The other question that we didn't get to last night was "How do judgment and mercy relate to favoritism?" In other words, how do verses 12 and 13 fit in with the rest of the passage??
Showing favoritism, or partiality, IS judging another person's worth or value. Of course James is making the point that we are judging their worth based on things like clothing, social status, money, appearance, attractiveness, etc. INSTEAD of the things that truly matter (their faith). In that sense we are treating their outward appearance/wealth/etc. as more valuable than Christ.
James sees the opposite of favoritism (or judging) as being mercy. Mercy is at the very essense of the "Royal Law" that he speaks about in vs. 8. James is applying the teaching of Jesus. For more on this you can read the parable of the unmerciful servant found in Matthew 18:21-35 and see that he calls the merciful "blessed" in Matthew 5:7.
Until we meet again I'm praying that the Holy Spirit will continue to mold and shape us to be more like Christ. May we show mercy to others~whether that be to the ornery student in the classroom, the smelly patient who doesn't bathe regularly, or the waitress doing her best to serve us.