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When a group of its members took ownership of ADR provider JAMS a year and a half ago, some in the legal community wondered whether the newly structured firm would be successful. So far, so good. JAMS over the past year has been boosted by an influx of productive new talent and an investment in training and support staff, as well as by an intangible sense of “pride of ownership” among its stable of retired judges, says JAMS’ chief operating officer Steven Price. The nation’s second largest alternative dispute resolution company reports that 2000 revenues will be $55 million, a 25 percent increase over two years. Though the firm will not disclose its profit margins, Price says JAMS will be profitable for the second year in a row after years of inconsistent profits. “There were years we were profitable and some we were not. In the past it’s been very sporadic,” says Price, who rallied support for the buyout by visiting neutrals across the country. “We’ve been profitable since the buyout.” Despite the good news, the company continues to face some challenges: There are too many neutrals not bringing in enough work, competition among ADR firms is increasing, and coaxing judges to join JAMS is proving to be more difficult outside of California. The alternative dispute resolution market has become increasingly competitive, says John Horn, co-owner of Los Angeles-based ADR International Inc., a JAMS competitor. He says JAMS is trying to market itself as a high-end ADR outfit to distance itself from the rest of the pack. “JAMS is doing the right thing for themselves,” Horn said. “Only time will tell if it works. They are a pretty good business with good people.” In July 1999, 44 ex-judges working as JAMS neutrals each paid $70,000 to buy out the firm’s venture capital investors. At the time of the $3 million deal, JAMS was having its best year since 1979. The new company changed its name from JAMS/Endispute to just JAMS, and it didn’t stop there. Among other things, the owners ditched the old compensation system, where each neutral negotiated his own contract with JAMS, and instead enacted a uniform compensation system. And since then, it has been aggressively marketing itself as the “resolution expert” with a “national” presence. JAMS has also gone on a hiring spree. The firm hired a record 23 new neutrals in 2000 — in any previous year, the firm had added no more than 10. JAMS now has about 200 neutrals in 22 offices. Most of the firm’s growth remains in California, where JAMS added 14 neutrals in 2000. Price says ADR, in general, has taken longer to flourish on the East Coast. “It’s a lot harder to get judges off the bench [on the East Coast than] it is in California,” he says. Most retired judges there still like to go to private law firms. Company officials say JAMS has no timetable or numerical goals for growth. “We want to remain a manageable size. We want to be discerning in who we bring on,” says Judge Rebecca Westerfield, who chairs JAMS’ recruitment committee. “We’ve taken in so many people in the recent past, particularly in California, we want to slow down and coalesce and jell, in a sense.” In recent months, JAMS has landed some potentially big hitters, including Justice Daniel Hanlon of the San Francisco First District Court of Appeal and Judge John Davies of the U.S. District Court, Central District of California. And this week the firm announced that Washington State Chief Justice Richard Guy will join JAMS’ Seattle office in February. Price says the new neutrals are pulling their weight and more. “They pretty much are self-supporting or better, because they’ve been doing well.” But what about the neutrals who are less lucrative? Of 200 neutrals, Price says about 100 bring in 80 to 90 percent of the revenue. And the top 50 revenue-generating neutrals are responsible for 66 percent of revenue. To help the firm’s neutrals, the firm boosted its administrative support and training over the past year, firm officials said, although they declined to be specific. JAMS has also been trying to position itself as an expert in class action matters, which would help more neutrals get work more often. Class actions, a growing trend in ADR, made up 8 percent of JAMS’ total revenue in 2000, compared with 3 percent annually over the last few years. Westerfield is confident that JAMS will succeed, but she, too, is looking forward to seeing how it will happen. “We’re not a law firm and not a business in a traditional sense. That makes it challenging, but that makes it exciting,” she says. “It’s still growing and being defined.”

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