at the end of each day to process all the information exchanged earlier. We needed time to talk among ourselves and to determine how to proceed the next day. The cases would not have settled if the mediator had used what I call "muscle mediation."

Some mediators show concern that cases will not settle unless the parties are locked into an uninterrupted mediation process. These "muscle mediators," as I call them, reach settlement by waiting until one of the parties capitulates -- out of exhaustion and even hunger – screaming "UNCLE." Admittedly, this practice can work (although I recommend feeding the parties). And in some circumstances it is essential to reaching agreement because an interruption in the process almost certainly will be the end of it.

My experience as a client of mediation services however suggests that parties who go into the process expecting to spend the time needed to fully explore settlement options, are willing to come back for more than one mediation session. The trick for the mediator is to maintain the momentum during the breaks. The mediator must also build on the effect the sessions with him or her have had on the parties.

My use of the internet as an adjunct to face-to-face mediation, also arose from advice offered by J. Winslade & G. Monk in Narrative Mediaton: A New Approach to Conflict Resolution (Jossey-Bass Publ. 2000). In a chapter entitled "Documenting Progress" the authors suggest using written communications to the parties during the mediation as milestones or signposts in the mediation journey. Id. at 228. These written communications can secure the progress made by the parties and prevent slippage back into hardened positions between mediation sessions.

Based on the advice of the authors, my e-mails to mediating parties do the following: (1) acknowledge the effects of the conflict on each person (e.g., emotional and financial) without ascribing blame for the dispute; (2) describe each party’s perspective of the dispute, which serves again as acknowledgment that I have been listening carefully to each party; (3) acknowledge the best intentions of each party and implicitly invite each person to join the mediator in acknowledging the best intentions of the other party; (4) wonder about possibilities of building on the progress made, which Winslade and Monk call "flying in the face of hopelessness;" (5) put the conflict in context, especially by highlighting the sequence of events that led to the conflict; (6) summarize any unique outcomes suggested by the parties during the session, including a summary of the kind of on-going relationship the parties expressed an interest in achieving; (7) ask the parties to reflect on what has happened, especially the parts of the mediation that they have appreciated; (8) pose "what if…" questions designed to invite them to consider the risks each party faces if he or she fails to reach agreement; (9) remind the parties that they may wish to consult with a trusted third party (including lawyers) before the next session about some of the "what if…" questions; and (10) compliment them on their commitment to the process and encourage them to continue with it. Id. at 233-242. I may close with one of my favorite mediations quotes like: "All polishing is done with friction."⁹ I invite comments to my e-mails and solicit any questions they may have about the mediation.

Over time, these e-mails can serve as a point of reference for noticing change in the parties’ positions and interactions. Id. 236.

In the cases in which I have used these e-mails, the parties seem to settle more quickly. In one case, a very defiant plaintiff discovered overnight after receiving my e-mail that she was exhausted by the litigation and she wanted to avoid going to court the next afternoon. She reached a reasonable settlement the next morning with little further help from me. In another case, a multi-party dispute involving an antique table, the parties settled the dispute after receiving a very long e-mail from me that took me hours to draft. I feel that the e-mails gave the parties a structure for looking at what they had heard, learned and truly needed.

Obviously, the same information could be exchanged by letter, but e-mail allows me to continue to interact with the parties on a real-time basis.

The use of the internet in helping parties resolve disputes is in its infancy. Lawyers, as providers and consumers of mediation services, will play a critical role in the development of the internet as a mediation tool. As Derek Bok¹⁰ said, "If lawyers are not leaders in marshalling cooperation and designing mechanisms that allow it to flourish, they will not be at the center of the most creative social experiments of our time."

1 "eBay Cancels Sale and Suspends Seller in Painting Auction," New York Times (May 11, 2000).

2 "Finding Deals, Small Businesses Buy More Online," New York Times (May 15, 2000).

3 See K. Marquess, "Point, Click – Settle Quick!" ABA JOURNAL 82 (April 2000); E. Katsh, "The New Frontier: Online ADR Becoming a Global Priority," DISPUTE RESOL. MAG. 6 (Winter 2000); D. Eidsmoe, "Calling Their Bluff: Settlement Rates Low but Hopes Still High for Online Resolution of Personal Injury Claims," DISPUTE RESOL. MAG. 9 (Winter 2000); J. Melamed, "Mediating on the Interenet: Today and Tomorrow." www.mediate.com/articles/Melamed5.cfm.

4 See also J. Boskey, "Useful ADR Sites on the WorldWideWeb," www.mediate.com/articles/boskey.cfm

5 U.S. Settlement Corp and ClickNsettle offer unlimited rounds of bidding.

6 E. Katsh, supra at 7.

7 For a description of some of these sites, see E. Katsh, supra at 7-8. See generally R. Bordone, "Electronic Online Dispute Resolution: A Systems Approach – Potential, Problems and a Proposal," 3 HARV. NEGOTIATION L. REV. 175 (Spring 1998); G. Friedman, "Alternative Dispute Resolution and Emerging Online Technologies: Challenges and Opportunities," 19 HASTINGS COMM/ENT. L.J. 694 (1997); E. Katsh, "Dispute Resolution in Cyberspace," 28 CONN. L. REV. 953 (Summer 1996); E. Lide, "ADR and Cyberspace: The Role of Alternative Dispute Resolution in Online Commerce, Intellectual Property and Defamation," 12 OHIO STATE J. ON DISP. RESOLUTION 193 (1996).

8 See discussion in C. Rule, "Online Mediation: The Next Frontier for Dispute Resolution," 23 SPIDR News 10 (Fall 1999).

9 Mary Parker Follet, was a turn-of the century women who is now recognized as the "mother" of today’s ADR movement.

10 Bok is the author of The State of the Nation: Government and the Quest for a Better Society, Higher Learing, The Cost of Talent: How Executives and Professionals are Paid and How it Affects America and Beyond the Ivory Tower.

© Paula M. Young 2000