Why should HR directors consider working with an employee benefits attorney?
Attorney Doll Lank explained that the most persuasive reason to hire a benefits attorney is cost savings. Having an ongoing relationship with a knowledgeable attorney ensures HR directors have a reliable resource for planning, monitoring plans, and responding to third-party service providers. This prevents HR leaders from being pressured into decisions that benefit vendors rather than the company. Doll emphasized that attorneys can proactively prepare for events such as company growth, acquisitions, or layoffs—each of which directly impacts employee benefit plans.
Attorney Kathleen added that many HR departments cover a wide range of responsibilities, with benefits being only one piece. Because of the complexity of employee benefit plans, most HR professionals lack the bandwidth to fully manage compliance. While HR teams often rely on service providers like third-party administrators or insurance brokers, none of these advisors can provide legal counsel. Kathleen stressed the importance of involving an employee benefits attorney early—not only for problems but also for plan design changes, new plans, or other strategic initiatives. By establishing a relationship with counsel, HR professionals can ask questions before small issues turn into costly problems.
How does proactive legal guidance benefit HR professionals?
Doll explained that legislative changes make proactive legal involvement essential. For example, the Affordable Care Act introduced hundreds of changes to health and welfare plans, and more recent laws like the SECURE Act of 2019 and SECURE Act 2.0 introduced more than 1,000 provisions impacting retirement plans. HR directors must be prepared for these evolving regulations, and employee benefits attorneys help interpret, implement, and train teams on these requirements.
Kathleen emphasized that many legislative changes are mandatory, while others are optional. Benefits attorneys guide HR teams through both, ensuring compliance while also helping employers take advantage of opportunities offered by new laws.
When should HR professionals immediately involve an employee benefits attorney?
Doll explained that audits and third-party reviews are critical times to involve legal counsel. She compared it to cleaning your refrigerator before letting someone inspect it—companies should prepare their benefits records before sharing them with outside parties. Government audits from the Department of Labor or IRS, corporate sales, and employee lawsuits are all situations where HR should hire benefits counsel at the earliest stage. Attorneys safeguard the scope of inquiries, secure extensions, and ensure companies avoid disclosing unnecessary or harmful information.
Kathleen added that benefits attorneys are equally important for buyers in mergers and acquisitions. Without legal review, buyers risk inheriting noncompliant plans or liabilities that could have been avoided. She also noted that companies large enough to require annual Form 5500 audits face detailed scrutiny from independent auditors. Having counsel in place before these reviews helps prevent last-minute compliance problems.
What are the risks of handling benefit plan issues without an attorney?
Doll shared an example of a company audited by the IRS due to an error on its Form 5500 filing. Attempting to save costs, the company initially proceeded without legal counsel and ended up disclosing far too much information. By the time Doll’s firm was hired, the audit was halfway complete, but they were able to narrow the scope back to the original issue and resolve it favorably. Without legal involvement, the company risked penalties and unnecessary exposure to additional compliance problems.
Kathleen reinforced that government examinations highlight the difference between engaging attorneys early versus later. Once too much information is disclosed, it is difficult to reverse the damage. She also pointed out that in mergers and acquisitions, failure to terminate or vet a retirement plan properly can saddle the acquiring company with significant liabilities. In many cases, pristine plans have been contaminated by merging with problematic ones due to a lack of early legal review.
How can HR teams access legal support cost-effectively?
Doll recommended that HR teams take a proactive approach by establishing a relationship with a benefits attorney as part of their internal team. Meeting annually with legal counsel—alongside the plan committee or benefits staff—allows companies to review compliance issues, address new legislation, and strategically plan changes. Doll also highlighted the importance of involving a registered investment advisor (RIA) at least once a year to ensure proper investment lineups and prevent potential claims. This routine approach is far more cost-effective than waiting for problems to surface.
Kathleen added that attorneys can also work collaboratively with third-party administrators and insurance brokers. By allowing service providers to handle routine calculations or recordkeeping while attorneys review and advise on compliance, HR teams can control costs while still ensuring legal accuracy and protection.
