By
Radical Social Entrepreneurs
Tuesday,
 |
| Peter-Jan Celis |
All around the world, people struggle with expensive legal fees and backlogged courts.
Judges are sometimes biased or corrupt. Political agendas tilt the
scales of justice. In many places in the developing world, courts are
used almost exclusively by elites.
But if 26-year old Peter-Jan Celis has his way, this is all bound to change. Celis founded Judge.me – a private, online small claims court based in Santiago as part of Start-up Chile.
While building Judge.me, he has come to see a paradigm shift in law
and legal services as the only realistic way to fix the problems of
today’s legal systems. Taking arbitration online and making it cheap and
user-friendly is the first step towards a much deeper vision.
Celis is an outspoken advocate of polycentric law,
a clunky phrase for a network of parallel legal systems, where
jurisdictions and legal firms compete with each other to ensure
high-quality and low price.
At its debut, Judge.me lay dormant for months. But recently, Celis
suddenly found himself trending on sites like HackerNews and Reddit, and
his website has roared to life.
Radical Social Entrepreneurs chatted with Celis about Judge.me, and his bold vision for the future of legal systems.
RSE: So, what’s judge.me?
Celis: Judge.me is a small claims court for the
internet. We offer fast and convenient online arbitration that is
legally binding in 146 countries at just $299 total fixed price ($149.50
per party).
RSE: That’s surprisingly cheap. Some courts can charge that much just in paperwork fees. At RSE,
we’re always interested to hear people’s stories and how they arrived
upon their radical social entrepreneurship project. What’s yours? How
does a twenty-something end up in ‘start-up law’?
Celis: The divorce of my parents has been going on
for 7 years and still running. It became very obvious to me the court
system was failing around the same time I got interested in private law
as a “last frontier” for innovation.
In essence, any legal system is an attempt to manage negative
externalities, although incentives in centralized legal systems
unfortunately also go beyond that.
[Negative externalities are effects of private activity which spill over onto others. For instance, pollution or loud noise. –Ed.]
Imagining how private law might work as an alternative to today’s
monopoly legal systems was the last “hard nut to crack” for me. Trying
to find a pragmatic way in the current legal system was an even harder
exercise, but after studying arbitration at a CIArb course (Chartered
Institute of Arbitrators) I came up with the Judge.me system.
What I am most proud of is that I found a way to offer immediate
enforcement value to my customers leveraging current international
arbitration laws while hoping to build a more reputation based
enforcement mechanism as soon as possible. (Read: user profiles.)
RSE: Judge.me seems to have two main components. The
first is the arbitration service, which is why people pay you. The
second is your contract clause. With one click, people can literally
copy and paste a clause from your website into their contracts — making
any disputes that arise Judge.me cases. This could be used by all sorts
of people. How have both components been received? What’s the caseload
like? What does the market look like?
Celis: The service has been very well received.
There is, however, a lag between clause usage and dispute filing. As a
result, the number of disputes arbitrated can still be counted on one
hand. Also, I can’t track how many contracts use my clause yet.
When I launched my service on January 17th, I started with
business-to-consumer marketing, assuming case load would take off
organically. However, looking at my stats now, I see maybe 1 case filing
per 500 unique visitors and most of those don’t even end up in
arbitration hearings because either the filing is fake or the responder
refuses to agree to arbitration.
Post-dispute agreement on arbitration is indeed very unlikely as
often one of the parties knows they are likely to lose. Hence it is
really important for me to push my customers to add my arbitration
clause to all their contracts pre-dispute.
So looking at where I am now, I received a lot of media attention,
good and increasing traffic and great applications from arbitrators,
rails developers, and business developers. The only thing lagging is a
steady case load, which is why I decided to start focusing on
business-to-business partnerships with market places and escrow
companies.
If they send the disputes between their users to me for arbitration,
it lowers their support costs and users can settle in a low cost and
binding way.
I am not giving up on targeting consumers though. The great response I
get when I talk openly about the vision for Judge.me has convinced me I
should take a page from the 37Signals handbook and out-educate any
existing arbitration provider.
RSE: So how can other startups or individuals use your service?
Celis: Judge.me can be used for any type of
commercial and private dispute. Disputes that are not arbitrable include
crimes and all issues involving identity. To give you an idea, the
disputes that have been settled using Judge.me arbitration so far
included the parents of a quickly divorced couple disputing who has to
pay what share of the wedding, a freelance management consultant and his
client disputing project delivery and payment, and a dispute between a
student and a private tutor.
So in practice, I advise everybody to put the Judge.me arbitration
clause in all their contracts, to avoid costly and time consuming court
litigation. Businesses are well advised to put the clause in their terms
and conditions.
If anyone reading this interview runs or works for a market place or
escrow service, I’d like him or her to contact support on my website so
we can talk about a partnership.
RSE: Great. Let’s get back to your bigger vision.
How scalable are the services Judge.me provides? Having affordable
arbitration in the developing world, where so many people face such
terrible courts, would be a major achievement for humanity. But does
Judge.me rely so heavily on the effectiveness of state-provided courts
that it’s constrained to the developed world? If I live in a country
with ineffective courts, how binding is the judgment?
Celis: In its current version Judge.me indeed relies
on the existing framework for international arbitration and as a result
on the local courts for enforcement. Please note, however, that even
when doing business with less reputable jurisdictions, it is the
location of assets of the other party that matters for enforcement. In
other words, even if you do business with someone from the Central
African Republic you can always go after his assets in other countries
if possible.
Overall though, I agree that Judge.me will only be able to
revolutionize the rule of law in corrupt developing countries if a) we
are able to provide arbitration cheaper than $299 – e.g. evolve to 2% of
claim value if the depth of our arbitrator market increases – and b)
Judge.me becomes so well known as a brand that the reputation on your
future Judge.me/yourname profile becomes so important that being called
out if you don’t pay up is enough for people to comply.
RSE: We keep calling Judge.me a start-up. Are you in the ‘market for law‘?
What do you say to someone who says that law is necessarily the duty of
nation-states and their sub-units? Centralized provision of law seems
to work decently – though certainly not perfectly – in some places, and
extremely poorly in others, such as in the developing world. What are
the virtues of your ‘start up law’, polycentric approach?
Celis: I do consider Judge.me to be in the market
for law. Currently we are simply a service that applies equity
principles/contract law, but the next step is building a market place of
arbitrators with reputations and case law history. Eventually I want to
allow 3rd party providers to plug-in to my system as well, so Judge.me
becomes the platform for polycentric law.
As far as those who doubt, I’d rather just create the future and
people will use it if it benefits them. If you surveyed people 20 years
ago whether some TV broadcasting time should be randomly distributed to
everybody who wanted it, people would most likely have demanded special
checks to make sure criminals or those with extreme views could not
participate.
Today there is YouTube and everybody thinks it is the most common-sense thing in the world that everybody can upload a video.
Polycentric law, if universally adopted, would eliminate all the incentive problems in politics that public choice theory describes so well. Being principled as a politician would pay off.
Last but not least until we get to this polycentric ideal, having a
few extra private alternatives to government courts can only benefit
consumers.
RSE: Wow. So what is the future of law given
changing technology and start-ups like Judge.me? Are we ever going to be
able to challenge monopolies in the market for law?
Celis: The monopoly on law is basically a claim by
the government that they are best at managing negative externalities and
as a result, the reputation of individuals in the legal system. As
reputation becomes more important on the internet, and more advanced
dispute resolution systems arise to track reputation online, this claim
will become increasingly unsustainable.
In the future, I see law and as a result politics moving online, with
“being a famous politician” meaning, among other things like YouTube
views and Facebook followers, “having a lot of arbitrators in my
Judge.me group with a lot of users liking us.”
Another catalyst for this change will be major governments going into
bankruptcy and major currencies going into hyperinflation or extreme
currency controls. There will be a void for “government” services such
as justice, social security and education, and the free market will have
to fill it.
RSE: Fascinating. Thanks a lot, Peter-Jan.
