Legal Tech for Consumers: How to Strengthen Out-of-court Settlement
When looking at collective redress, the European Justice Forum (EJF) adopts a holistic approach which covers the entire process from dispute detection across out-of-court dispute resolution up to in-court dispute settlement. The goal is to ensure that the legal environment in Europe protects both consumers and businesses alike, and that those with a legitimate grievance not only have access to, but truly obtain delivery of justice.
Talking about the fundamentals of dispute resolution, the process needs to provide three simple elements: First, advice to people and businesses. Second, a simple, effective and efficient dispute resolution. And finally, in order to resolve the root causes of problems, changes of behaviours, culture, systems and rules are required to cure the system as a whole. For that purpose, the collection of data about problems, their number and quality are of high interest and can trigger preventative or subsequent interventions.
Fundamentals of dispute resolution
Today, there is the advantage that digitalization allows us to strongly support all three elements. In the following we look at each element and compare learnings from good practice in different member states and link this to the European Commission’s approach to provide input for improvements regarding already useful components and initiatives.
- How to identify and access information, advice, support and assistance to help solve problems? (Advice landscape and accessibility)
The consumers need to know that there is one important website to address themselves in case of any dispute. The central point of access at EU level is the platform for Alternative and Online Dispute Resolution. For consumers, this Online-Dispute Resolution Platform even provides a so-called “self-test” allowing access to information where to receive further legal advice or even dispute resolution. Unfortunately, such important information is somehow hidden within complex administrative websites of the EU Commission. An entirely separate website dedicated to “EU Consumer Dispute Resolution Advice” could be much simpler for consumers. A good example on national level is the Federal Belgian Ombuds entity, as a central dispute resolution body, which has one multilingual website guiding to different sectors. In case there is no sector-specific resolution mechanism, there should be the option to bring the case up to a general, residual conciliation body.
- How do we ensure that dispute resolution pathways are simple, effective, cost-efficient and that they deliver justice to people? (Process & techniques)
Consumers would normally need guidance about their rights and their first options to effectively receive redress out-of-court. This is like a general admission process, which also allows triage, e.g. using appropriate criteria for classification of cases. Capturing important data from the consumer remains key: what was the damage, who is liable, what type of compensation is possible? An example from private initiatives would be the UK based platform “Resolver”, where consumers are supported in knowing their rights as well as in how to complain to business first. As a second step there is a link towards the related ombuds entities. Escalation to court is then only advised in case the dispute could not be solved otherwise. By also capturing bank account data of consumers, even small reimbursements can be achieved electronically at nearly no transaction costs.
- How do we identify systemic problems, and address them so as to reduce future risk of recurrence? (Remedies, data, systemic problems, feedback and intervention)
Collecting complaints data may also serve as a “heat map” for the industry. In the UK, the financial ombuds entity is making complaints data related to broader business areas public. By providing also individual and more specific feedback loops to business, problems can be solved early on, even before they aggregate to collective initiatives that turn out to be expensive both to consumers as well as for industry, mainly for the benefit of intermediaries like lawyers or litigation funders. Transparency may also be ensured as a trust building measure for consumers and regulators. Moreover, this allows to establish a learning culture for all parties involved.
Architecture remains key
As we see from this exercise, there are different institutions on both at national or at an EU level which deal with dispute resolution. But the dispute resolution bodies remain highly fragmented. To be effective, there needs to be a stringent architecture and respective links between the national bodies and those working cross-border. Here we still see the need to improve transparency and structure.
There are several dimensions to be considered in the future: Are the national dispute resolution entities consistently interlinked to one platform? Are different channels considered, i.e. are individuals complaining, and how are consumer protection organizations, consumer centres and qualified entities linked with alternative dispute resolution bodies? On the EU level, how is the interface with cross-border platforms like ADR/ODR and CPC-Net and ECC-Net? And how do we achieve a stringent architecture between these EU-wide acting bodies? All this would need to be identified and mapped out, demonstrating clear roles, tasks and links that would allow consumers to move the most effective way top-down or bottom-up.
As we can see, digitalization will play an important role here. Not only by building an interlinked infrastructure, but also by collecting data and feeding the information as alerts to public bodies and business itself. Starting actions in court can always be an escalation path. But by starting out-of-court, important information will already be gathered and more efficient options of resolution would have been tested before-hand. All this will be a valuable basis to achieve faster and more efficient results in court if necessary, by not overburdening resources and leaving consumers’ money on the table for the sole benefit of intermediaries like litigation funders.