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One of the leading providers of online dispute resolution services (ODR) today is Smartsettle, based in Vancouver, Canada. We caught up with founder Ernie Thiessen and asked him a few questions about Smartsettle, ODR, and the Future of Justice.
How did Smartsettle come into being and how has it evolved compared to your original expectations?
Smartsettle’s roots are in my experience as a water resources engineer while doing volunteer work for Mennonite Central Committee in Nepal. I was involved in a very interesting rural development project in which there was a serious degree of controversy about how to distribute irrigation benefits to the landless. It was conflict resolution the hard way. I had no idea at the time that my major advisor, Professor Pete Loucks at Cornell University, would later challenge me to bridge the gap between engineers and decision makers. Out of that challenge came my PhD dissertation in 1993. Professor Loucks tells me today that I am unique among his hundreds of students; the only one who didn’t just put that book on the shelf and take a paying job.
I ended up independently solving the same problem that Nobel Laureate John Nash addressed 40 years earlier. The solution was an algorithm for uncovering and fairly distributing hidden value. This algorithm, called “Maximize the Minimum Gain,”,is now at the core of Smartsettle Infinity and works like a charm. What we figured out later was another piece of the puzzle called “Visual Blind Bidding,”,which solves the prerequisite equity problem. It was several years until this process was fully integrated into the system and it was only recently that we decided to build a simple edition called Smartsettle One that highlights Visual Blind Bidding.
Smartsettle is the product of much creative thinking along the way. Much of the credit goes to a few brilliant people who worked alongside me. A mature Internet and other advanced communications technologies have complemented the evolution of Smartsettle in ways that nobody could have predicted.
How does Smartsettle’s evolution compare with the ODR field in general?
With the exception of a few of my academic friends, most ODR practitioners have attempted to craft ODR solutions that mimic traditional face-to-face conflict resolution methods. Not having had the benefit (or distraction) of traditional conflict resolution training, I came at the problem from a totally different angle. As a result, Smartsettle’s evolution has been from the top down, thinking about how to solve the most difficult problem first and simplifying for less complicated problems later.
How does Smartsettle differ from other ODR providers?
Smartsettle has the most comprehensive offering among ODR providers, practical for the very simplest problems as well as being uniquely capable of using sophisticated mathematical algorithms to produce fair and efficient negotiated outcomes for any number of opposing decision makers with unlimited quantitative and /or qualitative issues.
Has Smartsettle worked with or assisted government agencies? How might it in the future?
I have participated in promoting and presenting at UN sponsored forums on Online Dispute Resolution since their inception in 2002. Last year, Smartsettle was featured at a UNESCO course on international water conflict management. Closer to home, we have been courting the BC Government for a number of years while they have been watching Smartsettle develop. One place where we expect to begin with Smartsettle One is in the Small Claims court, or perhaps just at the door. What they are asking for is a product that will “catch them on the way in.”
Smartsettle Infinity is now ready for the most complex problems on the planet and I think these are going to involve water issues. Professor Loucks, as an advisor to the World Bank, has recommended that Smartsettle be used in Africa to help all the countries in the Nile Basin Initiative resolve water quantity and quality challenges in order to agree on how they are going to share the Nile river water.
Looking into your crystal ball, what is your view of The Future of Justice?
Our vision is ”conflict resolution in a more peaceful, collaborative and intelligent way throughout the world.” In pursing this vision, we have come up with an online negotiation system to produce decisions that are even better than fair. This is The Future of Justice, and it is imminent.
To learn more about Smartsettle, or to try Smartsettle One and Infinity for yourself, visit Smartsettle.com.
Jeff Aresty | July 11, 2011
The American Bar Association has, for years, had an eLawyering Task Force, which promotes the use of innovative tools and technology for lawyers to use. Whether the tools are used to promote better business models for lawyers, or, are used, to promote access to justice for citizens everywhere – sometimes comes up as a talking point. It does both.
My note below is a reply to a long thread whose last entry before mine was by Indiana lawyer Priscilla Peigen. My recommendation is for the American Bar Association, through its eLawyering Task Force, to step up and define Best Practices in the field of innovative uses of technology.
Here is Priscilla’s post -
Hello All,
The real issue we are debating is how to create a business model which will support us and our families in a lifestyle we desire and have earned, balanced against the public’s perception of overpriced legal services, and a straw man argument about access. It is this baseline, and its distortion, which has given rise to the conflict between Legal Zoom, lawyers, and the roles of each. A honest resolution cannot be attained without addressing all of the factors which affect lawyer fees.
First, the old 1919 model of practicing law doesn’t work, if it ever did. It is antiquated and based upon economic conditions, taxation policies, and work place regulations, which serve to devastate a reasonable profit making margin in solo to small firms (if not all firms).
- (I venture to guess that most solo/small firms are somewhere between 33% to 40% profit on their hourly billing rates, which is NOT evidence of a greedy profession). Do the math yourselves, then control for region living expenses, type of practice, and notoriety of the lawyer.
- Mathematically, (and generally) it looks like this – Assume $200 per hour, and a 33% profit margin for that solo, which equals $66 per hour net. We all know that most lawyers are not cranking out 40 billable hours per week. IF a lawyer is 90% efficient, each week of a 52 week year, then he’s netting 36 billable hours a week, @ $66 per hr, which is $2376 per week, multiplied by 52 weeks a year, which comes to $123,552.00. [Before uncle sam's and the state's cuts, et cetera].
- Now, we know four things. One, most lawyers are not working 52 weeks per year. Two, most lawyers (if not all) are not experiencing consistent client billables giving rise to the above number range. Three, regions, types of practice and notoriety will skew results. Four, superstar lawyers will also skew the results.
We have (and had) people creating economic policy many of whom have too little or no experience running a successful small business. The laws they make certainly affect the cost of doing business for us and by extension, our rates charged to the public because we have to charge more to pay others more, period.
Second, we have sat by and allowed ourselves to be demonized and our good works trivialized in the public’s eyes. This has given rise to the unfounded and horrible prejudice that lawyers are a dishonest, and greedy bunch -earning too much, unjustifiably…hence..both a class warfare and the access problem. This inaccurate perception by the public, is fueled by self-serving politicians and companies alike, all to the detriment of lawyers as a whole, and while giving rise to companies like Legal Zoom to step-in and fulfill this “perceived” need.
- Today, in this country, we pay anywhere from $32 to $64 per gallon for starbucks coffee. We pay $200 for a rubber ball at Disney. (I can cite numerous examples, just like this one – but you get the idea).
Third, because we’re told that we are a “profession” and not a business, many of us are improperly trained for the work we are setting out to do. Lawyers as a group, do not enter the profession knowing how to run a real business, which is the source of much of this problem. They don’t know how to market themselves properly, how to set and manage client expectations (not the other way around, as Marc referenced in his closing statement), and they are not free enough to set different fee policies without fear of state bar associations engaging in Monday morning quarter-backing of their decisions, and stripping them of fees.
Marc, Your focus here is incorrect because its skirting around the issue. You cannot characterize the discussion this way, and this is why.
On one hand, you are asking, what can lawyers do?
Well, the answer is simple. Market properly, manage client expectations properly, automate tasks (which Direct Law already does by the way), get rid of staff, and outsource. And, the profession can abolish state lines and multiple bar exams, and give everyone the right to practice throughout the country.
Next, you ask, What can we learn about consumer expectations and market opportunities from the success of companies like Legal Zoom?
Well, consumer expectations are always directly influenced by the market opportunities available, which in turn are directly influenced by what the servicers within that market can do. In this case, what a lawyer can do, competing directly with what a “non lawyer” company like Legal Zoom can do.
How so?
Well, its because the non-lawyer company is competing in our area, which is giving rise to consumer expectations about the value of legal service, and thus, the money one can charge in exchange for that service. If they weren’t, we wouldn’t be discussing this at all because consumers would not consider them a legitimate source for legal products, above the quality of the same form they could buy in a Staples, for example.
Legal Zoom says its not competing with lawyers.
Well, look up the definition of self-help. Any other person involved, violates the concept of “self”. Okay, how about another one? Watch one of their Robert Schapiro commercials. What does he say? We “prepare”, and “We put the law on your side.” How can that statement be true, if Legal Zoom is just a forms company? Moreover, why do they have a nationally recognized LAWYER making the statement?
Or, how about their websites direct comparison of its own services to saving money from high lawyer fees? Come on, you can’t compare apples to oranges. And Legal Zoom is calling itself an orange, while acting and presenting itself as another apple…a better, and cheaper apple. Why doesn’t Legal Zooms commercials say, hey, we’re better than the forms you can buy off the shelf…pay us triple for it cause we’re online?
Or, how about the addition of “secretaries and spell check” that was talked about earlier? Again, if its self-help, then the buyer can and should be able to do their own spell checking, formatting, and error checking. The public does it when they represent themselves pro se anyway.
How about the “access” argument? Do any of Legal Zooms publicized customers look “poor” to you? In need of cheap, legal services? How about the “access” for the rest of the public? Well, the public can get free forms and instructions directly from the governmental entities themselves, or state legal aid clinics, or law school pro bono clinics, or public libraries without Legal Zoom at all.
I could go on, all day long. But, alas, I’m not getting paid and pretty arguments are for paying clients. I’m off to bed.
Priscilla B. Pelgen
The Law Office Of Priscilla Pelgen
AND MY REPLY
I appreciate Priscilla’s passion – and I also earnestly believe that lawyers must come to grips with the desire of the marketplace to make legal information available for little or no cost. This will directly impact all legal services in the future. How the legal profession defines its value added is critical to the future success of lawyers. We can’t stop the growing trend of making all information available for little or no cost, but instead we need to find ways to embrace it, and take steps to showcase our efforts to the public: at the same time, we need to explain why legal training and experience is a value add worth paying for. Indeed, the legal profession should be seen as enablers of consumer access to government and other non-lawyer intermediaries provision of legal information simultaneously with selling our services.
Priscilla is right to point out that managing client expectations is critical to a lawyer’s success, but today that management responsibility will vary jurisdiction by jurisdiction becauses what is the definition of legal practice, which will a main driver of the management responsibility, remains undefined. This is a problem that, as has been noted earlier in this thread, has been around for at least 10 years, and probably, much longer than that. I remember asking, as a new lawyer working in the tax department of a large national accounting firm in 1977, why giving tax advice to corporations, wasn’t the unauthorized practice of law. After all, we were interpreting statutes and cases. I was told that lawyers usually don’t practice tax law and lawyers leave that work to accountants. To this day I don’t see the legal profession aiming at accounting firms and charging them with UPL violations. It makes no sense that UPL applies for example, to real estate law, but not to tax law. UPL will come under further pressure as alternative business structures begin to permit the public financing of law firms in the UK; as investors look for an ROI, more or more pressure will come down on the legal profession’s regulators to do away with UPL all together. Lawyers are indeed at a defining moment for our profession.
Early on in the life of the elawyering Task Force, when Bill Paul was ABA president, there was a movement to push malpractice insurers into the forefront of this debate. It was thought that if the legal profession could work with the malpractice insurers to help develop a set of ‘best practices’ with respect to defining the practice of law, and, with respect to the use of technology – especially as it related to unbundling legal services – and finally, with respect to UPL issues for law firm websites, that bar counsel would pay heed to this movement. A Best Practices movement would further both legal innovation and access to justice. The effort was still – born. I believe it’s time has come again. The elawyering Task Force of ABA LPM certainly has the knowledge and power to drive this forward.
The parent organization of eLawyering, the ABA LPM section, has, for years, published books on unbundling legal services, cloud computing, use of technology; its signature ABA Techshow runs programs on these same topics. But the regulators of lawyers continue to warn lawyers who would embrace these practices that they may face sanctions if they don’t use technology properly. Instead of promoting innovation, the legal profession’s regulators ‘chill’ it. Clear guidance is in short supply. That’s where ABA LPM and the eLawyering Task Force can step in.
The Task Force has great representatives from industry, academia, law and others to support a Best Practices movement. In the end, this is all about why we are a profession – to support access to justice. This is why the innovators join with the Task Force: Companies like DirectLaw and LegalZoom. Innovators like them support access to justice, whether by enabling lawyers with innovative tools or by enabling self-help. These are trends the legal profession needs to support AND be seen as leading. This is not just a national issue, indeed it is an international one. To me, access to justice at an international level is important to all, as it supports economic development everywhere, which will create markets where lawyers can work.
The organization I co-founded in 2005, Internet Bar Organization, was founded on the mission of using technology and law to promote human rights and alleviate poverty. Economic development programs (which, of course, create future clients for lawyers) are at the core of our work. We are running a program on the Future of Justice, which focuses on the impact of Online Dispute Resolution technology on law and justice.
I think that members of the elawyering group will learn a great deal about where their business market opportunities will develop in the near term as well as promote access to justice. Please consider signing up for our program. http://internetbar.org/future-of-justice-program/future-of-justice-agenda/ You can join our effort to build a global community to use technology and the rule of law as we define the 21st century legal profession.
Jeff Aresty, President
Internet Bar Organization
By Jeffrey Aresty I have a hard time putting in words what I witnessed at SOB’s on Saturday night. Arriving with my cousin Eleana, the perfect person for me to be with on this night, I walked into a venue at 10pm with at least 100 couples grooving away on the dance floor. The Brazilian [...]
Continue Reading →By Jeffrey Aresty The way we make the rules that govern us haven’t kept pace with the way society is using technology to make a narrative which will define it’s time here on earth. This society is global, and is interacting through digital exchanges of information. In WIRED, author James Gleick says that the basis [...]
Continue Reading →By Jeffrey Aresty In THE BIG SWITCH, Nicholas Carr begins with the story of how electric power changed the way in which America worked. From water power to electric power, in a matter of years, industries changed, and the workplace along with it. The point of his story was to inform his readers that a [...]
Continue Reading →By Jeffrey Aresty I just returned from a week in Chennai, India where I attended and spoke at the 10th annual meeting of the Working Group on Online Dispute Resolution (www.odr2011.org); the most exciting part of the conference for me was when I showed the Haiti Sings video which showcased the work that the IBO [...]
Continue Reading →The World Justice Project, which provided IBO with seed funding for our very first PeaceTones projects, highlighted our work in Haiti in their newsletter this quarter. You can view the WJP’s newsletter here. The WJP’s mission is to lead a global, multidisciplinary effort to strengthen the rule of law for the development of communities of [...]
Continue Reading →On the front page of Monday’s NY Times (here) there is an article about how the US Patent and Trademark Office (PTO) is failing to keep pace as the number of patent filings increases. The article also attributs PTO’s backlog and inefficiency to antiquated computer and review systems. Oh, the irony. In reading, I couldn’t [...]
Continue Reading →Take Part in Safer Internet Day Article Credit: Yahoo Safety Tips tags: cyberbullying, digital footprint, digital reputation, education, privacy, report abuse, texting This February, parents, teachers and children in more than 60 countries around the world will gather online and in the real world to celebrate Safer Internet Day to raise awareness about safety online. [...]
Continue Reading →The poster below was circulated by the Center for Policy Alternatives, a Sri Lankan political think-tank working tirelessly to promote good governance, democracy and conflict-resolution in Sri Lanka, a country crippled by twenty five years of war. Activists, journalists, researchers and policy-makers working in the fields of human rights and humanitarian work have, over the [...]
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