Expert Analysis of Cybersettle

Appeared in CIO Magazine, March 2000 is both a trap for the unwary and a blessing for the informed. It’s a trap because it is, at its core, Cybersettle is a modified auction in which the bidders are trying to divide up a fixed pie. Whatever one side offers, the other takes away, a classic zero sum game. Once in the auction, attorneys representing clients are likely to justify their further participation by staying in the game. After all, it only takes a few more dollars to keep playing rather than miss out on a quick and dirty settlement opportunity.

But Cybersettle is also a blessing because it provides a simple and complete exit strategy for a stream of routine legal disputes, such as traffic accidents, where the amount in controversy is modest and the cost of proceeding to court is prohibitive. While most of these cases get resolved without intervention by a third party, or, in this case, by a microchip, for the cases that fall through the cracks, it serves as an added tool in the claims handler’s toolbox.

This site will primarily serve insurance companies by trying to more efficiently administering volume cookie cutter disputes. Essentially the pioneers at Cybersettle will cash in on the age old marketing strategy of advising the insurers that the transaction costs of keeping a claim’s file open will be reduced if they submit the case to Cybersettle. The ultimate goal, of course, will be a closed file. The challenge: convincing plaintiffs’ attorneys that this service actually serves their clients, the true victims in this game of chance. From an ethical standpoint, the dilemma faced by lawyers is whether their clients are receiving adequate representation from a judicial formula cranked out by a microchip.

Its hard to imagine that a computer program would replace the human element, a key ingredient in any negotiation. Yet, with proper client consent, this program might fill a gap in the marketplace where parties are not very far apart in their negotiations, and both sides are committed to compromise.

Cybersettle’s application to disputes outside the routine disputes encountered by the insurance industry is extremely limited. Generally, attorneys and their clients are not willing to give up the element of control that is found in typical negotiations. Even in cases where the negotiations are at a stalemate, attorneys can always recommend private mediation with a professional neutral third party. That person can, like Cybersettle, serve as a confidential listener — but unlike the online service, a human mediator can also provide valuable verbal feedback.

Will it succeed? I wouldn’t want to invest my retirement account on it, but I still wish I had invented it.

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