Harnessing ODR by Startups and Commercial Enterprises

As many of the discerning readers of the SCC Blog may be aware, your columnist is a big believer and evangelist of Online Dispute Resolution (‘ODR’).

Check this out here for a brief on what ODR is and where it is currently at.

ODR represents a singular opportunity to reimagine dispute resolution at scale for consumers, citizenry, enterprises and ecosystems.

Rather than making individuals or organisations go to a designated location i.e. the courtroom (itself inaccessible at times due to distances, costs and time), ODR is accessible anywhere (and at times, anytime) that the individual desires. Cost and time savings accrue to both the sets of disputing parties when the medium is online: be it voice, video, chat, document (or combination of all of them) as the medium. ODR serves to level the field for the disputing parties.

ODR institutions build and operate the platform which connect the disputing parties and the neutral/s, and provide the online medium required for dispute resolution. Due safeguards for managing conflicts, ensuring confidentiality and data privacy, onboarding neutrals as well as assistance to those unfamiliar with the platform are some of the roles played by ODR institutions.

Harnessing neutrals – arbitrators, mediators or conciliators – brings independent, experienced individuals committed to furthering the rule of law, and helping resolve disputes amicably (mediation or conciliation) or decisively (arbitration) all in a short span of time.

Automated dispute resolution takes this one step further: where the dispute revolves around information, data or records, the system searches the records, assesses the claim or grievance against the same, and provides the verdict. It is at once free of bias, is objective and provides an auditable trail for the verdict it renders.

In this paper, your columnist will articulate the use cases for ODR by startups and commercial enterprises.


Why does an entrepreneur or an established enterprise need to harness ODR?


Almost every economic activity brings together two or more parties who undertake a transaction or a series of transactions with one another.

For a vast majority, the transactions are concluded smoothly and without a hitch. In a way, this is also the biggest hurdle or mental block for startups or established enterprises to embrace a well-designed dispute resolution mechanism.

 

To them, to design something which addresses a very small set of transactions or parties is regarded as unnecessary or wasteful. However, such exceptions can contribute disproportionately to the costs, time and bandwidth that is spent dealing with the exceptions.

Furthermore, disgruntled consumers may:

  • refrain from engaging in further transactions (an opportunity cost);
  • engage in badmouthing the enterprise or the counterparties that adversely impacts the reputation of the enterprise; or
  • file complaints or claims with the regulatory authorities, or law enforcement agencies or in the courts.

 

So if one has to think for the long haul – cost, time and bandwidth being saved, retention of consumers (probably acquired after a huge cost and/or effort), maintain goodwill and good repute in the market (important for attracting and acquiring future potential customers), and to avoid situations compelling interventions by authorities, agencies or courts would be the biggest reasons to embrace ODR.

 


Harnessing ODR for almost everything: Nothing too small – Nothing too large


You have embraced the entrepreneurial journey and established a startup.

Among the first few things you would probably do is: find the right set of individuals who will join your startup. They might be few in number, but as the startup scales and goes through various rounds of funding or growth or both, their numbers will rise. Whether they be co-founders or employees or such other designation that is conferred, anticipating situations of conflict, differences or disputes is something you should consider. By incorporating the dispute resolution process (of the ODR variety) in the employment letter, employment agreement or founders agreement, you will be able to ensure that there are amicable, confidential, closed-door resolution of issues, conflicts, differences and disputes which arise.

As again, maybe none ever arises, and you make the list of best workplaces and best employers – congratulations and well done. Keep in mind that embedding the ODR clause did not hinder nor detract that.

While Covid-19 may have encouraged work from home, if you have an office in a space that is taken on lease or leave and licence, ensuring any differences or disputes with the landlord are resolved satisfactorily to both of you is something ODR can do.

You have now moved from ideation to MVP – minimum viable product, and started the client acquisition process. You have chosen the direct model – perhaps it is a mobile app or on the website that your potential clients, customers or consumers experience the product. They want to sign up and avail of the product or service.

If what is promised by you is exactly what is understood by the consumer, and the product or service does what it has been said and understood, you are home free and have succeeded. Congratulations and keep at it.

Pause to consider the alternatives. What if what you promised:

  • Is miscommunicated or misunderstood (amounts to misselling).
  • Is well communicated and well understood, but the product or service does not perform in the manner it was communicated and understood (becomes product or service deficiency or defect).

You get the picture.

Any of these will lead to conflict, disputes and differences. How you propose to deal with these situations is important for the reasons already outlined above: of time, cost and bandwidth savings, of customer retention, of keeping goodwill and good repute and of avoiding intervention by authorities, agencies or courts. That it should be ODR would be clear by now.

Moving forward: you have added distribution heft for customer acquisition. These distributors are well-regarded establishments and have well-trained, experienced staff. Once you have explained the product or service construct, they become your startup’s representatives to potential clients, customers or consumers. They will communicate what you promise such that it is exactly what is understood by the consumer, and the product or service does what it has been said and understood. You are home free and have succeeded once more. Congratulations.

Pause to consider the alternatives.

Could the distributor or its staff foul up the communication to potential consumers? Could the consumers have misunderstood what has been shared with them? Could the commission you pay the distributor be incentivising making a sale at any cost? Could the distributor despite commitments to you be deploying inexperienced, poorly trained staff, and/or be departing from well-thought-out sales practices?

How do you deal with such distributors? Can you just disassociate and pick up the pieces? Can you instead hold them accountable and help you fix the mess they may have created? As again, ODR can come to aid and help enforce the commitments you were given or being compensated for lack of adherence to them.

Then again: perhaps your startup is the vendor or supplier to an established enterprise. If you are an MSME, and end up facing delay in payment (life-threatening to your startup), ODR being harnessed can help in providing swift, timely and enforceable outcomes.

In every direction that you had consider: vendors and suppliers, or other intermediaries (warehouses or wholesalers), service providers or partner organisations, if you can have conflicts, differences or disputes, then choosing ODR will make sense again and again and again.

As far as established enterprises go, it is much the same. However, admittedly they come with their own baggage.

You can almost hear them say: this is the way we have always done things around here. Why fix something which is not broken? We would be upsetting the apple cart of how we deal with these things today? It really baked into our pricing and costing and it does not matter.

What may not be said out loud: we are at the receiving end of many grievances and disputes – this will make it far easier for the consumer to hold us accountable.

The fact is that it does matter. Those having the grievance start to treat it as a grudge. The as-yet unaffected consumers start to become anxious and require constant reassurances. The social media powered word of mouth makes potential customers and consumers apprehensive of availing of the product or service. The stakeholders become far more watchful of what you do and do not, and swoop in when the situation is precarious.

In the meantime, your competitor is already embarked on the journey or is seriously considering doing so. Guess what the marketplace will think of its embracing ODR and your lack of embracing ODR.

Across all areas and across the lifecycle

ODR is capable of being embraced across all the areas that a commercial enterprise has, does or needs, and across all of the lifecycle of the enterprise, be it a startup or an established enterprise. More and more enterprises and ecosystems are embracing ODR.

Choose wisely and choose immediately. Embrace the emerging dispute resolution solutions and systems, and the future.

ODR also represents a greenfield opportunity for law students and lawyers among others to consider pursuing as a career. In fact with the right training and skills being imparted, almost anyone can consider becoming a neutral – helping resolve conflicts and disputes and bridging the differences.

 


Group General Counsel at ICICI Bank. Views are personal. His Linkedin profile can be accessed HERE

This column is inspired a brief status of ODR  outlined, Here.

 

Here are further reading materials for those interested:

  • See HERE
  • The ODR Handbook HERE
  • Example of an ecosystem/digital platform harnessing ODR HERE

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