Is employer benefits law an emerging market?

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J.J. Conway

Many years ago, I attended a reception where a distinguished looking older gentleman was sitting by himself, sharply dressed, and contentedly sipping a martini from a birdbath glass. He looked like a university professor, bespectacled and wearing a tweed blazer.

Someone informed me that he had been the head of a pension plan or pretty high up in plan administration for a major U.S. company. I knew the company had massive numbers of salaried and unionized employees. What interested me was the fact that he had held that role in the 1960s through to the late 1970s. This meant that he had seen pension law in operation before and after the passage of ERISA in 1974. There weren't many people who had that informed perspective. So, I went over and introduced myself and asked him about his career.

I first asked him whether his company was in favor of ERISA. He reflexively informed me that his company strongly opposed the passage of the statute. His employer found a lot of company - just about every private organization, state and local government, and union opposed the legislation. (It was really only the employees themselves that favored the law).

Next, I asked him how his company adapted after ERISA was passed - after all, their benefit plans, once a matter of state law, were now federalized. He sort of chuckled and said, "Well, once it was the law, we let the lawyers loose to secure interpretations that we liked."

I realized then, there is a legislative history of ERISA, but there is also a litigation history of the Act. The latter has become increasingly more consequential as ERISA approaches its 50th anniversary. Through litigation, the statute has been interpreted to contain unusual rules and remedies that actually appear nowhere in its plain text. For many claims, there is no discovery, totally displacing Fed. R. Civ. P. 26. Likewise, benefits can hinge on proving whether a self-interested party acted in their own interests, but only upon a showing of arbitrary and capricious actions. The list could go on and on.

The employee benefit plan is one of the single greatest sources of private rights in American life. Benefit plans are essentially contracts, and they promise such things as healthcare benefits for employees and their families, financial safety nets in the form of disability income insurance, and, of course, retirement benefits that provide a measure of financial security and dignity as we age.

When the average American worker looks at their contractual legal rights, perhaps it includes a home ownership with a mortgage, vehicle leases or ownership, personal savings accounts, and various forms of insurance policies. Pretty high on that list of private rights is retirement plan benefits and insurances like disability and life insurance.

And yet the actual legal market - particularly for employees and their families - is ill-defined. The legal market for "Employee Benefits" is more of a tapestry or a series of loosely affiliated practice areas than a truly identifiable consumer sector of the legal market. Some law firms provide only one aspect of benefits law - for example, they will only handle cases involving long-term disability benefits. Other firms offer only healthcare representation and many of those firms are actually working on the medical provider side. Firms that offer legal solutions to complex pension problems are hard to find when an employee or beneficiary has a problem. As an example of this, our firm has handled cases in places such as Hawaii, Montana, Idaho, and the Dakotas as there are very few lawyers handling ERISA matters in those jurisdictions.

Large law firms were better equipped to offer employee benefit representation to their clients. These firms now routinely offer these services and realize the needs of their clients. It wasn't always so. Previously, large law firms cobbled together employee benefit practice groups from their labor and employment, tax law, and commercial litigation practices. Attorneys were working in these "employee benefit" practice groups, but they were positioned in some other practice area of the firm. In the past decade, that seems to have changed, particularly following the passage of the Affordable Care Act.

Employee benefits as a form of compensation is changing, too. Employees are looking for employers offering better benefits from paid leave to insurance coverage that helps create and care for families. Employees want access to generous mental health coverage and low fee options for their retirement plans.

Employee benefits is a legal area ripe for increased competition, innovation, and new ways of approaching benefit disputes. It is ready to be its own easily identifiable legal market, like family law or estate planning, and ready for robust competition in the coming years. Talk of increased competition in an area, can make lawyers feel cautious obviously, too many lawyers in a given area can be, shall we say ... challenging? But increased competition and more lawyers entering into the employee benefits market could bring new perspectives, new creative ideas, and reshape the law to meet the challenges of the next 50 years. Employee benefits make up a large, and increasingly growing, sector of the global economy. The need is certainly there for good, solid representation in all aspects of this complex and growing area.

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John Joseph (J.J.) Conway is an employee benefits and ERISA attorney and founder of J.J. Conway Law..


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