State and Local Governments: Unlikely Supporters of ODR

Topics: Business Development & Marketing Blog Posts, Government, Law Firms, Legal Innovation, Legal Managed Services


Innovation often takes place in waves, and the strongest, most prevalent one of our generation is without a doubt that of communication, specifically the Internet. But digital disruption has not stopped with communication: it has spread to all aspects of modern life, how we order taxis, how we shop, how we watch TV, and today, how we handle legal disputes.

Online Dispute Resolution, or ODR, is the application of modern technology to legal disputes in an effort to offer a faster, cheaper, more transparent and more homogenous processes. To date, the most famous implementation of an ODR system is that of eBay and PayPal, which together handle about 60 million disputes every year, 90% of them being resolved without the involvement of a third-party neutral.

Recently, ODR has found an unlikely ally and supporter with the public sector. Although not usually known for their propensity to innovate, governments and public entities have begun to embrace private ODR processes as a way to cope with budget cuts, congested courts, and the need to improve access to legal services overall. The adoption of ODR processes is taking place both locally and internationally.

For instance, local counties collect annual taxes owed by homeowners based on the value of their property, which often leads to disputes regarding the property value. Antiquated paper-based and manual processes have crippled assessors’ offices with chronic delays and rising processing costs. ODR helped simplify the overall process by allowing taxpayers to file appeals, provide supporting documents, and track the status of their claim, all directly online. Administrative tasks are simplified or automated, and the assessor’s office can handle cases faster and more cost effectively. Over the past three years, counties have flocked to private ODR systems, and the adoption rate is accelerating. The State of Ohio, and the Province of British Columbia went even further and adopted statewide ODR systems.

The proven efficiency of ODR systems and the need to revamp existing dispute resolution processes has helped the field gain a wide and unequivocal support from the public sector. But will this support be short-lived?

The push for ODR is also taking place within the Judiciary branch of many government entities. The Dutch Legal Aid Board recently launched Rechtwijzer 2.0, an ODR platform that helps divorcing couples reach a separation plan. If that fails, a mediator will be appointed, and then, if mediation fails too, the case moves to a final, binding decision-maker. A few months before, the Dutch Judiciary commissioned a pilot project called the Burenrechter (or “neighbor judge”) exploring how technology could help revamp the way to handle disputes—in this case disputes between neighbors. The United Kingdom too has been refining its plans to leverage ODR in small claims courts as a way to lower the costs, increase consistency, etc. Similarly, in British Columbia, the 2012 Civil Resolution Tribunal Act will come into effect shortly, and will offer ODR processes to the general public for disputes under C$25,000.

On a larger scale, the European Union recently made it mandatory for online sellers of goods or services in the EU to offer ODR to buyers. The EU believes that providing readily available remedies to dissatisfied buyers will increase its GDP. Also, UNCITRAL—the United Nation’s international law body—has been working on draft ODR rules for B2B and B2C cross-border electronic transactions. The publication of these rules could be groundbreaking given UNCITRAL’s influence, especially in the field of arbitration.

The proven efficiency of ODR systems and the need to revamp existing dispute resolution processes has helped the field gain a wide and unequivocal support from the public sector. But will this support be short-lived? Recent progress in algorithmic resolution and big data suggests that ODR can and likely will go much further. Our collective notion of Justice may be challenged by technological innovation. More than ever, it will be critical for ODR providers to strike the right balance between the status quo and full-fledged robot-judges.