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Online Settlement Systems Saving Money in Tort Litigation -- but Why?

A recent report shows that claims and settlement costs for personal injury and property damage against New York City are generally on the decline (Brooklyn Eagle, 8/30/07) -- from $529.8 million in FY 2006 to $496.4 million in FY 2005. The full report is available here. What's interesting, however, is  at least one of the reasons for the decline: the city's use of

Cybersettle, an online negotiation program for resolving disputes. Apparently, use of Cybersettle results in lower settlement amounts, in a shorter period of time. From the article:

When the online system was used, the average length of time from the filing of the claim to the settlement was 278 days and the average settlement amount was $11,252. In contrast, the average settlement time for claims that were settled by other means was 1,629 days, and the average settlement amount was $38,809.

The article does not discuss the reason why use of Cybersettle leads to smaller settlements. But the difference between Cybersettle and non-Cybersettle claims is substantial: around $27,000. My own thoughts on the reason for the disparity? Perhaps use of Cybersettle has enabled more claimants to negotiate with the city unrepresented-- and they're willing to settle for less either because they don't realize that they might be entitled to more or because they're willing to accept less where a lawyer doesn't take a cut of the recovery. Or perhaps Cybersettle has lowered the cost of litigation for attorneys, thus allowing them to settle cases for less and still achieve fair compensation for claimants and a reasonable fee. 

I couldn't find any more discussion of this issue around the blogosphere, and yet, I'd think that personal injury lawyers, tort reformers and mediators would all be interested in these statistics. So here's my question for the blogosphere and readers: Why does Cybersettle keep settlement awards down? Submit your comments or links to this blog post below.

Posted by Carolyn Elefant on August 30, 2007 at 05:24 PM | Permalink | Comments (2)


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