When Jay-Z grabs the microphone, people listen. Consequently, the alternative-dispute resolution industry is now itself under the spotlight, after the legendary New York rapper-turned-business mogul accused the American Arbitration Association (AAA) of lacking a slate of African-American arbitrators capable of handling “large and complex cases.”

Jay-Z quickly got part of the relief he was looking for, as a New York state judge Wednesday hit the pause button on his arbitration with the current owner of his Rocawear apparel brand—the same day he filed his petition.

But the underlying issue hasn't vanished. There aren't enough women or minority arbitrators available to help unravel complex disputes, acknowledges Kim Taylor, senior vice president and chief legal & operating officer at JAMS, another alternative dispute resolution provider.

Taylor spoke with ALM about the significance of assembling diverse panels, the challenges in doing so, and one of JAMS' measures intended to address the issue. What follows are highlights from that conversation, edited for length and clarity.

Does the Alternative Dispute Resolution industry have a diversity problem?

Yes. I think the entire legal industry has a diversity problem.

What differentiates the issue in the ADR arena?

What you see in the ADR arena is a reflection of the broader legal community. If you take JAMS' roster of neutrals, for example, we recruit people from the ranks of the judiciary and law firms: typically people who have reached a stage in their career where they may be looking at retirement, or they've practiced law for a number of years and they're looking to do something different with all their experience.

We're recruiting people who entered the legal community 25 or 30 years ago, so even today, the statistics for women who reach partner ranks in law firms, women in C-suites, diverse neutrals in both categories—the numbers become more sparse. It's consistently been around 20 percent of women who get to and stay in the partner ranks of law firms, or reach the C-suite, and that's the group of people that we're recruiting from. We're looking at a narrow pool of people to pull into our ranks.

Can you address these concerns about diversity in light of the fact that arbitration is becoming an increasingly pervasive way of handling disputes?

I think that everyone would agree that having a more diverse roster of decision makers, whether on the judiciary or whether in arbitration, is going to be better for the outcomes overall. Diversity is important because you want people to come to a problem with different approaches and different perspectives. JAMS has been focused for a very long time to increase the number of women and diverse neutrals on our panel for that reason.

It's challenging, and it's been a bit of an uphill battle, but I think it's important that we do that, especially as arbitration is becoming more common.

What are the benefits of having a diverse panel that might not be immediately obvious?

The recent publicity around the Jay-Z case would show that parties around an arbitration would want to see a selection of judges or arbitrators or other decision makers who accurately reflect the general population or may have some perspective on their experience that's more broad and diverse.

Not only do different backgrounds or different skills bring different perspectives on a particular problem, but also from the user side, it's important that they see people to choose from, or judges in the courts—who are deciding the cases—that more accurately reflect a broad cross-section of the community.

Tell me about JAMS' inclusion rider option. Where did the idea come from?

I always refer to it as a supply and demand problem. On the supply side, that's the ADR providers. We want to try to make sure that we have, in our group of neutrals, as diverse a panel as we can. So we do that through our recruiting process: We try to identify those women and diverse neutrals who we think would be successful in having an ADR career.

But then there's the demand side. That we have a lot less control over because parties ultimately select the person who's going to hear their case. We provide five to seven names of people who meet the qualifications of the contract clause and have experience of the subject matter of the dispute. And we layer on top of that, internally, a desire to try to make sure that list has diversity in it. We try our best to do that, but we may not always get it right on the first try.

So when we grappled with the fact that we don't necessarily have control over the demand side, we thought it might be helpful for parties to include in their arbitration clauses at least some idea that diversity ought to be something to consider in the selection of the arbitrators.

We have a clause workbook—a tool for people who are drafting arbitration clauses to refer to with sample language for things like the qualifications of an arbitrator, which rules are going to apply, whether it's a single arbitrator or three arbitrators. So we added the idea that people should also consider diversity in the selection process. We thought that was at least a concrete step that we could take to at least influence people's thinking over this in an area that we have less control over.

How has it been received?

I can't tell you whether people are actually using it yet, but shortly after we released this, the ABA passed Resolution 105, which encourages ADR providers to think about diversity as they are filling out their rosters and also suggests that users should be thinking about diversity. So this is something that is on the minds of people in this industry.

It's been very positively received in concept, and hopefully people will begin to use it, and that may help influence the decision of the users—the buyers of the service—to pick more diverse neutrals in their arbitrations and mediations.  

What else is there to be done?

The providers should continue to make recruiting diverse neutrals a high priority, but the users also need to be conscious of the decisions that they're making.

In-house counsel, a number of years ago, began requiring their outside counsel to staff their matters with diverse teams, and that had a positive impact on the diversity numbers within the law-firm ranks.

I think that end users of arbitration and mediation and other dispute resolution services are thinking about the diversity of the people that their outside counsel—or maybe they themselves—are choosing for matters, and maybe that will have a positive impact. It may begin to move this dialogue a little faster.

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