At some point, you have to stop pretending this is about protecting participants and call it what it is: a business model.
That’s essentially what came through loud and clear from Daniel Aronowitz at the NAPA 401(k) Summit—the idea that ERISA litigation, at least in many cases, has drifted far from its original purpose and into something far more opportunistic.
Now, let’s be clear. There are real bad actors. When fiduciaries steer assets for self-interest or ignore their duties, they should get nailed. Even Aronowitz acknowledged that. But that’s not what most of these lawsuits are about anymore.
What we’re seeing instead is a wave of copycat litigation—fee cases, forfeiture cases, investment menu cases—where the playbook is simple: survive a motion to dismiss and force a settlement. Because once discovery starts, the economics flip. It costs millions to defend even a weak case, and plaintiffs’ lawyers know it.
That’s not justice. That’s leverage.
And here’s the real damage: it’s not just dollars. It’s behavior. Fiduciaries are becoming risk-averse to the point of paralysis. Innovation gets shelved. Plan design becomes conservative, not because it’s better for participants, but because it’s safer in a courtroom.
Think about that. We’ve built a system where doing something new—even something potentially beneficial—can be more dangerous than doing nothing at all.
That’s backwards.
Aronowitz’s broader point is that Employee Retirement Income Security Act of 1974 was always meant to be a “process” law. Follow a prudent process, document it, and you should be protected. But today, process isn’t a shield—it’s just Exhibit A in a complaint.
So where does that leave us?
Somewhere between accountability and abuse.
If regulators don’t find a way to curb frivolous litigation while preserving legitimate claims, the system keeps drifting. And when that happens, the only real winners aren’t participants.
They’re the lawyers.
