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Burden of Proof

Resolving Legal Disputes Online

Aired January 1, 2001 - 12:30 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

GRETA VAN SUSTEREN, CO-HOST: Today on BURDEN OF PROOF: Point, click and settle; how virtual forums offer to resolve actual disputes and online peace keepers find retribution for that cyberspace buyer's remorse.

ANNOUNCER: This is BURDEN OF PROOF with Roger Cossack and Greta Van Susteren.

VAN SUSTEREN: Hello, welcome to BURDEN OF PROOF. Each year, Americans spend more than $150 billion suing each other as millions of lawsuits are filed each year. But in the end, less than 2 percent of those cases actually are heard by a jury.

ROGER COSSACK, CO-HOST: Now, some online entrepreneurs are offering cyberspace judgment alternatives to brick-and-mortar courthouses. They claim the World Wide Web offers a quicker and less expensive way to resolve a dispute.

VAN SUSTEREN: Joining us today from New York is Robert Mack, who's the executive vice president of clickNsettle.com, and in Boston we're joined by Ethan Katsh, a professor of law and technology.

COSSACK: And here in Washington we're joined by Keith Lanchaeno (ph); Fredric Lederer, director of Courtroom 21; and Alex Emdotti (ph). In the back, Jaranda Perry (ph) and Duane Raul (ph).

Let's go right to you, Bob. First of all, tell me how your clickNsettle -- how's that work?

ROBERT MACK, CLICKNSETTLE.COM: Well, basically on the clickNsettle.com Web site, we have an online negotiating program where one party can submit a dispute. We'll invite their adversary to participate and during a 60-day period they can negotiate back and forth over the value of that claim or dispute.

VAN SUSTEREN: Here's the problem right off from the beginning, Bob, that I worry about is that you have some of the things -- look, I don't want to pay for a lawyer. I'd much rather go online and try to resolve this, and in the end ends up taking substantially less than he or she would have gotten had the person go out and gotten a lawyer, and in essence gets taken advantage of. How do you protect against the sort of unsuspecting or uneducated?

MACK: Well, in a few ways. Our traditional business is arbitration and mediation, so we already have about 10,000 attorneys as clients, and what we do when people submit a claim, if it's something that they wouldn't normally negotiate by themselves; it's something they would normally get a lawyer for, we recommend that in the online process they do the same thing. You know, negotiating online doesn't make you smarter; it doesn't give you a better understanding of the value of your claim. So, we caution then that they should always have the advice of an attorney.

COSSACK: So, Bob, if you're advising them to get -- to have an attorney advise them, tell me again what the advantages of going online is as opposed to perhaps being able to visit with an attorney and go to a courtroom?

MACK: Well, the big advantage is really for the attorney in terms of the time they spend contacting the adversaries, going back and forth with offers and demands. You know, we automate that process through the Web site. In addition, because we're using blind bids, it takes away the posturing that you have in a typical negotiation where, you know, I ask for $100,000; you offered me $10,000 when really I'd take $40,000 and you'd pay $60,000. So...

(CROSSTALK)

VAN SUSTEREN: What about, Bob, suppose someone has an injury, and let's say that the person never has had two nickels to rub together in his or her whole life, and goes online and gets offered like $30,000 which seems like the moon and it turns out that the person actually has an injury that might be worth, you know, $700,000 because it's a permanent nature, or maybe disfiguring or maybe disable the person from working. I mean, that's sort of the concern that I have. How does your clickNsettle protect that person?

MACK: Typically, if -- we -- because we contact each party, we're aware of the nature of the dispute. In an instance like that, certainly we would talk to the party if we felt that, you know, they were not qualified to be negotiating a dispute.

VAN SUSTEREN: So, are you practicing law, then? I mean, if you're advising the person, does that put clickNsettle in the position of not really being a mediator or an arbiter but actually practicing law, advising someone don't do this, don't take that or your claim is worth a lot more?

MACK: We won't discuss what the value of their claim is, but certainly we will, you know, provide them with caution and a warning that they should contact an attorney.

To date, that really hasn't been an issue. We really have not seen disputes of that magnitude coming from private individuals. They've either been submitted by the attorneys or the insurance carriers and for that product, we don't really market it to individuals. We market it to the insurance and legal industries.

COSSACK: Fred, Bob tells us about the advantages that he says that his situation possesses. Are there any disadvantages to using online for people who are litigants? FREDRIC LEDERER, COURTROOM 21: It's not so much whether it's online or not, it's a question of changing whether we have to be in the same place at the same time. We did, for instance, first note experiments with mediation by video conferences some years ago at William and Mary.

If we are able to make it easier, faster and cheaper for the people who ordinarily will get together, we do a great thing. At the same time, we have to be very careful, as you've been asking, that we not have false economies. The lawyers may benefit greatly by dealing with each other online, but that's not the same as saying we should encourage a person to do so without counsel.

COSSACK: I think what Greta is suggesting, and I think she may be right, is that -- she may have hit something here is that the notion that this may attract people who are perhaps unable to go to lawyers because they don't have the funds...

VAN SUSTEREN: Or they're dazzled by a $30,000 check when in reality they have a $700,000 injury.

(CROSSTALK)

COSSACK: Well, that's my point. They don't have the ability financially to go to a lawyer to get good advice, and therefore they go online because they think it's going to be quicker and cheaper and perhaps miss something.

LEDERER: Well, and I think you're both clearly right. The question is not whether it's useful to use an online service, an AOL chat room which had preliminary hearing not too long ago, a motion matter, the question is what are we going to do with the opportunity?

VAN SUSTEREN: Ethan, this seems like actually an intriguing idea, this clickNsettle, if it's two lawyers trying to click and settle and do this quickly for their clients. Obviously, I've expressed my reservations for the unrepresented. But what do you make of this clickNsettle?

ETHAN KATSH, PROFESSOR OF LEGAL STUDIES: I think there are a range of opportunities and a range of applications. We shouldn't simply focus on personal injury lawsuits, most of which are settled anyway out of court.

VAN SUSTEREN: But they're settled by a negotiation which would be presumably a clickNsettle-type thing, but maybe in an office.

KATSH: Well, what we have in the last year or two with the growth of electronic commerce is a large universe of disputes that are arising out of online activities. We did a project with eBay in which we mediated 150 disputes that arose out of -- during a period of two weeks. I advised a company called squaretrade.com that currently is settling disputes that arised out of eBay transactions.

Every marketplace that exists online is generating disputes. Where you have transactions, disputes are going to follow regardless of whether or not the marketplace is safe or not safe. We have domain name disputes, over 1,000 of them, since January that have been resolved through arbitration online.

These are disputes among people who may be in different parts of the world. Electronic commerce-related disputes are among people who are never going to get to court. So, for them, it's not a question of do I go to a lawyer to get good advice? For them, it's a question do I have access to any kind of justice or do I not have access to any kind of justice?

VAN SUSTEREN: Bob, I really like the idea having a lawyer do this because it puts them in contact with each other quite quickly. I mean, frankly, trying to get lawyers in same room sometimes even when they're in the same city is nearly impossible. But are there certain guidelines within clickNsettle as to people who, you know, you think it's inappropriate to be involved in this and those who you think are especially targeted for?

MACK: Well, we did a few things, and it really depends on the nature of the dispute. First of all, we always charge a submission fee. So, the goal in that...

VAN SUSTEREN: How much is that?

MACK: It's $15, and while it's not going to prevent everyone from submitting a dispute, it does help curtail, you know, nuisance- type disputes -- the person sitting at home at two in the morning, you know, filing frivolous claims against businesses or carriers. Depending on the nature of the dispute, you know, we market only to the attorneys.

American Lawyer Media recently took a 4 1/2 percent stake in our company, and the goal of that is to reach out to the attorneys and show them why this can help them grow their businesses, process more cases. In e-commerce transactions like Ethan was just talking about, those claims are over the sale of a good or the purchase of a product on the Internet. Typically the parties that are involved understand the value of the claim, and in the real world would be negotiating it themselves anyway. So in those instances, you do have people negotiating.

COSSACK: All right, Bob, let me interrupt you for a second because we're going to have to take a break. When we come back, what are the cyber-land mines of the legal Web sites, and how are the resolutions enforced? Stay with us.

(COMMERCIAL BREAK)

COSSACK: A number of Internet Web site are acting as cyber- arbitrators, settling civil disputes on-line, instead of in court. But what happens when problems arise from these computer resolutions, and how are decisions enforced?

OK, Fred, let me just say that I enter into a good faith negotiation and I get a little buyer's remorse in the morning, and I wake up say: You know what, either I didn't get enough, or the other side got too much. I'm not paying, what do I do?

LEDERER: I can't answer that question, like any good lawyer without knowing what the facts are. We have got a dispute. Perhaps we are going to get, if you don't have counsel, you should be getting counsel almost immediately.

Then, what do we do next? Well, we may want to use one of the cyber operations, we may want to go traditional. It all depends.

VAN SUSTEREN: Bob, let me...

COSSACK: Let me just follow-up one thing.

Bob, in a regular courtroom, if there was a stipulated judgment, or there would be some sign of a judgment that one person receives, and the other person pays, there would be something written out and it would be in the court docket, or a court order. In your situation, there us none of that. How do you enforce these things?

MACK: Well, when we started the clickNsettle on-line negotiating program, we modeled the user agreement that both parts agreed to before participating on a typical arbitration agreement that had been used, really, for year.

So both parties, before they participate, agree that the transaction, if it settles, will be binding. That is really no different than, if you were going to an in-person arbitration, or even an in-person mediation, where you mutually agreed on a settlement, and afterwards, signed a post-mediation agreement.

VAN SUSTEREN: Bob, walk me through this. Assume that I was in a car accident, and that I did not believe I was at fault, and I had sued another party, and that other party is represented by an insurance company. I want to get them to come to clickNsettle, how do I get started? What do I do?

MACK: Basically, you or your attorney would submit the claim to us, and we would contact the insurance carrier, and invite them to participate and come on-line and negotiate. If they agreed to it, then they would come onto the system and proceed to negotiate against you on-line.

VAN SUSTEREN: And what -- how long have you been in business?

MACK: We've been in business for eight years. We started as a provider of traditional in-person arbitration and mediation services.

VAN SUSTEREN: But in terms of clickNsettle, how long you been on the Web, clickNsettle?

MACK: ClickNsettle came out in June of 1999, so just a little over a year.

VAN SUSTEREN: Give me some idea of how much resistance you've had from insurance companies, or defendants in civil suits, how many are willing to come and clickNsettle? MACK: Well, so far, we have processed about 2000 cases. We work with a lot of carriers anyway, and Insurance Services, which is a big provider to the insurance industry, actually owns a portion of our company as well.

So the insurance industry has been very receptive because, as most big users of litigation services, they spend a lot of money on it, and they are looking for ways to reduce those costs. They view it as an efficient way to speed up the process.

COSSACK: Ethan, by taking law out of the courtroom, are we, in some ways, demeaning the respect that people should have for the courthouse, for the courtroom?

KATSH: I think law has been -- I think law has been outside of the courtroom for -- ever since alternative dispute resolution, mediation and arbitration became the preferred ways of settling disputes. As you noted at the top of the show, very, very few disputes actually end up in court. So the court is a symbol, but the reality is that most disputes get settled out of court anyway. And the more opportunities we can present to people for fair settlement, the better off we are.

COSSACK: What I guess I'm suggesting to you is is that the symbol of the courthouse, as being the place where justice is done is...

VAN SUSTEREN; I don't think a lot of people necessarily feel that they get justice in the courtroom. A lot of people would prefer not to roll the dice with a jury, would like the certainty of settling.

COSSACK: I know, but what I am suggesting is, we are taking the judge out of the proceedings. And I am just saying, as a symbol, are we doing -- are we hurting ourselves by taking the symbol of the judge out of the proceeding?

VAN SUSTEREN: Roger, we've had that forever, taking the judge -- the judge is the place of last resort, the jury is the place of last resort. If two people who have a dispute can resolve it without getting lawyers, that is terrific; if they get lawyers, and the lawyers then resolve it, that is a little bit better. It is when you go all the way through the court system, it is a tremendous burden on the system, and you are rolling the dice both ways. So it has been outside, it is just that this clickNsettle speeds it up, if we could just make sure that we don't, in any way, you know, neglect someone.

KATSH: We are always going to have physically-based courthouses in the center of town that people can look at, and they can wonder about what is going on inside. We are not going to demolish any court buildings.

However, we are going to have more options, and people get together in cyberspace to do all kinds of things. We have opportunities for them to interact on-line, to collaborate, to talk, to discuss, to negotiate, and hopefully, to reach resolutions. I don't think, so far, anybody has had any problems with enforcement. And there are a variety of reasons for that. In mediation, the parties only are not coerced into agreeing to anything.

VAN SUSTEREN: I will tell you, though, Ethan, I can't tell you how many times that I've gone to mediations and -- or even arbitrations, and won an award in an arbitration, and then had to go to court to sue, to enforce it. So sometimes, adding the arbitration- mediation simply adds another one or two more steps to the process because it -- the people don't always pay when they have awards against them in arbitration.

KATSH: But the nice thing -- in the on-line environment, if the award is money, and the technology is sophisticated, payment can be immediate.

VAN SUSTEREN: Wait a second. I will even fight with you on that one, the idea of settle. I can't tell you how many times I have gone to arbitrations and won awards for my clients, and it's taken months and months before a defendant will finally sit down and write that check.

But we are going to take a break. We will be right back. Up next, the future of civil law. Will the information superhighway really cross the legal bridge to a new 21st century? Stay with us.

(BEGIN Q&A)

Q: Of the 18,622 Internet-related complaints the Federal Trade Commission logged in 1999, how many involved transactions at Internet auction sites?

A: 10.688; More than doubled since 1998.

(END Q&A)

(COMMERCIAL BREAK)

VAN SUSTEREN: Because of time and expense, on-line courtrooms are popping up all over the Internet, claiming to resolve disputes quickly and inexpensively. But can these cyberjudges have an impact on the dockets of real-life courtrooms.

And speaking of that courtrooms in cyberspace, Fred, Courtroom 21, you are you the director; what is it?

LEDERER: We are the world's most technologically advanced trial and appellate courtroom. We use modern technology to accomplish things that are almost unthinkable.

VAN SUSTEREN: Like?

LEDERER: This is simple, we did a demonstration, I must confessed for CBS last fall, remote federal judge from Portland, Oregon presides over a jury trial in Williamsburg, Virginia. Witness appears life-size in a 50-inch plasma screen behind a witness stand from the highest tech state courtroom in the country from Orlando, Florida.

VAN SUSTEREN: So you eliminate travel.

LEDERER: No travel necessary. Additionally, the experimental evidence indicates a remote expert, for instance, is just as credible to the jury as being in the courtroom in person.

VAN SUSTEREN: So, if you do clickNsettle, and you can't reach an agreement, the next place to go, if you want technology to make this go swift as possible, is to go to Courtroom 21, because nobody even has to travel to court.

LEDERER: If we choose to do it that way. But, of course, most of our participants are physically present. Then we use technology, no paper in our courtroom, all evidence is electronic. If your witness can't speak English, we use in our case Language Line, 153 language interpretation, scanning of any piece of evidence, we have a court record that is available on the Internet, audio, video, text and exhibits.

VAN SUSTEREN: OK, here is a problem, let me ask you this. The appellate courts have always been very differential to juries because juries actually see the person, they see the body language. You don't get a lot of body language in the two dimensions of a video screen. What about that? I mean that is an important element to assess credibility is to see the person?

LEDERER: We were talking to two large bodies of appellate judges about that, and other topics this year alone. The type of all- encompassing, multi-media record we make, gives you a real, legal possibility of being able to retry the case. Now, we don't think that's actually going to happen because it would take too long, but it is certainly now possible.

COSSACK: Ethan, is that sound I hear, the hum of the Internet talking about the future of law, and perhaps I'm just a little slow to get onboard, being an old-style lawyer; I mean, is this the future of the law?

KATSH: Well, I think it is as much the future of the law, as much as it is the future of commerce, or the future of education. Increasingly, we find that students come to our university knowing more about technology than the faculty and administrators. Of course it is the future of the law.

You can deliver experts from anywhere. Now, this is what we've got going now is really version one. If you think back to what first word processor you used was like, and what your current word processor was like, we are going to make lot of progress over the next five, 10, 15 years.

VAN SUSTEREN; Fred, if I wanted to find out more about Courtroom 21, I want to be really high-tech, where do I find it on the Internet?

LEDERER: Web page is courtroom21.net.

VAN SUSTEREN: What am I going to find there?

LEDERER: You are going to find a complete list of our technology, a number of the major articles in the area, links to most of the high-tech firms that loan us hardware and software for our experimental use, and a good deal more. And eventually, every legal authority in the world that deals with our particular areas of technology.

COSSACK: Well, that's all the time we have today. Thanks, boss, for giving me our job. I could never go back to practice law. Thanks to our guests and thank you for watching.

VAN SUSTEREN: Join us again next time for another edition of BURDEN OF PROOF. We will see you then.

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