10 years in, I’m glad I went on my own as an ERISA attorney, so I could provide value to clients, instead of being wedded to a billable hour because of a huge overhead working for a law firm.
I have championed the use of an independent ERISA attorney for plan documents instead of relying on the attorney for the third party administration firm (TPA) or whoever is drafting plan documents for a bundled provider. I stressed the value of an attorney-client relationship and the fact that plan documents are legal documents with legal consequences.
Like with TPAs and financial advisors, there are some good ERISA attorneys and not-so-good ERISA attorneys. I know this from my experiences working for TPAs and working at a law firm. I will never forget reviewing the work of a California ERISA attorney and an amendment he was trying to make to his client’s matching contribution formula. The amendment was a monstrosity and I quipped to my plan conversion expert that this attorney can write the amendment, but good luck to us in administering it. So when picking an ERISA attorney for a single employer plan, pick an ERISA attorney who works with single-employer plans. So when hiring an attorney for a 401(k) plan, don’t hire an ERISA attorney who only works on union (multiemployer) plans and doesn’t know what revenue sharing is.
Also, value is an important consideration. If a TPA is offering a pre-approved plan document for $2,000 and an attorney is creating a plan from scratch for $7,000 to $25,000 and the plan belongs to a small or medium-size employer, then I would recommend using the TPA’s services. I also recall an advisor friend of mine who advised me of an ERISA attorney who went through a plan sponsor’s entire $100,000 budget for a full fiduciary review before all the work was completed.
To me, value is such an important concept in terms of all retirement plan services, then that is why my practice is focused on flat fee billing and being competitive with the legal services of TPAs. I stress a flat fee because retirement plan sponsors need cost certainty and because of my disillusionment with working for law firms, which stressed billable hours more than anything else. I have never been a big fan of the billable hour because since billable hours are the most important criteria in judging and rewarding partners and associates; it opens itself to abuse and overbilling. I understand why medium-sized law firms need to bill by the hour, based on the overhead they carry.
As far as my TPA experience goes, I know it has been fodder for a lot of my material, but my career would have been nothing without it. It brought me so much experience that I have never would have gotten from a law school textbook or the halls of a law firm. Working for a TPA made me think quickly on my feet, churning out plan documents quickly, come up with solutions for problems you don’t read in textbooks, and made me love the idea of flat fee billing for plan documentation. I wouldn’t have traded that experience for anything.