Business & Practice

These Top Law Firms Got the Most ERISA Class Action Biz

Oct. 21, 2016, 8:26 PM

The law firm Morgan Lewis & Bockius tops the list of law firms getting the most business from large employers hit with ERISA class actions in the past year.

Since November 2015, Morgan Lewis has been hired to represent employers in 19 Employee Retirement Income Security Act class actions, according to Bloomberg BNA’s research. Morgan Lewis is defending a number of entities across the board that face challenges on how they manage their employee benefit plans.

Some of the firm’s clients include Johns Hopkins University, Fujitsu Technology & Business of America, Oracle Corp., University of Pennsylvania, Total Petrochemicals and Honeywell International Inc.

O’Melveny & Myers LLP closely follows. In the past year, O’Melveny was hired as defense counsel in 12 ERISA class actions against big name entities, including Morgan Stanley, Massachusetts Institute of Technology, Franklin Resources Inc., American Airlines Inc., CVS Health Corp., Walt Disney and Fidelity Management Trust Co.

The latest wave in ERISA class action litigation has seen more than 100 lawsuits brought against a wide range of entities, including financial institutions, universities, religiously affiliated organizations and multinational companies. With this uptick in litigation, it looks like employers are relying more on a small pool of big law and boutique firms to represent their interests.

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Big Law, Boutique Law Firms

Proskauer Rose LLP has been recently hired to defend seven lawsuits, including challenges over excessive fees in 401(k) plans and allegedly underfunded defined benefit plans by religiously affiliated hospitals. Its clients include Neuberger Berman Grp. LLC, JPMorgan Chase & Co., Ascension Health Alliance and Mercy Health.

Another big law firm that follows behind is Goodwin, which is defending entities, including MIT, American Century Services LLC and Deutsche Bank Americas Holding Corp., in six class actions. Sidley Austin LLP has been hired as counsel to defend five cases in the past year against financial institutions, including Cetera Advisor Networks LLC, Massachusetts Mutual Life Insurance Co. and Great-West Life & Annuity Insurance Co.

Boutique law firm Groom Law Group Chartered is representing defendants in a total of four class actions, three of them related to church plan exemptions under ERISA.

Alston & Bird LLP, Seyfarth Shaw LLP and Mayer Brown were hired as defense counsel in four class actions each. Worldwide-known research universities Emory and Duke as well as Hilton Worldwide have retained Alston. Mayer Brown includes among its clients Yale, Cornell and Columbia universities.

In the past year, Ogletree Deakins Nash Smoak & Stewart PC, Kirkland & Ellis LLP, Drinker Biddle & Reath LLP and Skadden Arps have been hired to defend employers in three ERISA class actions each.

Complex, Expensive Litigation

Morgan Lewis, O’Melveny and the other law firms have represented, and keep representing, a number of employers targeted mainly by Schlichter Bogard & Denton, the St. Louisbased law firm that started the litigation trend over high-cost 401(k) plans more than a decade ago.

Since then, other players have joined Schlichter in filing lawsuits testing new legal theories over investment strategies in the plans. Some of these lawsuits challenge the offering of allegedly high-fee, poorly performing in-house funds in the companies’ 401(k) plans, the companies’ investment strategy for stable value funds, and even including too many investment options in the plans.

The plaintiffs’ bar has become very aggressive, Gregory F. Jacob, former Solicitor of Labor and now a partner in the ERISA practice at O’Melveny told Bloomberg BNA Oct. 19. Jacob’s colleague Shannon Barrett, also a partner in the ERISA practice at O’Melveny, agrees. Strategies are changing, plaintiffs’ counsel are deepening their theories and now there are new issues and new claims, Barrett told Bloomberg BNA Oct. 19.

Experience has shown how expensive and complex these cases can be. The first step is to try to get the case dismissed, Jacob said. If that doesn’t succeed, the case will become complex almost extending for six years and it will be expensive for employers, Jacob added. In addition to the cost factor, litigating these cases can ‘‘create significant business interruption,’’ Debbie Davidson, partner at Morgan Lewis told Bloomberg BNA Oct. 19.

Employers — and the firms they hire as counsel — must plan for the short-term as well as the long-term in developing a litigation strategy, Davidson said. It’s important to think early on about what the case would look like at trial and to work backward from that in framing a defense strategy, Davidson said.

What Employers May Be Looking for?

Defense lawyers have developed great experience with these cases after getting to know the plaintiffs’ counsel, and as a result there has been a learning curve, Barrett said. You learn the plaintiffs’ tactics, the experts they use and you get to know what comes next before it hits, Barrett said.

Defense counsel must understand the financial products involved in these cases and the way 401(k) plans and the compensation scheme works, Barrett added.

The ERISA practice at Morgan Lewis partners with the firm’s employee benefits and investment management practice groups in many of these cases, which has added a great value to the firm’s litigation practice and to the clients, Davidson said.

Employers are looking at experience hand in hand with track record, Barrett said. They want to know how the firm has done in previous cases, Jacob added.

Asked what O’Melveny was doing to attract this business, Jacob said that part of it is word of mouth and happy clients that have lot of confidence. Many of O’Melveny’s cases involve referrals but other involve long-term clients, he said.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com.

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com.

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