One big reason for the boom is money. Public judges, who earn about $150,000 a year in the public courts, often retire early to become, in effect, rent-a-judges. By doing so they can earn between $100 and $500 an hour -- easily doubling or tripling their salaries. Arbitration firms often have powerful attorneys or corporations as steady clients. They pay monthly retainer fees or get volume discounts. As a result, some for-profit justice firms have a vested interest in keeping their clients happy if they want the return business, which has been the topic of seminars sponsored by the California Judges Association.

"The public perception somehow exists that there is a two-track system," said Chief Justice George during an interview. Another jurist, Appellate Court Justice Miriam Vogel, was quoted in the Los Angeles Times decrying "the growth of private judging particularly when financially strapped litigants are forced by public judges into accepting private judges, referees, arbitrators, or mediators who may charge large sums for their services." She also criticized "the exponentially growing number of available retired judges, and a dramatic increase in hourly rates and total billings, leaving those who remain in the public system to address the problems inherent in the creation of a second, separate judicial system."

In the PG&E arbitration, Girardi, Masry and Lack expected to settle the case against the utility for $400 million, according to a July 2, 1996, letter to their clients. The case was heard before a panel of retired judges in San Francisco and Los Angeles.

The former judges who heard the case were all employed by an Irvine arbitration company called JAMS/Endispute -- one of the biggest such firms in the West. JAMS boasts about 300 arbitrators, including some of the more prominent retired judges in California. But the firm has also seen some controversy in its 21-year existence. In 1993, the then-chairman of JAMS, John Trotter, hired Michael Greer, a former San Diego County Superior Court judge who at the time was being investigated for accepting gifts from lawyers in his courtroom. Trotter publicly defended the hire, calling the allegations against Greer "inconsequential and in some cases absurd." But in March 1996, right before the PG&E settlement, the ex-judge pleaded guilty to accepting $75,000 to rule favorably in cases before him. Greer eventually testified against two judges in one of California's biggest judicial scandals.

The rules that apply in open court often aren't followed in private court. No laws prevent the hired judges from accepting gifts from attorneys. Another criticism is that the arbitrators and their clients and attorneys often work together regularly. "The same judges are often employed by one side or the other," said Uelman.

As it turned out, Girardi had ties to at least three of the private judges in the PG&E case: Jack Tenner, John Trotter and Jack Goertzen. Had this occurred in public court, judicial rules would have forced the judges to recuse themselves from the case due to a conflict of interest. But no such ethical standards bind participants in private arbitration.

Tenner, a retired Los Angeles Superior Court judge, officiated at Girardi's second wedding, in September 1993. This was confirmed by his wife, Kathy Risner. (The pair are currently in the midst of a divorce.) When John Trotter sat down over dinner one night to convince then-Superior Court Judge William Schoettler to retire from the bench and work for JAMS, his friend Girardi came along, say both Schoettler and his wife at the time, Nancy Morgan, who was present. Schoettler also says that Goertzen has been a friend of Girardi's for many years. Goertzen says the relationship is only professional.

Trotter, through a secretary, refused to comment on the case, citing a confidentiality agreement. (Tenner did not return a call for comment.)

Yet, as late as 1998, Tenner and Goertzen oversaw the controversial distribution of Girardi's Lockheed awards; and at Girardi's suggestion Goertzen arbitrated in one of Girardi's large cases involving Exxon.

Girardi dispenses gifts as well. "Girardi is a very generous man and very kind," said Ralph Drummond, a former judge in Monterey County Superior Court, who used to work for JAMS and now arbitrates disputes for Girardi. During the 1989 World Series, Girardi used his Gulfstream jet to fly Schoettler and Morgan to San Francisco for the games; at the time, Schoettler was a sitting judge in Los Angeles Superior Court. Schoettler stresses that such gifts never affected his judgment. "The key is if you have a significant case before you in court," he said. He never heard a case from Girardi or Lack in his open courtroom, so his social relationship with them was not an issue, he said.

"I became aware that I should absolutely stay away from JAMS or its retired judges when it came to any dealing with Tom Girardi," said Laurence Janssen, a partner in the Los Angeles office of Washington law firm Steptoe & Johnson. As the defense attorney in Girardi's infamous Lockheed case, he wanted to keep his case in open court. "The common lore imparted to me was that it would be crazy to get in front of any JAMS arbitration with Girardi."

In a short interview in which almost all his replies were shouted, attorney Lack would not comment on the arbitrators in the Hinkley case. When asked if Trotter, Tenner and Goertzen were the arbitrators in the case, he said, "You have your facts wrong." He would not describe the case as arbitration. "It was a real case, a full trial, with rules of evidence and a court recorder," he shouted when asked. When asked if Salon could view the transcript, he exclaimed, "It's confidential!"

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PG&E's attorneys may have been wary of Girardi as well. Indeed, what happened next provides a rare glimpse into the sometimes cloak-and-dagger world of nine-figure lawsuits. During negotiations in June 1996, PG&E appeared to be stalling, Girardi told clients in the July 2 letter. Then, Girardi learned that PG&E's outside counsel, Haight, Brown and Bonesteel of Santa Monica, had hired private investigators to snoop into his bank records and private affairs, as well as those of his clients. It's against California law to obtain confidential private records. One of the firm's operatives, who had just been fired, took the damning information to Girardi.

The investigator, Ben Ortiz, a retired LAPD officer, was suing his former employers at Haight, Brown and Bonesteel. Around the same time, another, unrelated, case against the firm alleged similar spying practices by Haight, Brown; it also detailed the Ortiz-Girardi snooping. Buried inside this second case, worthy of a John Grisham novel, are allegations of racketeering and collusion among judges and attorneys throughout Los Angeles County. David Sharp, the attorney in that latter case, alleges that Girardi and Lack used the Ortiz affair to pressure PG&E into making a large settlement -- "part of which was used to curry favor with active and retired judges involved in that case and others," according to Sharp. His suit is on appeal.

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