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One of the Law's Best Inventions: ADR

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One of the Law's Best Inventions: ADR

Source: The Metropolitan Corporate Counsel, Inc.
Date: August 2003
The Editor interviews Michael D. Young, a mediator and arbitrator in New York with JAMS, The Resolution Experts.

Editor: Can you tell us about your background and why you became a neutral?

Young: I joined JAMS (formerly Endispute) in 1989, having previously practiced law for about eleven years. My interest in ADR arose because in 1985 -1986 I was counsel to a group of clients who participated in a fairly substantial mediation and arbitration process that took place as part of the Johns Manville bankruptcy proceeding. As a result of that experience I became very interested in ADR and how valuable it was in resolving that case. In 1989 I decided to make the leap from law practice into ADR.

Editor: When did Endispute merge with JAMS?

Young: I opened the New York office of Endispute in 1989 and in 1994 the companies merged. By then we had grown from an office in New York consisting of one (i.e., me) to a greatly expanded office in New York, including some of the people who are now neutrals on our panel. JAMS had a competing office in New York, and with the national merger in 1994, the two New York offices merged.

Editor: Please give us more background on JAMS.

Young: At the time JAMS was a California-based firm that consisted primarily of judges serving as mediators and arbitrators. In 1994 Endispute was primarily based on the East Coast, consisting primarily of lawyers serving as neutrals. Since the merger, we have gone through a number of changes; now we have offices in 20 cities around the country with over two hundred lawyers and former judges serving as neutrals, and we are by far the largest private ADR firm in the United States, if not the world.

Editor: How is JAMS organized in terms of its business structure?


Young: It is a fully integrated structure with a headquarters, which coordinates the financial, marketing, training and development functions and the overall operation of the firm. The business is owned by a group of neutrals, who bought the firm in 1999 and now share a purpose of keeping neutrality and quality of service paramount.

Editor: What has your success ratio been in terms of settlement?

Young: The success ratio in resolving disputes in the mediation context (whether during the session or shortly afterwards) is somewhere around 85%. In the arbitration context there is a final decision so the resolution rate is 100 %. We also have a very high client satisfaction rate.

Editor: Do you always make a determination on the basis of existing law or at times on the basis of equity and fairness?

Young: What we say to the parties in the arbitration context is that in the absence of your telling us otherwise, we will apply the applicable law and make a decision based on that. If you want us to use a different standard, such as equity or fairness, we will do that. Our niche in the field of arbitration is very much law-based. We are all trained in the law and are prepared to apply the law.

Editor: What kind of services do you offer besides mediation and arbitration?

Young: There are a lot of variations on the theme of mediation and arbitration, particularly with mediation. Sometimes people use the word 'mini-trials,' which is a very structured approach to mediation where you have extensive presentations of the case, usually to both the mediator and senior representatives of the parties.

Editor: You have discovery there?

Young: You can have discovery and there can be information exchanged before hand. The goal is to give everybody a taste of what the real trial would be like. We also offer other forms of mediation. Sometimes the mediation can be much more evaluative where the mediator is asked to provide an opinion of the merits of the case or a recommendation of how the case should be settled, these approaches are sometimes called a non-binding evaluation.

If one looks at arbitration, we do "mock arbitrations," where a party is preparing for an arbitration and wants to do a run-through of the case, using actual arbitrators. The party may make a presentation to three of our arbitrators who give feedback about what arguments make sense. The other services we provide are that of discovery master where we are retained directly by the party or pursuant to a court order and are in charge of the discovery, making rulings on discovery matters as they arise. We sometimes are appointed to do independent investigations, arising in cases of sexual harassment in the workplace or in other contexts. I was appointed about two years ago by a quasi-governmental organization to investigate a claim by its CFO that there was a racial animus behind his termination.

Editor: How would you break down the percentages of cases as to mediation and arbitration?

Young: I would say that by revenue rather than case number that we have approximately 70% mediation, about 30% arbitration. Our arbitration revenue is increasing.

Editor: What practice areas do you touch upon?

Young: We are geared toward the higher end cases where there is much at stake as in business-to-business cases. Most of our arbitration is commercial arbitration where there are two companies having a dispute. That also would encompass insurance issues where there is a dispute between an insured and an insurer or a re-insurer and an insurer. On the mediation side JAMS neutrals mediate commercial disputes of all kinds. We mediate securities and bankruptcy issues, intellectual property cases, cases in the employment area regarding terminations, professional liability claims against lawyers or doctors or accountants. We also mediate complex personal injury claims of higher value, including products liability claims and mass tort claims.

Editor: What about early dispute resolution? How often do you get called in to ward off any eventual dispute?

Young: That is happening more and more. In the employment area I would say half the cases that I see are cases pre-litigation. The advantage is that you are saving a significant amount of transaction costs. The disadvantage of early efforts is that you do not have enough information, but a lot of companies and individuals are interested in trying early resolution. We are seeing it to a lesser extent in commercial cases, but more and more companies that cannot resolve a case on their own, suggest pre-trial mediation.

Editor: Are you appointed by the courts to do mediation?

Young: We are. If the court has that authority, it will appoint a mediator or in other cases will strongly encourage the parties to go to mediation. I personally have about 20% of cases each year that are court appointments or involve cases where the courts have encouraged mediation.

Editor: What about court ordered arbitration?

Young: Very rare. I have had a number of cases where there have been claims filed by building owners against insurance companies revolving around the World Trade Center collapse. I have been an umpire in two cases referred by the courts in which the parties either have agreed or the court has ordered them to come to an appraisal process, which is like an arbitration, in which two appraisers plus an arbitrator/umpire decide the amount of the insurance payment. Unless there is some authority that the judge can find, it is very hard for a judge to order someone to go into arbitration. Unless there is an arbitration or appraisal clause, the court has no independent authority to order arbitration. There are, however, court rules that allow a court to order someone to mediation.

Editor: Are there occasions when arbitrations can be overturned?

Young: There are occasions when an arbitration result can be overturned. The grounds are pretty narrow, but in situations where there is something defective about the process or if the arbitrator has a conflicted relationship with one of the parties, there are grounds for overturning an arbitration award. JAMS is very careful about screening arbitrators and about making disclosures to be sure there is nothing problematic about the process.

Editor: Can you discuss the increased use of ADR, especially on the East Coast?

Young: On the West Coast, one sees a level of activity that is much more extensive than on the East Coast and reflects an institutionalization of the use of ADR in law practice. It's rare that cases get tried in California without having gone through some form of mediation.

The East Coast is different. The use of ADR is stronger in New York and New Jersey than in Boston or Washington, but we have only begun to scratch the surface. Our business in New York and New Jersey has grown steadily over the last few years. As a result, in September we will celebrate the grand opening of JAMS' second New York office, which is located on Park Avenue in Midtown Manhattan.

It is very clear in the context of certain kinds of litigation on the East Coast, mediation is part of the practice. It is very rare in construction cases and employment cases that mediation is not discussed and is often used. I would not say that is the situation in commercial cases, but if you look at the law firms that have been in JAMS' offices, it is fair to say every major firm has come to mediation with us at least once. I have seen repeat cases, and that is indicative of the growth on the East Coast.

Editor: What are the benefits to in-house counsel in using ADR?

Young: In both arbitration and mediation there is an opportunity to resolve a case in a more controlled, quicker and more cost-effective way than the normal litigation process. I have pending two arbitrations that will go to hearing this summer and neither will ultimately have taken more than seven or eight months to resolve. In one of those cases, which has been very active in terms of pre-trial motions, the parties are able to get me on the phone within a couple of days of any time they need me. An in-house counsel interested in quicker and cheaper resolution and wishing to get a fair outcome can achieve that in arbitration and mediation.

Editor: What has happened with mandatory arbitration in employment contracts?

Young: There is a lot of dispute about that in the courts and certain state legislatures. JAMS does not take a position on the enforceability of condition-of employment arbitration clauses. If courts rule definitively that such clauses are unenforceable, or if laws or regulations proscribe their use, JAMS will comply with the rulings or laws in the applicable cases or jurisdiction. Absent such proscriptions, any employment matter referred to JAMS as a result of a mandatory pre-dispute clause must first be reviewed by our employment experts before administration begins to ensure compliance with JAMS Minimum Standards of Procedural Fairness. It is important to note that most of JAMS' arbitration work is commercial.

Editor: Arbitration is used more effectively in commercial disputes?

Young: In a commercial context where there are two entities that have agreed to arbitrate, there are not the policy issues raised by an employee required to arbitrate. We are trying to encourage in-house counsel to recognize that arbitration can be tailored to fit whatever needs you want. In a process where the two sides decide to apply the law and there is a need, for example, to have a more formalized process providing some room for discovery, where the rules of evidence would apply, etc., the parties are able to agree on a process which we follow.

Along those lines, I can't stress enough the importance of the arbitration agreement - it really shapes the arbitration process. Attorneys can mold the process by including specific guidelines for the parties and the arbitrator in a well-crafted arbitration clause.

Editor: In terms of discovery and expert witnesses how does this differ in arbitration from in court?

Young: Generally in arbitrations, there are limitations placed on discovery, such as the number of depositions and the use of interrogatories. Also, the arbitrator is more willing to be actively involved in managing discovery disputes than a judge can be. With respect to expert witnesses, I often have expert witnesses at hearings I conduct. There is a little more willingness on the part of courts not to allow certain witnesses to testify in applying the Daubert standards in not wanting an expert witness to mislead a jury. Since we can evaluate the expert, there is less willingness to bar an expert from testifying.

Editor: Do the same rules of evidence apply?

Young: They can or can't. Traditionally in arbitration you have more relaxed rules of evidence, but the parties can agree that they want the rules applied. Traditionally the rules do not apply, but with JAMS we structure the process so if the parties want the federal or other rules of evidence to apply, we apply them.

Editor: How would you suggest corporate counsel go about selecting a neutral?

Young: The important thing is try to match the person to what you want. In arbitration you need someone with experience in managing cases with a reputation for neutrality and integrity, who may be someone with experience in a particular area of law. In mediation, you want a good mediator. We are frequently asked whether in mediation you need someone with substantive expertise. My view is if you can find an experienced mediator, who also has relevant substantive experience or knowledge, that is ideal. If you have to make a choice, I would choose the person with process skills.

Editor: You handle more complex, multiparty cases than any ADR provider. To what to you attribute your great success?

Young: Over time organizations develop a reputation and a niche. JAMS' focus is on more complicated cases. Our record speaks for itself in our success in recruiting very professional and effective mediators and arbitrators who practice ADR as their exclusive vocations. Parties are attracted to JAMS because of the quality of the neutrals, the professional staff and the high quality service they receive in resolving their disputes.


Reprinted with permission. Copyright 2003 Metropolitan Corporate Counsel.