The first objective of the 401(k) plan sponsor is to reduce fiduciary liability. The perils of liability exposure confront the typical fiduciary in many ways. They can hide in outdated language in the plan's investment policy statement. They can loom on the horizon as plan sponsors prepare for the inevitable fee disclosure mandates. But, most plan sponsors see them lurking in investment options ranging from bond funds, target date funds to annuities.
Of all these liabilities, the one most overlooked deals with the hiring of an ERISA attorney. Sometimes it's the fear of fees and sometimes it's just the nature of the question, but for some reason too many plan sponsors don't seek an ERISA attorney when it matters. Complicating matters, earnest service providers – TPAs, investment advisors, auditors, etc… – are quick to over "compliance" advice, not knowing when it's crossing the line and becomes legal advice (which only an attorney can provide).
We had a long conversation with Tod Yeslow while researching the article "5 Criteria 401(k) Plan Sponsors Must Consider Before Hiring an ERISA Attorney" (Fiduciary News, May 3, 2011). Yeslow, an ERISA attorney at Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., served as an in-house benefits lawyer for Fortune 50 companies for many years. That's where he gained experience on the best ways to find outside legal experts. "I always touted my best talent as being one who can locate the best legal talent," he told us.
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All of Yeslow's comments couldn't fit in our original story, but it makes sense to consider them now within the considerations of this article.
Yeslow first sets the scene when he outlines the parameters of selecting an ERISA attorney. "Remember," he says, "in the world of ERISA plans, the plan sponsor acts on behalf of the shareholder/owners and is responsible for the design and funding of the plan while the plan fiduciaries act on behalf of the participants and administer and invest the plan's assets. So, both the needs of the sponsor and fiduciaries should be considered because, technically, your one lawyer will wear a different hat when performing sponsor services from fiduciary services."
His experience taught him to look for particular traits when interviewing prospective lawyers. In addition to the five criteria mentioned in the article referenced above, Yeslow added these (and was kind enough to place them in priority order:
First and foremost, the ERISA attorney must demonstrate "the 'boardroom presence' necessary to clearly and concisely communicate the statutory and regulatory technicalities of ERISA and tax laws so that the decision-makers are well-informed of the issues, solutions, and corresponding risks."
Next, the candidate must show "a strong understanding of the technical requirements of the tax and ERISA laws and regulations."
In addition to this, the lawyer has to have "the mindset to 'partner' with the client as would an in-house counsel (e.g. proactively take ownership of, and manage, one's legal services so that the client is always apprised of potential risks, regulatory requirements, and regulatory changes)."
Lastly, when looking for an ERISA attorney, the plan sponsor needs to detect "the ability to provide well-crafted legal advice that balances the client's business needs against the legal requirements."
What's the worst thing that could happen in selecting the wrong ERISA attorney? Yeslow says, "the worst thing would be frustration on behalf of the client. Other bad things would be waste of resources (time and money), and overlooked areas of risk and responsibility."
Of course, things could be a lot worse if the plan sponsor just guesses at legal answers and doesn't hire an ERISA attorney in the first place.
Who's your favorite ERISA attorney? Let us know by completing the survey: "Name Your Favorite ERISA Attorney." Please click through to the survey and tell Fiduciary News about your favorite attorneys (up to 3). We'll compile the results and seek out the more popular for comments and interviews. Feel free to nominate anyone – someone you've worked with, someone you've seen at a conference, someone whose articles you've read. You can even nominate yourself if you're an ERISA attorney. Your responses are anonymous.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
