Different approach to legal disputes has detractors
A profound and enduringly controversial change in the way companies approach legal disputes has spelled success for some companies and individuals in the Bay Area.
Alternative dispute resolution, or ADR, a legal-industry term that encompasses everything from lauded mediation to themore hotly contested binding arbitration is facing everyone from employees landing a new job, consumers of financial products like credit cards and payday loans and Kaiser Permanente patients. And it has spelled big money for retired justices and attorneys who mediate these out-of-court settlements for a fee.
In San Francisco’s Embarcadero Center and the surrounding Bay Area, the California company JAMS: the Resolution Experts, has its largest offices in a set of nationwide dispute resolution centers. Their list of 200 “neutral” arbitrators nationwide includes big names, including Katherine Hope Gurun, formerly senior VP and general counsel of Bechtel Corp., and retired Judge William Cahill.
ADR in general smoothes out the high-risk possibility of huge plaintiff settlements or no settlement at all facing both parties in a jury trial, JAMS board chairman and retired Sonoma County Judge William Bettinelli said. It allows the parties involved in a would-be case to control the timing, process, fact-finding and other expensive and hard-to-manage features of a trial, he said. Since its founding in 1979, JAMS has become the nation’s largest mediation firm, and its place in the ADR industry overall is only exceeded by the American Arbitration Association, he said. JAMS focuses on complex corporate issues.
“It’s a values-driven company,” said Betinelli, noting its charitable giving, long conflict-of-interest disclosure requirements and requirement of continuing education and a full-time commitment from its “neutrals,” who are independent contractors. “Our principal thrust is the pursuit of ethical elements of what we do. Hopefully those values are picked up by the marketplace.”
Even critics of other aspects of ADR don’t speak negatively of mediation, the largest part of JAMS work. But there are plenty of critics of the growing trend of binding arbitration — the boilerplate in contracts in which employees and consumers sign away their legal right to a jury trial, which could earn them millions more than an arbitrated settlement. A hotly-watched New Jersey case that may reach the Supreme Court is being viewed as a test of one controversial provision in such contracts barring class-action arbitration and lawsuits, something California courts have already restricted.
But all isn’t rosy in the Golden State; trial lawyers still lament former Gov. Gray Davis’s veto of a law banning binding some arbitration clauses in employment contracts, attorney Jim Sturdevant said.
“I don’t think he understood the impact fully of his veto,” he said, noting that arbitration decisions are kept out of the public record. “Without that decision being public in the press, you wouldn’t have had all those internal codes of conduct put in place by that and other law firms. The salutary effects of a written record of decision making are important in future conduct.”