Immediation bags $3.75 million for tech shaking up dispute resolution for SMEs, as Kate Carnell calls for reform

Disputes mediation platform Immediation has raised $3.75 million in Series A funding, after COVID-19 led to a tech overhaul of the legal system and 1000% growth.

The funding comes amid calls for easier access to justice for SMEs, with small business ombudsman Kate Carnell noting an uptick in disputes during the COVID-19 pandemic, and saying small business owners are more likely to walk away that tackle an inaccessible court system.

Immediation’s backers include Thorney Investment Group, the fund of Aussie billionaire Alex Waislitz, as well as Euroz Hartleys Securities and SG Hiscock.

The cash injection follows a mammoth year of growth for the Melbourne startup, which offers an online route for resolving legal disputes, without anyone having to go to court.

When the COVID-19 pandemic hit in March, founder and chief Laura Keily quickly pivoted, providing the technology for use in the courts.

It’s now in use at the Federal Court of Australia, the Victorian Civil and Administrative Tribunal and the New Zealand Ministry of Justice, and between March and October, the number of users on the platform increased by 1000%.

Immediation also acquired New Zealand online dispute resolution business CODR, which was founded by former Solicitor-General of New Zealand Michael Heron QC, who is now heading up the New Zealand arm of the business as Keily prepares to expand into the US and other new markets.

This funding is about capitalising on the unexpected momentum 2020 has brought, she tells SmartCompany, and powering it into the next phase of growth.

It’s also about consolidating its position in Australia by continuing to invest in its product and build out its 50-strong team. The growth this year has happened incredibly quickly, says Keily, and without any real sales push.

“I didn’t expect that we would be in very large federal court mediations with Commonwealth regulators,” she says.

A timely solution

Immediation’s funding round comes just weeks after Australian Small Business and Family Enterprise Ombudsman Kate Carnell released her Access to Justice report, calling for an overhaul to the dispute resolution framework for small businesses.

Most small businesses do not have the time or money to try to resolve a dispute through the courts, said Carnell, and this means they are more likely simply to abandon the dispute — and the relationship with the party in question.

Carnell’s report laid out five key recommendations: improving unfair contract terms protections; promoting alternative means of dispute resolution; providing access to arbitration; improved access to tribunal and court determinations; and permanent funding for more mental health and wellbeing support for small business owners going through such disputes.

Changing the game

For the most part, Keily is on the same page as Carnell. As a former barrister, it was the need for better processes for small businesses that spurred her to build Immediation.

However, she warns mediation is not always a viable option.

The barriers to legal dispute resolution have only been exacerbated by the COVID-19 pandemic, with Carnell’s office seeing nine-times the normal number of commercial lease disputes during the height of the crisis.

“It’s very difficult for voluntary mediation to work effectively in that situation,” Keily says.

“Where there’s a power imbalance, there’s really not a lot of reason for the larger party to come to the table … they can utilise their power that way,” she adds.

However, she wholeheartedly agrees something needs to change to improve a system that is intimidating, mysterious and inaccessible to SMEs.

Keily wants to see a mindset shift away from litigation as standard, and towards “trying to resolve things carefully and quietly, with everybody’s commercial interests at heart, using a non-aggressive method”.

And in any overhaul, technology and the private sector will have an important role to play; leaving access-to-justice reform to the government and not-for-profits isn’t going to work, argues Keily.

“If it was going to work, it would have worked so far.”