June 12, 2012
--- When discussing how plan sponsors can protect against
litigation, the main message from panelists at the 2012 PLANSPONSOR National
Conference concerned documentation. ---
According to David M. Weiner,
shareholder, Littler Mendelson, PC, plan sponsors want to avoid lawsuits
altogether, but at the least they should create circumstances where they can
get out of a suit early, either by dismissal or summary judgment.
Lucas Barton, partner and vice
president at Lockton Investment Advisors LLC, recommended having an investment review
process in place and making sure quarterly meetings address processes in the
investment policy statement (IPS). In addition, plan committees should keep
meeting minutes and document all processes for selection or rejection, not just
of investments, but of plan providers. He notes that more detail helps as time
passes and committee members change.
James Fleckner, partner at Goodwin
Procter LLP, adds that there are two benefits to documentation; it shows you
have processes in place and helps committee members recall decisions made years
Weiner says plan sponsors need to
know what their plan documents and IPSs say, so the processes will follow it.
“This is an area of risk you have control over,” he told conference
Fleckner advised that unless
sponsors get a lawsuit dismissed on technical or legal grounds, the legal
process moves to discovery, which includes a request for all documentation,
including e-mails. He warned that some of the most damaging evidence comes from
e-mails, so plan sponsors should be careful about this conduit of plan
communication and treat it as formal documentation. He also noted there is a
fiduciary exception to attorney-client privilege.
Weiner said a good rule of thumb is
if the conversation is about plan administration, assume it is not privileged
and stop e-mail communications as much as possible.