Inspired by the utility theory of John Nash, the mathematician whose life was dramatized in the film A Beautiful Mind, Smartsettle ONE is a negotiating tool designed by Ernest Thiessen and his company iCan Systems Inc.
According to iCan chief product development officer Peter Holt, the online system uses a series of algorithms which allow two parties to resolve a single numerical issue such as a financial settlement. The parties involved make offers and counteroffers by moving moveable boxes, or “flags,” along a slider, one of which is seen by the other party and one which is not, a “blind bid” which shows the area of settlement the party is willing to accept but does not want the other side to see. The system then works to reach a settlement that takes into account the range both individuals have set, and once a negotiation is complete the system produces a document that shows the agreement the parties have come to.
“So, the algorithms mean if you are the sort of negotiator trained by Trump where you hang back and think winning is the only thing that matters, then it doesn’t really help you,” he said. “But if both parties know the zone of the agreement, and once you set the range for the negotiation and it’s done by knowledgeable people, then you have already done the first step and they know there’s a zone of agreement they can move towards.”
Graham Ross, U.K.-based lawyer and mediator
Ross said the parties involved in the case had been in the courts for approximately three months and had tried to settle the dispute without success, utilizing both the U.K.’s online civil money claims system and mediation. He said he believes this is the first case settled in the U.K. using this type of mediation tool.
“They actually settled and resolved their dispute within an hour,” he said. “It’s not easy to say definitively that this is the first time this has been done, but I don’t know of any other systems and no one has challenged the statement that this was the first — so I’m very comfortable in the truth of that assertion.”
According to Ross, the computer monitors the bidding processes of both sides and gets a feel for where there may be some mutual ground and it encourages people to move their secret bids.
“If the bids overlap it’s a real win-win, because it means the receiving party gets at least more than they were prepared to accept in the lowest secret bid, and the paying party pays less than he was prepared to pay in the highest secret bid,” he said.
If the bids don’t overlap, Ross said an algorithm comes into play which invites the parties to put in an amount they might be prepared to settle at.
“If the proximity to the bids is sufficiently close then it will announce a settlement again within the gap, rather than the overlap,” he said. “So, this is a situation where the paying party pays a little bit more and the receiving party receives a little bit less.”
And there is an optional final process where three neutral parties enter a figure they feel is a fair settlement, with the system taking the middle figure and working out which of the parties was nearer that and awards a deal between those two figures.
Holt noted iCan has another product, Smartsettle Infinity, which can be used in larger-scale negotiations with multiple parties and issues that go beyond simple financial ones, which has been used by First Nations groups to set salary and performance criteria for staff. He said the Infinity system allows the parties to negotiate all the issues at the same time, putting their preferences in order of importance and then allowing the addition of new issues, which is then used by the system to come up with a final solution.
Ross said one question mediators pose to him is whether systems like Smartsettle are going to run them out of business.
“The answer is no. These systems empower the mediator to be more effective,” he said. “So, there is a huge future, and it works with negotiations of any sort. There’s nothing to be lost by using it — it will either settle or it won’t.”
Holt said Smartsettle ONE is marketed as a “white-label product for mediators.”
“It’s something that has an enormous potential financial implication if you can drive 10, 20 or even 30 per cent of these small claims out of the court system and get to an agreement,” he said. “It can have a number of different flavours, so there’s also a lot of interest in it from the insurance industry because insurance people often boil things down to a single issue, which is money.”
More information about Smartsettle ONE can be found here.