“It is a regional preference,” he said. “Not everywhere in the United States are judges the preferred mediators, but in California the marketplace reflects the history in this area of alternative dispute resolution being started by former judges.”
While most company executives and former judges were hesitant to admit it, money plays a major factor in the recruiting process.
“They will dangle some pretty large figures in front of you,” Albracht said. “They will say you could make up to $700,000 a year, if not more.”
While that kind of money is only earned by the most productive neutrals, it is not difficult to see how those salaries are reached.
Fromholz charges $3,000 for a half day and $5,000 for a full day. He describes these as “standard rates” for neutral services. Therefore, if a neutral were to work full time every weekday except for vacations and holidays, he could bill about $1.2 million a year.
The salary can be attractive to Los Angeles County judges. According to a 2004 report by the National Center for State Courts, California trial judges earn an average annual salary of $143,000. And it’s especially attractive to judges who have qualified for the maximum retirement benefit of 75 percent of their salary.
“This creates an enormous temptation to leave the bench,” Albracht said.
Judges are not the only ones who are attracted to the sector. Alternative Resolution Services announced last week that former Los Angeles Mayor James Hahn would join the firm as a neutral.
Specialized field
In addition to ADR Services, Alternative Resolution Centers and Jams, the other dominant players in the local market for mediation and arbitration services are American Arbitration Association and Santa Ana-based Judicate West.
Fromholz, who declined to name the companies he met with, was especially sought after because of his experience with complex civil litigation, such as the sexual abuse lawsuits against Southern California archdioceses.
He ultimately joined Jams, where he started last week, because “it has a very high reputation and I have a number of close friends who are on the Jams panel.”
