One of the truly “disruptive” innovations in legal services isn’t a legal service and isn’t even new. It doesn’t use the judicial system or even lawyers, yet its methodology to settle disputes has been practiced for hundreds of years. Alternative dispute resolution, which got its start with the fair courts of the Middle Ages, has found its way to the internet. Known as online dispute resolution (ODR), it has the potential to transform access to justice.
One of the chief architects of ODR is Colin Rule, founder of Modria and former Director of Online Dispute Resolution for eBay and PayPal. Rule helped implement eBay’s ODR platform, which handles 60 million disputes each year, roughly half of which are settled by software alone. For comparison, U.S. federal district courts handled 372,563 cases while California state courts handled 9.5 million cases. One of ODR’s advantages is that it can handle low dollar value disputes that would otherwise slip by the court system. Nobody wants to pay attorney’s fees and court costs for a $20 dispute, but ODR can handle such cases easily and at high volumes. Likewise, compared to the judicial system, the process for resolving disputes through ODR is comparatively straightforward. The court system uses different sets of rules based on geographic location or issue (i.e. bankruptcy), a level of complexity largely absent in ODR. For nearly every major complaint about how the legal system operates – costs, court backlogs, length of time to resolve disputes – ODR has a faster, cheaper, simpler, and extrajudicial answer.
At the moment ODR is skirting the major challenges that firms like LegalZoom have faced by venturing into less adversarial markets (i.e. property assessment appraisals). However, ODR technology is battle-tested and is currently deployed by several major companies. Governments are also looking into ODR as a way to settle disputes quickly and at low cost with the European Union being a notable example.