By Susan McRae
Daily Journal Staff Writer

      For years, Charles Brofman, an insurance defense lawyer in New York, was becoming increasingly frustrated with the time he wasted trying to reach claims adjusters and opposing lawyers to work out deals.
      The turning point came one day in 1995. He and plaintiffs' attorney James Burchetta were trying to settle an insurance claim. Burchetta's client was demanding thousands of dollars more than Brofman's client was willing to offer.
      Both lawyers knew the amount it would take to settle the case, but neither was willing to compromise his bargaining position. So they went to court.
      In the courtroom, both lawyers agreed to secretly write down their bottom-line numbers and give them to the clerk with instructions to signal a thumbs-up if they were within a few thousand dollars of each other. If not, they told the clerk to destroy the papers and never reveal the figures.
      The clerk flashed a thumbs-up. The amounts were within $1,000. They split the difference and settled the case within minutes.
      The experience got the lawyers thinking. What if they could create a software program that would allow them to duplicate the idea on a much larger scale?
      The following year, they founded Cybersettle Inc. and a year later took their invention online. Called Computerized Dispute Resolution System and Method, the automated, double-blind system offers a way to settle disputes instantly, anytime, anywhere.
      "Like anything else, when you bring in technology and it is user friendly, like ours, it significantly enhances your productivity," Brofman, the company's president and chief executive officer, said.
      "Today, who uses books to research, with sites like Lexis-Nexis?" he said. "Lawyers come home at night, have dinner, go online and do research."
      The pair obtained a U.S. patent for the software in 2001 and assigned licensing rights to Cybersettle Inc. and DebtResolve Inc., an Internet-based bidding system that allows debtors and creditors to agree on acceptable repayment terms. Burchetta is co-chairman and chief executive officer of DebtResolve.
      For those who can't wait for their money, the lawyers also have launched RapidFunds.com, an online service that provides near immediate receipt of settlement funds to claimants and their attorneys.
      To date, Cybersettle is the only company to offer online mediation services using this method.
      An attempt by Minnesota-based National Arbitration Forum to use a similar process to administer New Jersey's no-fault auto insurance and personal injury protection was found by a New Jersey federal court to violate Cybersettle's patent.
      Cybersettle has signed a partnership agreement with the American Arbitration Association, which has been beefing up its own online settlement options. The pact allows the companies to refer their clients to each other's services.
      Cybersettle might not work for all situations, such as complex cases demanding large settlements and other conditions. But, Brofman said, it is particularly useful for insurance companies and certain employers, which deal in high-volume claims.
      Bill Sayed, a Southern California personal injury lawyer based in Tarzana, said he finds the method works best with simple, straightforward claims involving strictly monetary settlements, such as from whiplash injuries.
      "From my experience, it's been all positive," said Sayed, who uses Cybersettle when dealing with insurance adjusters in auto liability claims.
      Plaintiffs' lawyers pay for the service only if the claim settles, either online or through a telephone follow-up. The fee ranges from $100 to $700, depending on the settlement amount.
      Claims organizations pay $150 per submission, with a price break for multiple submissions, which typically are in the thousands.
      Users register on Cybersettle's Web site and receive a personal identification number.
      Plaintiffs' lawyers are allowed three bids, and respondents have four chances to counter. If the parties are within a certain amount, the software will split the difference and settle the case.
      If the parties don't settle but the figures are close to the cut-off point, the software will send out a signal. A monitor will ask the parties if they would like to continue the process with one of Cybersettle's in-house telephone facilitators free of charge.
      Until a settlement is achieved, the offers are not revealed to the parties.
      "Because both sides understand they get three opportunities, I believe the carrier is putting real numbers in," Sayed said. "Depending on the dialogue, I will work my way up.
      "We both come in with realistic figures of what the case is worth. It just puts us all on a realistic playing field. If the carrier doesn't accept it, nothing is lost."
      Moreover, Sayed added, he is not particularly computer savvy, and Cybersettle makes the process painless by walking him though it.
      "It's very simple," he said. "Click here, click there, and there's an 800-number if you run into problems."
      Cybersettle software can handle 25 percent more volume than traditional face-to-face negotiations, Brofman said, by not having to wait around in court or for return phone calls. And, he noted, time is money to lawyers.
      "An insurance company can submit an offer at 2 p.m. in California, and it could settle by 8 p.m. in New York," he said. "You can settle cases on weekends or national holidays."
      In the past seven years, Brofman said, the company has settled 175,000 claims worth $1.25 billion.
      "Some insurers submit claims to Cybersettle, in which the plaintiffs already have asked the American Arbitration Association to mediate their case," noted Cybersettle Vice Chairman Robert Schmidt. However, the clients agreed to try Cybersettle first, and in some cases, it settles, he said.
      If not, Schmidt said, the case is turned over to the American Arbitration Association per the parties' previous fee agreement.
      "Cybersettle adds to what we do because, when parties are too far apart, it provides an off-ramp to our process," American Arbitration Association Senior Vice President India Johnson said.
      "We have warm, fuzzy people stuff," Johnson said. "But you can't just use our services anytime. There are time constraints.
      "Cybersettle nailed the patent with its nifty settlement tool," she said. "An adjuster can plug information in on a Sunday night, and it can be answered by the opposition the following evening."
      Johnson, who with Brofman has been giving presentations around the country and abroad, said the process has drawn particular interest from parties with claims in different states or countries.
      "What alternate dispute resolution people are interested in is the global application," Johnson said. "It's hard to get people in one country to be accountable to someone in another, even with minor items sold on e-Bay.
      "It's really an exciting area where you can actually take an investment made on the Internet and bring it down to settle a $500 dispute that people are angry about because they think they have no recourse."
      While Cybersettle appears to have cornered the domestic market on online mediation, an Atlanta company is exploring arbitration by e-mail. Called net-ARB, the company was started last year by Marty Lavine, a lawyer and former engineer.
      He said he uses eight arbitrators from around the country, who are assigned to cases randomly. The cases represent a cross-section of what normally is seen in civil court, he said, including construct defect disputes, real estate transactions, intellectual property and torts.
      Lavine would not say how many cases he's arbitrated so far. But he said he hopes to gain more consumer recognition, particularly Internet users, who deal in products from different states and countries.
      Lavine said he has done a lot of mediations over the years and saw a gaping hole in getting things resolved.
      "Folks are looking for resolution and not talking about it forever in mediation," he said.
      Like Cybersettle, Lavine said he makes a profit by dealing in high volume and low cost - $95 for a single arbitrator, $150 for a three-member panel. He also offers clients the convenience of working from home on their own time.
      "People appreciate doing the same thing they have to do in court or a lawyer's office, but without getting dressed up and going downtown," he said. "They can do it sitting at home in front of a computer."