John@ v. Jane@

Is the best mediation for online arguments online?
Magazine Contributor
4 min read

This story appears in the April 2002 issue of Entrepreneur. Subscribe »

When a deal made over the Internet goes sour, it may be harder to resolve the problem than when you're dealing with people face to face. Chances are you're dealing with an entity you don't know, most likely located in some far away legal jurisdiction. Commercial law varies some from state to state, and much more from country to country.

If sending an e-mail or making a few phone calls fails to resolve the problem, consider online mediation. Like face-to-face mediation, online mediation puts a neutral third party between you and the other side. In some versions, the mediator communicates by e-mail or in a private chat room with the parties, helping to identify issues and assess options, then relaying settlement offers until the parties come to an agreement. Other versions are tailored for cases involving monetary damage, and use a computer program to decide how much money will settle the claim.

Tough Decision
Simple signin':Think having employees sign arbitration agreements means you'll stay out of court? The U.S. Supreme Court recently ruled that in discrimination cases, the Equal Employment Opportunity Commission may sue for reinstatement and back pay despite a signed arbitration agreement. The decision came after the EEOC sued Waffle House Inc. on behalf of an employee fired after suffering a seizure.

Whether the "neutral" is a human being or a computer program, keeping the dispute out of court saves everyone time, aggravation and money. Doing so online can eliminate the posturing of traditional negotiation, and makes mediation convenient for parties separated by distance or time zones because the two sides don't need to travel or to assess options at the same time.

On the other hand, the rules of online mediation are still evolving, and there are still issues to be resolved. One problem is how to judge whether your mediator is qualified. "This is harder online without face-to-face contact," says Bruce Meyerson, a Phoenix attorney who is chair of an American Bar Association (ABA) task force taking a look at online mediation. Asking around about the mediator's reputation doesn't work as well when you're choosing from a list on a Web site. "The more substantial the dispute, the more you need personal contact," he says.

Then there's the question of confidentiality. What happens to the information that you provide the online mediator? In a major case, certain information can be damaging if the dispute ends up in court. Yet not all states require mediators to keep information confidential. Meyerson notes that his ABA task force and several other groups advocate a Uniform Mediation Act that would provide clarity.

Finally, how do you know the other party will abide by the agreement you work out? Given the different jurisdictions, enforcement could be difficult. Some Web sites allow merchants to apply for a trustmark, a symbol showing they abide by certain standards of conduct. The certifying entity watches to make sure the trust isn't violated. The ABA task force advocates using a uniform version of this trustmark system.

What to do while these issues are being resolved? Be alert when making a deal that commits you to use an alternative dispute resolution process. Get a copy of the procedure, and make sure you agree to it. There's no centralized way to check out the reputation of mediation Web sites, but ask questions if you're not sure.


Following are several online mediation firms:

  • Software that automates the mediation process, with flat fees that increase if things drag on.
  • Likewise automated, with fees scaled to the size of the settlement.
  • Mediates cases from e-commerce and insurance disputes to EEOC issues and family conflict.
  • Exclusively for business-to-business disputes.
  • Mediates disputes over eBay transactions.

Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

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