Late Thursday night is one of my favorite times of the week. The house is quiet, the dog is snoozing on my feet, the football game is on the tube, and I have time to write this week’s Five Favorites for Friday post.

So let’s get it started.

  1. A few years back, I first chaired a two week long trial in Massachusetts state court. Right before discharging the jury, the judge thanked the jurors for their service and then noted he also wanted to thank all of the lawyers for a well-tried case, noting in particular that he wanted to thank my second chair – we will give him the pseudonym “Mr. Eric” – because, as the judge said, “we know from the fact that Mr. Eric didn’t say a word in front of the jury for the past two weeks that he was the one who actually did all the work.” And there was some truth to that, and in our next trial together I would let him have the opening (I kept the closing for myself) and a few of the fact witnesses (it was an expert driven case and I wanted the experts). I mention this story because one of the tasks that normally should have fallen to Mr. Eric as the associate on the case and the second chair at trial was drafting the special questions for the jury, but I did those myself. The reason was that I had become very interested in the insights of behavioral economics, and believed it held lessons for courtroom lawyers, including with regard to structuring questions to present to a jury – so I wrote them myself, on the last night of trial before the jury would get the case. Why do I mention this now? Because Planet Money has an excellent retrospective this week on the teachings of behavioral economics, and particularly on the idea that winning an auction with a lot of bidders may mean little more than that you overpaid, since it simply demonstrates that all other actors in the crowd thought the asset wasn’t worth that amount or more. And as with many things these days, that point brought me right back to the risks to plan sponsors and fiduciaries from opening the gates to their 401(k) plans to allow private equity and other alternative assets into the plan’s investments. Are plan sponsors and fiduciaries really supposed to believe that their participants are being offered access to the assets before they are overinflated? Or, as the insights of behavioral finance would suggest, that it is instead because everyone else who already has access to acquiring those assets if they want them has concluded that they are overpriced relative to their risk and return? And if so, then are plan sponsors and fiduciaries being set up for future liability by effectively being little more at this point than the ones who decide for their participants to go ahead and win the auction for them, even though the auction shows they are overpriced? There are many ways to look at adding alternative assets to plans and the impact of doing so on plan fiduciaries – but none of them are or will be good until someone objectively demonstrates that doing so will increase returns to an extent that justifies any increased volatility or risk in participants’ holdings. Until that happens, plan fiduciaries will remain sitting ducks for litigation and should follow the safest possible course of action for protecting themselves against liability for allowing the asset class into a plan, as I discussed here.
  2. Insiders think the same thing, as this article points out.  ‘My honest assessment is it ends badly’ – NYC pensions’ CIO on retail investing.
  3. A consensus about AI in law seems to be forming, now that the hype cycle in which it was supposedly going to eliminate law firms has, unlike the law firms themselves, come to an end. In this Law.com article, Keith Maziarek addresses the point that AI may have a different value proposition in the provision of legal services than the longstanding assumption that it would reduce pricing. If you don’t have access to the article itself, the author does an excellent job of summing up his thesis in this LinkedIn post. He particularly points out that AI’s value may lie more in commodification of the routine parts of legal work and in improving access to the data needed to price more fairy or transparently, including possibly, as I have written elsewhere, by moving away from the crutch of the billable hour and on to more project based pricing models. I am glad to see this consensus forming, but since I have the receipts to prove it, this is basically what I have been saying since the start of the AI hype boom, such as here and here and here, among other places. My take has not been built so much on the specifics of AI itself, but from decades of seeing how technological improvements are deployed in the legal field – and the fact that it has led to larger and more profitable law firms, not to smaller firms providing less expensive product. As I discussed here, there isn’t a nefarious reason for this – it is instead because the technology has allowed for more complicated transactions and more sprawling litigation, which is expensive no matter how much tech you throw at the problem.
  4. When I started working on insurance coverage issues, the world was trying to determine the scope of insurance coverage for asbestos claims and then who should have to pay for Superfund cleanups, corporate polluters or instead their insurers. Now we are onto headlines that, back in those days, we couldn’t have imagined we would ever see, such as this one: “How CGL Policies May Respond To Novel AI Psychosis Claims,” in Law360. For decades, I have been helping clients predict whether new theories of liabilities or types of claims are likely to be covered by existing policy language, or whether new coverage terms needed to be developed to handle them. As you see in this article, that is still the approach, only now it feels like trying to view the 21st Century through the prism of the 1970s.
  5. UBS economists do not like the looks of the labor market. This is your periodic reminder from those of us who litigated ERISA breach of fiduciary duty and other claims during and after the Great Recession that, when job prospects weaken, employees and former employees start to look very carefully and very skeptically at the performance of retirement, 401(k) and other plans. We have already, in my own practice, been seeing the smarter money, which holds deferred comp benefits, looking carefully at those types of plans, as I discussed here.

ERISA litigation goes through phases and waves. It wasn’t that long ago that it seemed I was constantly litigating, in multiple cases, the distinction between so-called ministerial functions – which cannot support fiduciary liability – and fiduciary conduct. Here’s one example. Over time and a number of judicial decisions, an interpretative bulletin issued by the Department of Labor related to this issue was discussed and applied by enough courts that it effectively took on the force of law in some cases and, in others, at least became a shortcut for working through the issue. I always believed that this process by which the bulletin took on a judicial gloss and shine resulted, over time, in courts giving it too much persuasive weight.

In this interview with Bloomberg Law, I discussed the impact in litigation of a new advisory opinion by the Department, related to when an incentive compensation plan used by major financial institutions is or is not subject to ERISA. The article explains that the advisory opinion is on its way to winding through the courts to the Fourth Circuit. If the Fourth Circuit adopts its reasoning or conclusion, the opinion will be well on its way to repeating past history in which certain non-binding statements by the Department eventually take on the imprimatur of the courts and effectively become, at a minimum, highly persuasive authority to other courts addressing the issue.

Post-Loper, however, I don’t see that same process playing out here. If the Fourth Circuit agrees with the advisory opinion, the current state of play with regard to deference to agencies almost guarantees that the Court will present its opinion as its own analysis – and not as being heavily influenced, if at all, by the Department’s published opinion. I could see the advisory opinion being barely referenced in that circumstance, possibly simply dropped in passing into a footnote.

On the other hand, in the new, officially sanctioned post-Loper era of skepticism of agency action (I say officially sanctioned, because in truth, years of attacks on Chevron deference had long ago made it a dicey proposition to walk into court expecting a lack of skepticism over agency action, even though Chevron was still on the books at the time), if the Court finds that the plans are in fact subject to ERISA, which would be contrary to the advisory opinion, I could easily see the Court fully addressing and rejecting the reasoning and conclusion of the advisory opinion, in a manner intended to serve as persuasive authority on the question of its value.

Interesting times we live in, if you have long been involved with administrative regulation and related litigation.

This week, I cheated. I have known since Tuesday that I wasn’t going to have time to either blog or post on LinkedIn this week on even a small portion of the articles, ideas, podcasts and presentations that were crossing my desk and catching my eye. So I started writing this week’s Five Favorites for Friday three days ago, knowing that I would otherwise have way too many candidates for this post that I would have to cull through on Thursday to write this post.

For anyone new to this series, the back story can be found here – but in short, the Five Favorites for Friday post is my opportunity to write relatively briefly on five items from my inbox that I want to, but haven’t yet had the opportunity to, comment on.

So here are this week’s Fab Five:

  1. I am slightly late on this particular article, in that it wasn’t published this week. However, the conceit of this series is that it allows me to discuss things that crossed my literal or figurative desk and caught my eye in the past week, which this one did. Stephen Embry’s article on advanced AI weaponry for plaintiffs’ personal injury lawyers points out that the development could be a game changer for both the plaintiffs’ bar and the defense bar. I have written before, however, on my concern in the ERISA space with regard to what an AI powered plaintiffs’ class action bar suggests for ERISA plan sponsors, fiduciaries and their insurers – namely, the ability of more such shops to litigate more such cases, including against smaller plans that previously wouldn’t have justified the expense of suit, with the same or less investment and staffing. Other than the class action defense bar, more class action ERISA suits is the last thing that anyone on the defense side of the “v”or their insurers need. Whether it’s number of suits, settlement amounts, defense costs, or any other rubric, the trendlines in this area are already worrisome for plan sponsors and their insurers. The continued rollout of AI isn’t going to help.
  2. I really like insurance (as anyone who reads this blog can likely tell) and I love movies. So sue me. I really, however, have long been fascinated by movie stunt performers, ever since I worked as a pizza delivery driver as a teen in a shop run by a stuntman who had moved from Hollywood to the East Coast for a while because of a contentious divorce and custody battle back east. I have said before that I am really enjoying MS Amlin’s series of short films comparing underwriters to established movie stunt performers, and I really enjoyed the latest release.
  3. I am sure you know the old quote from the bank robber Willie Sutton, as to why he robbed banks – “Because that’s where the money is.” Forfeiture litigation, which is based on the theory that it violates ERISA for plan sponsors and fiduciaries to use employer contributions that revert to a plan when employees terminate employment to offset future contributions, is all the rage at the moment. As this article points out, the legal foundation for the claims is, to date, leaky, but there is a massive amount of money at issue. Right now, to me, the explosion in these types of cases represents large damages, still searching for a cause of action.
  4. This is a great story about First Brands, the risks of contagion and private equity. The story is an object lesson in why it is going to be extremely hard for plan fiduciaries to act prudently if they become charged with overseeing private equity and other alternative investment options in their 401(k) plans. My advice to plan fiduciaries confronting this issue is right here, and hasn’t changed since I wrote it.
  5. There was a lot of competition for the coveted fifth and final slot in this week’s Five Favorites for Friday. Among other candidates, I could have easily gone with this podcast on the changes AI will bring to liability standards in medical malpractice litigation, or this article detailing the growth in class action ERISA litigation in 2025, or a host of other worthy contenders. But instead I am going with this article on the status of cyber insurance and related developments in Asia. What I like most about it is that it illustrates the interrelationship between the growth of this line of insurance and real time developments in the world of cyber risk, including government efforts to protect against cyber exposures.

I really like a good theme. I can’t help it – it’s the trial lawyer in me. Frankly, I not only like a good theme in an opening and closing at trial, but in an oral argument on appeal or in an appeal brief. Themes help tremendously with communication, particularly in litigation.

So it won’t surprise you to learn, given the happenstance that this week Friday falls on Halloween, that today’s post in my Five Favorites for Friday series abides by the hackneyed convention of having a Halloween theme. Below are five things in the realm of insurance and ERISA that, as we sit here today, I find scary, at least metaphorically. Less metaphorically, they are, to be fair, all things that I worry about for my clients and that some of my clients do, in fact, find scary.

  1. If I owned or ran a smaller to middle market business, this would be scary. Chubb issued this report on the fact that the growth in cyber losses and claims is in these smaller companies, but at the same time, reports they are less likely than their much larger brethren to carry cyber insurance. It reminds me a little of excessive fee litigation under ERISA, or my days back defending patent strike suites and responding to copyright trolls – smaller companies can often be better targets, while having less resources to defend themselves against claims and to respond to the risks, which is one of the reasons they get targeted. It’s a vicious cycle, actually. Having experience both with litigation in this space and with coverage for these types of claims, I would suggest management of smaller companies focus on addressing coverage for these exposures – if they do, it may be less scary for them by next Halloween.
  2. Of course, nothing is really as scary in the insurance world as climate change. Premium increases, carriers leaving markets, massive natural disaster exposures – it’s just one terrifying horror after another. It’s like the business and insurance equivalent of spending Halloween in Salem, Massachusetts, while being chased by Jason from Friday the 13th. I have written before and extensively about the general business and the insurance risks of climate change, including this post on the question of whether insurance can survive climate change and whether, if not, modern capitalist economies can survive the resulting loss of insurance capacity. Marsh addresses many similar questions, and in particular how sustainability, insurance and business needs interact in this regard, in this excellent, if somewhat depressing, podcast.
  3. I don’t personally find parachute trial lawyer Chad Colton all that scary, although his adversaries in court may feel differently. What I do think is scary though, particularly for insurers, are defense lawyers who make the mistake, as Chad explains in this video, of approaching cross-examination by trying to box the witnesses’ ears. A while ago I tried the bad faith case that arose from an unexpected multimillion dollar judgment awarded by a jury on a case that likely should have been, but was not, won by the defense. Courtroom observers at the time attributed the outcome to the very talented and experienced defense lawyer metaphorically beating up the sympathetic plaintiff as well as his lovely wife on the stand, rather than letting them be and focusing the defense on the razor thin liability theory. In my study over the years as part of my litigation of bad faith claims of nuclear verdicts as well as surprise verdicts, I have found that defense tactics that just increase the existing sympathy for an injured party are a consistent part of the story. So yes, what Chad cautions against is scary, if you are an insurer or corporate defendant. I am not sure it is so scary if you are a plaintiff’s lawyer with a weak liability case but a sympathetic plaintiff, however.
  4. You know what I do think is particularly scary if you are an insured or an insurer? The need and interest of insurers to write exclusions for AI to include in coverages. As this article points out, there is a significant issue of how to word the exclusions to exclude what is meant to be excluded, and no more or less. This isn’t going to be as easy as it sounds. When policy language is well drafted, there is limited dispute later over whether certain types of claims are covered. We saw this, for example, in the business interruption coverage cases arising out of the pandemic, where most denials of coverage were upheld based on language that was well drafted to handle the risk, even though the ability to foresee the scope of the pandemic and the resulting business losses at the time the policies were issued or when the language was drafted was limited. On the other hand, for those old enough to recall it and, if you aren’t, for those who want to read up on the history of it, there were decades of massive coverage litigation concerning exactly what types and extent of asbestos related exposure was precluded by the wording of different exclusions. For me personally, I spent a good amount of time in 1987, as a paralegal fresh out of college, searching periodicals in the Library of Congress seeking extrinsic evidence for use in arguing what meaning should be attributed to certain wording in the exclusions at issue. How underwriters and coverage lawyers define AI and choose language for use in capturing this latest exposure in policies and their exclusions is going to decide whether coverage for AI liabilities ends up over time playing out more like coverage for business interruption after the pandemic, or instead more like coverage for asbestos losses, or perhaps more likely, somewhere in between those two polar extremes.
  5. If I were a plan sponsor or fiduciary, I would definitely find scary the idea of alternative investments, such as private equity and crypto, suddenly appearing in the target date funds or other investment choices in my 401(k) plan. I think that one’s going to work out to be all treat for the financial industry and all tricks for plan fiduciaries, who you can safely predict will be facing years of litigation and potentially significant liabilities – whether covered by insurance or not – from this development. Senators Warren and Sanders have much the same thought, as discussed in their joint letter to the relevant regulators. I have offered advice to plan sponsors on staving off these scary investment products a couple of times, including here and here.

I have litigated, arbitrated and advised on coverage and bad faith disputes from the U.K. to Guam and in every or practically every American jurisdiction in-between. (If you add in reinsurance claims I have worked on, you can add a couple more continents to the list).

Coverage itself, because it’s basically at heart a contract based inquiry, is reasonably consistent – to at least some extent – from one jurisdiction to the next.  But bad faith, when an insurer has to settle and what are the penalties for failing to settle when it was required vary greatly from one state to the next.  And so I am not surprised when I get, as I often do, inquiries from insurers and lawyers located elsewhere concerning exactly what an insurer’s duty is in Massachusetts with regard to the obligation to settle claims.

I thought, as sort of a public service, I would share my sort of “cheat sheet” that I often pass along on the basic outlines of these obligations in Massachusetts. It basically sums up, without cites and in more neutral terms, what I typically describe as the law on these issues in requests for conclusions of law, motions for summary judgment or other court filings.

So with that introduction, here are the key highlights of the duty of an insurer to settle claims in Massachusetts, and the liabilities that can run with breaching it:

• Massachusetts General Laws Chapter 93A, applied in tandem with Chapter 176D (which bars unfair insurance practices) requires insurers to act reasonably with regard to settlement of claims.

• An insurance company commits an unfair claim settlement practice if it “[f]ail[s] to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.” Chapter 176D, § 3(9) (f). Someone who is injured by a violation of that provision is entitled to bring an action to recover for the violation under Massachusetts General Laws Chapter 93A, § 9.  If there is a finding in such an action that the insurer failed to effectuate a prompt, fair, and equitable settlement causing injury, the plaintiff is entitled to the greater of actual damages or statutory damages of twenty-five dollars. However, if the judge finds the insurer’s action was willful or knowing, the judge must grant double or treble damages.

• When an insured’s liability becomes reasonably clear, an insurer has a duty to settle a case. 

• An insurer’s duty to settle arises only once liability has become reasonably clear, and the term liability, for these purposes, encompasses both fault and damages. As long as either the insured’s responsibility for the accident at issue or the claimant’s damages remains in dispute, an insurer has no duty to settle or to even make a settlement offer.

• Liability is not reasonably clear where a tort defendant possesses a valid defense; where an insurer has a plausible legal or factual position that there is no covered liability, even one that ultimately turns out to be mistaken or unsuccessful; or where an insurer relies on independent advice from an expert witness suggesting a reasonable prospect of success at trial.  When an insurer sincerely, reasonably and legitimately views the question of liability as a toss of the coin, liability is not reasonably clear. 

• Under these standards, technically, an insurer is not obligated to settle a claim, and cannot be liable under Chapter 93A for failing to settle a claim, unless liability has become reasonably clear. If liability is not reasonably clear, an insurer is not required to settle the case

• Technically, even after liability becomes reasonably clear and a duty to settle arises, the insurer is still allowed to negotiate reasonably and will not violate Chapter 93A if it does so but the case still does not settle.  An insurer’s obligation to exercise good faith does not require it to roll over and play dead vis-a-vis the claimants; nor does the looming of an excess judgment debar an insurer from employing conventional negotiating stratagems in good faith. Massachusetts law recognizes that negotiation is an art, not a science. In practice, however, if the court ruling on a Chapter 93A action believes the insurer’s offers were too low, too slow or otherwise unreasonable in comparison to the demands or the claim itself, a court will likely find a violation of Chapter 93A, if liability had in fact become reasonably clear.

• Generally, damages imposed for a violation of Chapter 93A are actual damages, or either double or treble actual damages if a court determines that the violation was willful or knowing. Where a judgment has been entered against the insured, however, the damages awarded under Chapter 93A can be significantly higher. Under Massachusetts law, if an insurer commits a willful or knowing Chapter 93A violation that finds its roots in an event or a transaction that has given rise to a judgment in favor of a claimant, then the damages for the Chapter 93A violation are calculated by multiplying the amount of that judgment.

• After a verdict has entered against the insured, an insurer must reasonably consider the likelihood of success on appeal in deciding whether to pay the verdict or instead appeal.  The reasonableness of the insurer’s settlement offers at that point must be evaluated in comparison to the strength or weakness of the appeal.  An insurer’s duty to settle a case does not end with the judgment, unless the insurer promptly pays the judgment. When the insurer causes a notice of appeal to be filed, the insurer continues to have a duty to settle what is now the appellate litigation. While the standard under Chapter 176D, § 3(9)(f) still applies after judgment-the insurer must still provide a prompt and fair offer of settlement once liability has become reasonably clear-the existence of the judgment should change the insurer’s evaluation of what constitutes a fair offer and whether liability has become reasonably clear.

It’s not just happenstance that this weekly round up section of my blog is called “Five Favorites for Friday.” It’s in honor of Elmo, who did not rap about the number four, or nine, but the number five. Thus, “Five Favorites for Friday.”

And so let’s get right to it, as there is a lot of ground to cover. As is the case most weeks, I could have listed many more items beyond just these five, but that’s not how Elmo rolled.

  1. In my day job as a bad faith lawyer, I have, over the past thirty years, litigated, including trying, the bad faith and coverage cases that inevitably follow on the heels of a nuclear verdict or other unusually large or unexpected jury verdict.  There are commonalities in the cases that give rise to such verdicts, and it is also fair to say that they don’t occur in a vacuum.  Moreover, it’s also not generally fair to just attribute nuclear verdicts to emotion on the part of a jury, because if, as I have done on many occasions, you closely review the record in such cases, you will see that there are always other issues in play. Is this story of the Massachusetts Supreme Judicial Court examining the standards governing punitive damages awards after a $1 billion (yes, that’s right, billion with a “b”) punitive damages award the story of a nuclear verdict? Of course it is. But it may also have been the right number for the jury to grant under the controlling standards, depending on what the evidence was in the case.  And thus the real question may be whether numbers have grown so big, both in terms of the revenue of defendants from whom punis are sought and in the amount that applicable standards allow to be awarded as punitive damages, that it is now necessary to impose additional standards that limit the amount of a punitive damages award to one that doesn’t, as the $1 billion award does, stop readers in their tracks.  But that’s a question of how much we think is the most that a jury should be able to punish a party.  Thought about this way, this case and the issues it raises concern a policy decision as to how much in punitive damages is too much, or in other words whether there should be a cap on recovery, an issue that perhaps more properly belongs to the Massachusetts legislature to decide. It’s not, when thought about that way, really a question about the competency or emotions of those who sit in a jury box and who, in my view, often get an unfair rap in arguments over nuclear verdicts.  In my study of unexpectedly large verdicts, they don’t come about simply because the jury got mad, but because there were elements in the case that made them mad, and which could have been predicted to have had that impact.
  2. As long as you have the Massachusetts Lawyers Weekly open to the article on $1 billion verdicts, take a look at the article surveying in-house counsel on the cost savings to them of having their outside counsel be AI competent. As I have discussed in a number of places, including in this blog post, this article and this article, lawyers in private practice should be becoming more efficient and effective by means of AI tools. I know I am, and can give you hard firm examples of it happening. One real life example was the elimination of time that would have been invested by junior associates in helping me prepare for an oral argument because, instead of asking for a memo on a particular subject while I worked on other aspects of my argument, I could instead sufficiently satisfy myself on the issue by doing my own AI assisted research when I had an open couple of hours late at night (and yes, I did read the cases it came up with, just as I would have read the cases in a memo prepared by a junior associate before I would have walked into an appellate court and cited them). But as this article in the Massachusetts Lawyers Weekly points out, in-house lawyers – otherwise known as clients – don’t believe they are seeing the benefit of that in the bills they are receiving from their lawyers. I have argued before that technological advances in providing legal services lead to bigger and richer law firms, rather than lower bills – and personally, I hope we are not seeing that same dynamic occur with AI. Time will tell, I suppose.
  3. Two things I really like are football and arbitration. One thing they have in common is that an awful lot of freedom of decision is granted to the decisionmaker, i.e., the ref in the former and the arbitrator in the latter. Another thing they have in common is that anyone who has watched a lot of football, and any lawyer who like me, has arbitrated a lot of cases, knows that on the ground and in real time, the outcome of either type of contest can be a little, well, unfair and even arbitrary. This article about overreach in the context of arbitration by the NFL, written by noted reinsurance arbitrator Robert Hall, really illustrates the extent to which arbitration can simply be a tool for the more powerful party in a given transaction to assert itself unfairly, in ways that probably would not be possible in a courtroom under the rules of evidence and the control of a judge. It’s also a story of how the courts themselves occasionally step in to fix that problem. It’s not a long read, but kind of fun – and it gave me an excuse to write this extended metaphor (now mercifully concluded) comparing football and arbitration.
  4. Two of my favorite founders, Jack Newton of Clio and Kevin O’Keefe of LexBlog, in a podcast. What more do I have to say? It’s only twenty minutes so give it a listen. You can watch and listen here.
  5. Finally for this week’s edition, they say that inside every lawyer is a frustrated novelist. (I prefer to say that inside every lawyer is a novelist who got waylaid by familial and societal expectations on his way to the publishing house, or didn’t want to live off of barista wages for years while writing a first novel, but maybe that’s just me). If that’s true, then inside executive compensation lawyers with their endless obsession with minute contractual terms must be novelists who favor a lot of details, like in a Russian novel. That’s a long way of saying my partner, long time executive compensation lawyer Mark Poerio, has just published his first novel, set in Italy and woven around the history of an order of monks. You can find it here.

I appreciate being named a Massachusetts Super Lawyer. I happen to know a lot of the lawyers on the list and have litigated against many of them. I know from their presence on the list that it’s the real deal.

But at the same time, I am never really all that comfortable broadcasting it and never really know what to say about it. I am from the generation of high school athletes, after all, who were taught when you scored, to act like you have been there before. Nowadays, if you gain two yards for a first down on second and inches, you strike a Heisman pose!

Anyway, I have in fact been named a Super Lawyer again this year and appreciate the honor. You can find more information on me being named a Super Lawyer here.

My “Five Favorites for Friday” series is quickly becoming one of my favorite undertakings. It’s a terrific opportunity for me to go back over the stories and videos that have crossed my desk during the week, and think about what they mean for my practice, my clients and the readers of my blog. Hopefully, you find it is as useful an exercise as I do.

For those of you who may be new to the series, here is the original post introducing the series. Last week, I noted that I could have covered twice as many topics as the five that I did pick out, and the same is true this week. Nonetheless, I am going to restrain myself and limit it to five items. So here we go:

  1. I am a huge fan of ESOPs. I have seen more employees retire with real wealth, more companies improve their performance, and more founders cash out happily from the use of this tool than from any other business transaction that I have observed or been involved with over the past thirty years. Now granted, as a litigator, there is a certain selection bias in play – for instance, when I see a private equity roll up, it’s usually because the deals have fallen apart and litigation has sprung to life, not because the deal went great and a lot of people who would otherwise be employees ended up with an excellent exit. This article here, by two lawyers at Foley & Lardner, on the ESOP process and structure, is an excellent place to start if you want to understand exactly what an ESOP transaction looks like.
  2. In last week’s “Five Favorites for Friday,” I discussed why insurance is a wildly underrated career field for young professionals. In the same vein, today I am including these excellent short video clips from MS Amlin that explain why underwriting complex risks is similar to being a Hollywood stunt person. I know what you are thinking – I am sure it is similar to my initial response to the premise. But watch the clips and I suspect, like me, you will end up convinced that the comparison is apt.
  3. I love this article by two lawyers at Pillsbury on what insureds should know about triggering insurance coverage for long tail exposures. They draw on the lessons of the old school classics in this genre for their guidance, namely the asbestos and environmental coverage disputes of the 80s to the early part of the 21st century. (The authors note that “as of 2024, insurers had paid $121 billion in asbestos and environmental-related losses under policies they have issued to policyholders.”) My professional and personal experience tells me the authors are absolutely right both in the lessons they draw from that time period and their belief that those lessons resonate today. I was actually the paralegal who, back in the 1980s, spent weeks sitting in the Library of Congress finding old periodicals to be used in deposing underwriters on the question of what they thought asbestosis actually was when they were excluding it from policies, and in the early 1990s I was the junior associate on some of the key Massachusetts pollution exclusion cases. In fact, almost twenty years later, I was still litigating some of the same long tail issues when I tried a reinsurance dispute concerning long tail environmental losses involving occurrence policies from decades ago.
  4. Nothing going on in the news has changed my position and views on the use of alternative investments in 401(k) plans. See here, for instance. I am a lot more sanguine about lifetime income options being added to 401(k) plans, depending on how it is done, if only because I know from my own clients that some participants want them within plans and, further, they can actually solve for participants an actual problem they are concerned about, namely the risk of outliving their money. However, the devil is in the details on this one, and this essay by The CommonSense 401(k) Project on the use of annuities in plans is worth a read in this regard.
  5. I have written many, many posts on the central role that the insurance industry has to play in addressing climate change issues, having first written about work by Lloyd’s on this issue around a decade ago. The unbreakable relationship among the industry, losses from climate change and the necessity of functioning insurance markets in the operation of modern economies makes insurance carriers central to any economic incentive to target the problem. The same, it is increasingly obvious, is true for handling cyber risks to modern economies – as is pointed out by Zurich in this whitepaper addressing the extent of uninsured and uninsurable cyber risk, and the need for public and private coordination to address it. Hat tip, as we used to say in the early days of blogging, to Mark Flippen and broker Lion Specialty, for bringing it to my desktop.

I talked briefly about withdrawal liability in my very first “Five Favorites for Friday” post, which you can find here. Because there is often so much money at stake, and because unions are aggressive in pursuing and claiming withdrawal liability payouts from departing employers, and because departing employers so want to not pay withdrawal liability if it can be avoided, there is a steady stream of significant and, if you are at all interested in the subject of union pension obligations, fascinating decisions on the subject of withdrawal liability.

The latest is out of the Seventh Circuit, in the case of SuperValu, Inc. v. United Food & Com. Workers Unions & Emps. Midwest Pension Fund, which is discussed in detail here. The Court focused on applying the literal terms of the statute, and rejected the employer’s arguments that policy concerns required reading the statute in a manner that would have reduced the employer’s withdrawal liability payout.

As I have discussed elsewhere, in my experience, creativity in arguing for a reduction of withdrawal liability, followed with any luck by settlement negotiations, is typically an employer’s best bet for reducing withdrawal liability. As the Seventh Circuit’s new decision reflects, taking on the statute and its requirements directly is typically not all that effective of a tactic.

My final note on this case for today is that if you are interested in reading a good, overall explanation of withdrawal liability, the Seventh Circuit provides a good one in SuperValu, which you can read in full here.

As I discussed in this earlier post just last Friday, I am now running a series of posts, each to be published on Friday, covering five articles of interest that I didn’t have time to write about – or write enough about – during the week just ending. This past week was busy and full of interesting stories to write about, and I could have easily made this post Ten Favorites for Friday, instead of five, but then the alliteration would be missing. So here goes with this week’s Five Favorites for Friday.

  1. Lawyers cannot get enough of writing about and talking about fees, for a lot of reasons. See here, for instance. But for an ERISA lawyer, the topic has particular resonance, because of all the statutes with fee shifting provisions, I suspect fee awards arise more under ERISA than under just about any other statute, because of the ubiquity of benefit disputes. But to someone like me, who also litigates insurance bad faith disputes, fee award issues are particularly salient because in many states, including in my home state of Massachusetts, fee awards can be entered against insurers in bad faith cases. Here’s a great story on whether it’s proper for a trial court to consider the size of a firm seeking an award when determining the hourly rate to apply to a fee request.
  2. It’s cyber insurance all the time, on all channels, as well it should be. Cyber risks are central to many industries, are a primary and prominent insurer exposure, and are the focus of attention with retirement plans in particular. Here’s a great article on the current state of the cyber insurance market.
  3. Speaking of cyber, I am currently litigating a data breach dispute, and the offshoots over shifting the loss among multiple potentially responsible parties. On my usual home turf of ERISA litigation, cyber is the 800 pound elephant of liability staring at plan fiduciaries. They and their lawyers should all be conversant on the subject and if they are not, I cannot think of a better place to start learning about it than this webinar, scheduled for next week.
  4. While I understand the reasons why, subjectively, insurance seems boring to young professionals and recent graduates picking a career, objectively speaking that interpretation is just plain wrong. You want international travel and work? I have mediated and litigated coverage cases in Scotland and London, and litigated in Guam. Want to make an impact on climate change? The industry has been at the heart of the issue since before most, and remains focused on it as an existential crisis. I discussed these points here and here, among other places, for instance. Anyway, that’s a long way of saying it’s a wildly underrated career field, and this article provides a nice discussion of that point.
  5. Not too long ago, a jury awarded nearly $40 million to plaintiffs in an ERISA breach of fiduciary duty case. I prefer the written word, but if you are an auditory learner, this is a pretty good YouTube explainer on the case.