JAMS ADR Insights
Focus on Neutrality: What You Need to Know About JAMS
Published June 25, 2020
The very premise and foundation of the JAMS business model is neutrality. In our list of values, neutrality comes first.
But recently, we’ve heard some questions about our structure and our neutrals that has prompted confusion in the industry that we want to address. In addition to responding to these questions and clearing up misconceptions, we want to provide some updates on our procedures that we hope will bring clarity to these issues.
- JAMS is not structured like a law firm
Within a typical law firm, profits (roughly speaking, revenues minus expenses) are divided among equity partners. A partner’s share of those profits can be based on several factors, but it often includes how much he or she contributes to originating new business or servicing existing clients. Generally, the more contributions a partner makes—information that is often shared throughout the partnership—the larger share of profits they receive.
This is not how JAMS operates. Here are the basics: JAMS has approximately 400 neutrals on its panel, and roughly one-third of JAMS neutrals have an ownership share in the company. Each owner holds one share and there are no outside owners.
Unlike at most law firms, where partners often have detailed financial information about the business activity of their colleagues, owners at JAMS are not provided information regarding the number of cases or revenue related to cases assigned to other panelists. Another difference: Whereas in some law firms, certain rainmakers who originate a lot of new business can earn an outsized portion of a firm’s profits, at JAMS, no owner’s distribution has exceeded 0.1% of total revenue in a given year. In addition, owners are not informed about the extent to which their profit distribution may be impacted by any particular client, lawyer or law firm, and owners do not earn credit for the creation or retention of customer relationships.
- Neutrals are not incentivized to rule in favor of “repeat players”
There is an unfounded belief among some that JAMS neutrals are incentivized to rule in favor of “repeat players” – parties that frequently use JAMS. But this belief is inconsistent with a few key facts.
Every year, thousands of institutions use arbitration to settle disputes with their employees, customers and business partners. Those institutions are free to choose their dispute resolution provider, JAMS does not make that choice for them. In fact, companies may name JAMS as their arbitration provider without obtaining permission from or notifying JAMS.
To put it into perspective, JAMS administers over 18,000 cases a year. As such, no one case, law firm, or party has a significant impact on the company’s total revenue. Furthermore, JAMS arbitrators are not privy to the cases of other JAMS arbitrators, meaning that they are unaware of the volume from any particular law firm or party. Lastly, as explained above, neutrals are not compensated based on the volume of cases they hear.
- Extensive disclosures about JAMS and its neutrals are made before each matter
In each JAMS matter, we strive to bring as much transparency as possible to the parties about information that could pose a potential conflict or appearance of bias. At the commencement of a JAMS matter, for example, the parties receive a disclosure report, which lists the number of cases JAMS has administered in the last five years involving any party, lawyer or law firm in the present case.
In consumer and employment matters, information is available even before the commencement of a matter. Case information for the past five years—including employer names, arbitrator names, case results, and the number of arbitrations and mediations JAMS has had with the employer—can be found on the JAMS website. The spreadsheet containing the information is sortable for easy reference.
Further, JAMS neutrals must issue their own required disclosures within ten days of their appointment. These disclosures cover detailed information about any relationship that the arbitrator and his or her immediate family may have with any of the parties or lawyer or law firm of a party. After receiving those disclosures, the parties may raise any objections.
The bottom line is that attorneys and their clients should know that JAMS is fully committed to providing neutral, efficient, and trusted arbitration procedures. Alternative dispute resolution is a critical component of the legal landscape and we are here to provide the best service in the industry.
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This page is for general information purposes. JAMS makes no representations or warranties regarding its accuracy or completeness. Interested persons should conduct their own research regarding information on this website before deciding to use JAMS, including investigation and research of JAMS neutrals. See More