Mediation Succeeds, There’s No Argument : Negotiating: JAMS of Orange uses retired judges to help disputants settle cases out of court, saving fees, time, trouble.
The Bay Area doctor and his wife lost everything in the 1991 Oakland fire.
They wrangled with their insurance company for three years and were considering a lawsuit--but decided to try a less common strategy instead. As a result, they reached a settlement last week in only four hours, saving themselves thousands of dollars in legal fees and court costs.
The credit goes to JAMS--Judicial Arbitration & Mediation Services Inc., a private, Orange-based company that, for a fee, provides an alternative to taking disputes to the courthouse.
The doctor, whose name was withheld because of a confidentiality agreement, met with a representative of the insurance company, and “they just sat down and talked it out,” said Edward A. Panelli, a recently retired state Supreme Court justice who joined JAMS in April. “They were motivated. They just needed the push.”
There were no motions, no opening or closing arguments, no paid experts. And for using Panelli’s services, the two sides spent a total of $1,200 to have the issue resolved.
“Everybody felt like they were part of the process,” Panelli said. “I told them about all the problems if they went to court. And they settled it quickly.”
The cases heard in JAMS offices range from personal-injury disputes to patent claims, company officials say. The most common cases recently, though, have involved environmental cleanup disputes and accusations of wrongful discharge or sexual harassment.
“I guess it’s a sign of the times,” said H. Warren Knight, a former Orange County Superior Court judge who founded JAMS in 1979 after taking early retirement. For the most part, he said, “the profile of our cases is pretty much the same as what you will see in court.”
JAMS has seen its business boom recently. And with the hiring of Panelli as its chief judicial officer--a coup for the Orange-based firm--and a recent announcement that JAMS is merging with an East Coast mediation firm, the company foresees a bright future.
The merger of JAMS with Washington-based Endispute in a stock swap will create the nation’s largest arbitration and mediation service. The new firm will have offices in virtually every major city in nine states and will employ more than 300 former judges and other mediators. Annual revenue is pegged at about $40 million.
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JAMS’ success is rooted in the growing acceptance of the so-called alternative dispute resolution concept, in which companies and individuals agree to have a third party hear disputes and help settle them out of court.
For many lawyers, hiring a service such as JAMS has a big benefit: By resolving routine cases quickly, they have more time to prepare cases that will eventually end up before a jury.
Los Angeles lawyer Robert Beswick said he has been using JAMS as an alternative for more than 10 years. “They have been very, very helpful,” said Beswick, who represents corporate defendants such as insurance carriers. “Everyone saves money. And it gets the job done.”
The success rate at alternative dispute resolution shops such as JAMS is high, Beswick said, because of the mind-set of the attorneys and their clients when they seek third-party intervention. In the court system, he said, litigants are prepared for battle. In the ADR setting, by contrast, they are seeking a quick decision.
“Attorneys get more in the resolution frame of mind before they go there,” Beswick said. “They are more inclined to settle because they don’t have that combative attitude like they do in court.”
And with most law schools now including ADR in their curricula, JAMS executives say, the company is well positioned for future growth.
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That was not always the case, though.
When Knight started JAMS, he was looking for something to do after he stepped down from the bench. Knight recalls that he saw then what the court system was becoming: an overburdened operation in which fees would inevitably soar as cases took longer and longer to resolve.
And, well aware that 95% of cases filed in court are settled before they reach trial, Knight saw the market potential of providing a venue for quick settlement. So he hung out his shingle in downtown Santa Ana and began encouraging local attorneys to bring their clients to him.
The concept of alternative dispute resolution was still largely unknown at that time, though, so Knight’s one-man operation limped along at first.
“I spent $50,000 to make $13,000 that first year,” Knight said. “It was not a good time.”
But he stuck to his new enterprise and slowly found growing acceptance in legal circles. He also expanded by finding silent partners to invest in his firm, which enabled him to buy out smaller competitors from San Francisco to San Diego.
For 1985, JAMS posted annual revenue of $1 million. By 1989, the company’s revenue was $15 million, and Knight had dozens of retired judges under contract as dispute mediators. Having outgrown its storefront office in Santa Ana, the business moved to bigger headquarters in Orange. Knight says that, since its inception 15 years ago, JAMS has heard more than 100,000 cases.
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As for founder Knight, who is now 64, he is preparing to hand over the reins. Jack Unroe, hired two years ago as the company’s chief executive officer, now runs the day-to-day operations and develops growth strategies. And recently former Supreme Court Justice Panelli took over as chief judicial officer, making him the highest-ranking ex-judge in the company.
As a recruiter, Unroe said, Knight has “gone after the best judges. . . . The company has a solid reputation now. I think we will continue to attract the best judges.”
Reaching an Agreement
Hiring an arbitrator is gaining popularity as a lower-cost, less combative approach to settling business disputes.
HOW ARBITRATION WORKS
* Those involved in a dispute agree to try arbitration before taking the case to court.
* An arbitration firm is selected and an arbitrator assigned--usually a retired judge or someone with a similar legal background.
* Both parties meet with the arbitrator to present their sides of the dispute and say what steps they expect other party to take toward resolution.
* The arbitrator evaluates the problem and helps negotiate a settlement.
* Those involved in the dispute then agree on a plan and carry it out.
* If arbitration fails, the case is likely to end up in court.
FINDING AN ARBITRATOR
* Arbitration firms are listed in Yellow Pages under “arbitrators.”
* Some nonprofit social service groups offer low-cost arbitration or can recommend an arbitration firm.
COSTS
* Private arbitration firms charge about $300 an hour. Costs are divided among those involved in dispute.
* Nonprofit groups offer arbitration on a sliding-fee scale, based on client’s ability to pay.
Source: Times reports; Researched by JANICE L. JONES / Los Angeles Times
