A look at some online ‘cyber settling’ services

It’s not only dot-com entrepreneurs who can make money on the Web, plaintiffs and attorneys are discovering. One of several Internet dispute resolution systems can be used to allow litigators to click their way to a settlement.

The world’s first independent online dispute resolution system was Cybersettle.com, which states it offers confidential claim settlements by matching offers and demands via a secure double-blind bid Web site. Cybersettle has been joined by U.S. Settlement Corp., clickNsettle and Claimsettle.com.

Cybersettle

At Cybersettle, one party submits a confidential amount into a secure Web site and the other party is advised. If the offer and demand are within 30 percent or $5,000 of each other, the claim is settled for the mean amount. If the defendant’s offer is the same or greater than the plaintiff’s demand, the claim settles for the demand amount. If the parties never come within 30 percent or $5,000, the claim doesn’t settle. The parties have three rounds with a possible bonus round and have 90 days to complete the process.

“I am the co-inventor of the process where we do blind bid matching of offers and demands,” said Charles Brofman, president and co-chief executive officer of Cybersettle. “I spent about 16 years in litigation. Jim Burchetta [the other co-inventor of Cybersettle] and I were opponents on a case. We submitted figures to a court clerk and he gave us a thumbs up. … We were within $1,000 of each other. We took it to the next degree, using 21st century technology and applied it to an age-old problem.”

Brofman said that his company expects “to do 30,000 claims this year, and we’ve exceeded 20,000 to date. Our closest competitor hasn’t cracked 1,000. We have settled in excess of $35 million in claims, handling approximately 35,000 files since August of 1998 when the company started.”

ClickNSettle

The clickNSettle.com site features a 60-day period but allows unlimited numbers of offers and counteroffers. The plaintiff or defendant may submit a case for online negotiation. Once submitted, the parties have a maximum of 60 days to negotiate the value of the claim. If at any time during the negotiation the plaintiff’s demand comes to within 30 percent of the defendant’s offer, clickNsettle.com will split the difference and settle the case at the midpoint.

The clickNsettle.com site also utilizes a unique “final bid” feature which notifies the opposing party that their adversary has entered a “walk away” figure. The program’s unlimited bid format allows the party receiving the notification to continue submitting new bids in an attempt to reach their adversary’s “walk away” figure.

Because the parent company of clickNsettle was NAM (National Arbitration and Mediation), clickNsettle had an existing dispute resolution business. NAM has a roster of 1,500 neutrals around the world to handle in-person dispute resolution, said Robert Mack, executive vice president.

When cases don’t settle or one party doesn’t want to go online, the company offers in-person arbitration or mediation. “We’ve found that to be very successful,” said Mack.

Sixteen percent of the publicly owned company is held by Insurance Services Office, (ISO), noted Mack. The carriers report all their claims data to ISO and ISO handles reporting and operates a claim fraud database.

“The insurance industry is on board with the idea of negotiating claims on-line,” said Mack.

U.S. Settle

U.S. Settle gives its users an unlimited time period and an unlimited number of offers.

Opponents in a dispute submit a demand and offer it in confidence to U.S. Settle, either at www.ussettle.com, or via traditional communications to U.S. Settle, using a brief submission form.

U.S. Settle compares submissions. If an offer is 70 percent or more of a demand, both parties are notified that a settlement has been reached at the median figure between the two. With prior agreement of the parties, U.S. Settle will use other parameters.

The entire process can be accomplished online with both parties notified directly either on-screen or by e-mail that settlement has been reached. If settlement is reached, each party pays $250. If no settlement is reached, U.S. Settle allows the parties to re-initiate the process to bring the dispute to resolution — as many times as necessary, at no additional cost. If the parties prefer, a U.S. Settle mediator can be immediately mobilized to assist them in conventional negotiations.

ClaimSettle.com

At ClaimSettle.com, whichever party initiates contact can customize the process, including the settlement equation.

A claim in dispute is “loaded” onto the ClaimSettle.com site. Each party to the claim then has the opportunity to securely submit settlement figures electronically at the site. Neither party can see the other’s offers or demands. Once each settlement figure has been submitted by each side, ClaimSettle.com will “compare” each offer to each demand, line-by-line. If the settlement offers are within a designated dollar or percentage range of each other, ClaimSettle.com will automatically split the difference and settle the claim. If the offers are not within range, the claim will not settle.

The initiator selects the settlement parameters, duration of the online “negotiation,” scope of release, and payment terms. ClaimSettle.com offers default parameters of 25 percent and/or $5,000 differential between offer and demand.

Reaction mixed

Minnesota attorneys who have settled — or attempted to settle — cases online have reported mixed results.

Minneapolis attorney Larry Stern said that having tried the technology, he wouldn’t attempt a second online settlement. Over a year after his client’s automobile accident, said Stern, the insurance company proposed using Cybersettle. Stern said that he was reluctant, but felt he had nothing to lose. The case didn’t settle.

Stern said he was unpleasantly surprised a couple of weeks after the negotiations when his client received a number of letters from other attorneys seeking to represent her. Stern said he doesn’t think that the solicitations were a coincidence.

Justin Pieragostini, marketing director for Cybersettle, responded that there is absolutely no way any lawyer could have made a connection between Cybersettle and Stern’s client because the client’s information is held in the strictest confidence.

Cybersettle does not release any information at all about any case or any facts relating to the cases, said Pieragostini. “In fact, all offers and demands are completely confidential and password protected,” he explained. “They are never revealed to either side so that no leverage is lost in settling claims through traditional means if online settlement did not occur.” The offers and demands are encrypted so no one can ever determine what they are once they are entered into the system, he added.

“The identities of the lawyers and the clients are never revealed and the information is housed on our secure Web sites,” Pieragostini observed. “Only the attorneys can access the Web sites for their specified claims with their unique password and ID.”

Brofman told Minnesota Lawyer that there has never been any other file where any attorney who used Cybersettle said that information about the case was revealed.

“We do not sell or give out any information under any circumstances,” Brofman stated. “Our people are bonded and investigated before they come here.”

Other attorneys have had more pleasing experiences and have stated that online negotiations are useful but not appropriate for every case.

“In the right case, it’s a wonderful tool,” said Minneapolis attorney Helen Meyer. Meyer thinks the right case is one where the lawyer and client are in total agreement to use the process and the client doesn’t have a need to tell the story.

“It’s not going to put mediators out of business,” said Meyer. “There’s no feeling that you’ve been through a process.”

Online settlement services allow attorneys and adjusters to cut to the chase, noted Minneapolis attorney David Jorstad. “You reach a point in any case where you are just exchanging figures. [Online] you can get to that point sooner,” he said.

Moorhead attorney Keith Miller, immediate past president of the Minnesota Trial Lawyers Association, said online settlement is not appropriate for a “significant” case, by which he means one worth six figures. He thinks it is appropriate for a smaller, more routine case.

St. Cloud area attorney Michael Bryant settled a soft tissue case online, but said he wouldn’t initiate the procedure. He entered into negotiations at the request of Travelers Insurance Co.

“I like dealing with human beings,” he said. “Online, I feel less like I have a good handle on the other side. It’s almost like a game show.”