Report to Help Employers Reduce Threat of Fiduciary Liability Lawsuits
WARREN, NJ, August 12, 2010- The Chubb Group of Insurance Companies and Morgan, Lewis & Bockius LLP have released a special report on the risk of fiduciary
"Business owners and managers need to understand the fiduciary liability exposures they face, especially in an environment
where they are likely to reduce staff or employee benefits," said Christine Dart, vice president and manager for worldwide
fiduciary liability at Chubb. "Employees who still have jobs may not be inclined to 'rock the boat,' but those who find themselves
overboard are more likely to take legal action against employers, especially if their 401(k) plans sustained losses before
they were terminated. Fortunately, employers can take steps to reduce the threat of fiduciary liability lawsuits."
The U.S. Labor Department reported 910 corrected violations resulting from the 1,042 investigations of violations of the Employee
Retirement Income Security Act (ERISA) it conducted in 2009.
"The U.S. Supreme Court's ruling in LaRue v. DeWolff and regulatory changes have helped empower individual plan participants to bring actions for losses to their own accounts,
paving the way for other claims against the fiduciaries," added Charles "Chuck" Jackson, a labor and employment partner and
co-chair of the ERISA Litigation Practice at Morgan, Lewis & Bockius LLP.
The new special report, "Who May Sue You and Why: How to Reduce Your ERISA Risks and the Role of Fiduciary Liability Insurance," includes measures firms may take to help reduce the risk of a fiduciary lawsuit, including:
- delegate fiduciary functions to committees with members who have the expertise and time to properly perform their duties;
- establish programs to train fiduciaries on their responsibilities;
- ensure the plan's fiduciary structure and documents do not conflict with plan practices;
- review fees and expenses at least annually to make sure the plan is not charged for costs that should be allocated to the
plan sponsor; and
- accurately document all meeting conversations and decisions and recommendations made by outside service providers.
"While the goal is to address fiduciary issues before they go to litigation, that may not always be possible," said Dart.
"Companies that follow guidelines such as those suggested in Chubb's special report may be able to better defend such claims;
and fiduciary liability insurance may help manage the defense costs."
With 23 offices in the United States, Europe, and Asia, Morgan Lewis provides transactional, litigation, labor and employment,
regulatory, and intellectual property legal services to clients of all sizes-from global Fortune 100 companies to just-conceived
startups-across all major industries.
The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property and casualty insurance for personal and commercial customers
worldwide through 8,500 independent agents and brokers. Chubb's global network includes branches and affiliates throughout
North America, Europe, Latin America, Asia and Australia.