It’s the first Friday of the Year of the Horse, making it time for the first Five Favorites for Friday post of the year. As a reminder, every Friday, I do an entry in this series, each of which covers five topics, posts, articles, podcasts or videos that caught my attention over the preceding week but which I didn’t have time to post about in any depth on either this blog or LinkedIn. For those of you who may just be joining this series with the start of the New Year, you can find the first entry, and more information about the series, here.

A tremendous amount of interesting information crossed my desk this past week, but I narrowed what I wanted to talk about today down to the following five. So let’s get to it.

  1. They say that a fish doesn’t know it lives in water, meaning that we often don’t recognize the details or unusual aspects of the environments that are native to us. I thought of this when I read this article about the growing scope, use of and industry capacity for captive insurance. Probably because the Harvard medical institutions used a captive insurer structure when I started out and I did coverage and bad faith work for their excess insurers, I spent large amounts of my time in the first decade or so of my career working on captive insurance issues. It even involved working with the captives, the insured entities, reinsurers and others to resolve what we would now call nuclear verdicts against the insured entities, as well as being the junior associate on some fascinating coverage and bad faith disputes related to the actions of captives. Like the fish in water, captive insurance was just the environment I was in, and I thought it was a commonplace structure across the industry. It literally wasn’t until I read this article on its expanding use in the industry that it occurred to me that captive insurance is actually a little bit of an unusual beast within the industry as a whole.
  2. Nevin Adams wrote a great end of the year review of ERISA and retirement plan developments in 2025. It’s the kind of article I would have loved to have written, but that a practicing ERISA lawyer just could not possibly find the time to write at the end of the year, given plan amendment and other end of the year deadlines. I agree with Nevin’s conclusions and view, though, that for a year in which there was no significant statutory activity, it was a ridiculously challenging year for retirement plans from an operational and execution perspective.
  3. I am going to say out loud what most clients and potential clients or target audiences already know – most law firm newsletters and similar content are useless pablum. A few are really good and I read them. What makes them different? They either tell me in depth how to solve a particular knotty problem in my field or they use hard won expertise to provide some guidance about the near term future. In the latter category, I like this Haynes Boone newsletter’s article addressing the halting progress towards developing a consensus on how policy language should be read in regards to cyber claims. History is littered with decades of coverage litigation caused by the uncertain fit of particular policy language to widespread risks, such as pollution, and whether that will occur as well with cyber losses in the future is a key issue to study and plan for.
  4. I have written numerous posts and articles cautioning plan sponsors, fiduciaries and their lawyers about rushing head first into adding alternative investments to the 401(k) plans they oversee.  This particular post here is the keystone of my thinking on this issue, and I have written numerous other articles, blog posts and LinkedIn posts to the same effect or on narrower aspects of this issue.  This series of podcasts points out a broader point as to why plan fiduciaries and their counsel should play it safe and stay on the green on this issue – there is just way too much uncertainty on way too many issues concerning the economy for it to make sense for plan sponsors or fiduciaries to play hero ball or to get ahead of their skis right now on any issues where they don’t have to do so right now.  And adding alternative investments to 401(k) plans is one of those issues.
  5. I have written a great deal on the two faces of ESOPs.  When done – and run – in good faith, they are the embodiment of the best of capitalism, a win-win for both employers and employees. But their design and operation are open to manipulation and, with it, litigation, to the detriment initially of the employees and eventually, through the costs and potential liabilities of litigation, employers and company founders.  This write up by Kantor and Kantor of a case – Botterio – alleging misconduct in operating a plan illustrates my point.

Continuing with the countdown of the top ten most popular blog posts, LinkedIn posts and articles I published this year, we come to the ninth most popular, an article on LinkedIn from the summer which asked the question of “How is Private Equity Like a Coffee Frappe?”

In addition to explaining that frappe is New England speak for milkshake, the article also addressed how sponsors and fiduciaries of 401(k) plans should respond to the political and marketing pressure to add private equity investments to those plans. The underlying theme was that, just like a frappe for a middle- aged lawyer, private equity investments in plans aren’t good for plan fiduciaries, but nonetheless we are all likely to give in to the allure of each. While I have no advice on how to avoid the harms of downing a frappe, I have plenty of advice on how plan fiduciaries can reduce the harm from falling for the allure of private equity investments. And I discussed that advice in the article, which was the ninth most popular blog post, LinkedIn post or article I published in 2024.

Last year, I did a top ten countdown of the ten most popular posts on this blog in 2024, inspired by how radio DJs in my youth would count down the top 100 songs of the year to close out the year. It was a lot of fun and people seemed to enjoy it, so I am doing it again this year.

However, this year, I am changing the rules of the contest a little bit. First, the pool of competitors has been expanded from just blog posts to also include LinkedIn posts and articles, so that the countdown is now of my top ten blog posts, LinkedIn posts and articles on LinkedIn in 2025.

Second, last year’s countdown was solely based on numbers – in other words, the most popular post finished at number one in the countdown, the second most popular post finished at number two in the countdown, and so on down the line. This year, a more subjective element is being added to the judging as well, sort of like the way Soviet judges would put their thumbs on the scale in ice skating or gymnastics judging in the old days, even though the results were supposedly objective and mathematical. So in effect, standings in the countdown will be based on two elements – the first strictly numerical in terms of readers, the second subjective, in terms of quality or interest value, in the eyes of the judges (i.e., me).

So without further ado or introduction, let’s get right to the countdown. Here is the tenth most popular blog post, LinkedIn post or article on LinkedIn for 2025, which was my blog post titled “Best Practices for ERISA Plan Sponsors and Fiduciaries in a Changing World: Handling Vendor Contracts.” As the title suggests, it was part of my series covering the need for ERISA plan sponsors and fiduciaries to modernize their practices, and covered the art of negotiating and interpreting vendor contracts in the ERISA space.

You can find my Tenth Most Popular post of 2025 here.

Boxing Day is my favorite post-holiday holiday, similar in many ways but better than the day after Thanksgiving, because the latter has, over the years, been overtaken by pressure to either shop or get started on end of the year rushes for work. Boxing Day, at least for me, suffers from none of that.

Boxing Day this year falls on the very last Friday of the year, making it also the last scheduled date for publication in 2025 of my Five Favorites for Friday series, in which I typically discuss five topics, articles, issues, podcasts or videos that I didn’t previously get a chance to blog about or discuss in a LinkedIn post.

In honor of Boxing Day falling on the last Friday of the year, I am changing the rules for this weekly post and publishing a slightly revised version of my weekly Five Favorites for Friday post. This one consists of five of my favorite items covered in this series over the past year. Think of it as Five Favorites from Past Five Favorites for Friday, or something like that.

Here goes:

  1. Nuclear verdicts are, in my opinion (which is based on decades of studying them for purposes of resolving and, where necessary, trying the insurance bad faith and coverage claims that arise from them), driven by a number of identifiable factors, including changing views of jurors of the world around them. Employers and insurers need to think carefully about what a recent nuclear verdict, including an award of $10 million in punitive damages, in an employment discrimination action, tells us about how jurors are viewing workplace dynamics. For what it’s worth, I predicted the expansion of nuclear verdicts from the personal injury environment to the employment context years before it happened, in this post. This is the next big frontier for nuclear verdicts.
  2. 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.
  3. 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.
  4. You know what I 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, you may find it valuable 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, reading insurance industry 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. $90 million is a lot of money. Even the judge who awarded it as bad faith and Chapter 93A damages against Liberty Mutual because she found unreasonable claims handling and believed the case law to leave her with no discretion in this regard, thought it was a disproportionate award. On the flip side for Liberty Mutual and other insurers who are presumably looking at the ruling in horror, if there was ever a decision perfectly written to allow an appeals court to revisit various aspects of bad faith law in the Commonwealth and rein in some of its most debatable aspects, this is the one. And I don’t mean that in a negative way with regard to the opinion itself – the decision is an excellent analysis and presentation of the totality of a complex area of law and of decades of case law (the judge actually goes so far back that she cites a decision from the first Chapter 93A case I ever tried, back in 1995). Instead, I mean that the Court’s scholarly treatment of the issues presents the perfect trial court decision for testing the appropriate scope of recovery in such cases. I discussed the opinion here.

I have been thinking more and more about the tactical questions raised by the recent $90 million bad faith judgment under Massachusetts Chapter 93A against Liberty Mutual, which I discussed here. By sheer good timing, it was issued just as I was leaving to attend a major insurance coverage conference and also just before a number of end of the year meetings and lunches with clients. The decision generated plenty of discussion.

I don’t represent any of the parties and, as I have said before, I don’t have a bias against the statutory enforcement under Massachusetts law of reasonable claims handling practices. Having studied and litigated the issues for decades, including in relation to nuclear verdicts and runaway juries, I believe that the standards governing multiple damages in this scenario are due for rethinking. Maybe that rethinking ends up with the standards exactly where they are now, and if so, that is fine. But too much of the current regime governing this type of claim, and in particular multiple damages awards, has essentially been driven by simple extension of prior precedents, or by the phenomenon whereby bad facts drive an outcome, or both. I think it may be time for the courts to step back and look at the body of law as a whole, and ask whether the legal standards still work correctly and actually fairly address the harm at issue. In fact, I think that’s effectively the same question posed by the trial judge who entered the judgment, who raised the question in her opinion as to whether the $90 million award aligned with the harm but noted that the case law required that outcome.

Judges sometimes write opinions that read like treatises, covering the history of a particular area of the law in depth and synthesizing inherent conflicts or ambiguities already present in the case law. Judge Woodlock, on the federal District Court bench in Massachusetts, did it on the scope and nature of equitable relief under ERISA in a long decision in one of my cases, discussed here in this article. The judge did that here as well, this time for Chapter 93A and multiple damages law in Massachusetts. She thoroughly discussed the historical development of the case law, citing three or four of the decisions in my own cases over the years and even going so far back that she cited the opinion in the first Chapter 93A case I tried, back in 1995.

I don’t know if it was the judge’s intent, but the depth and breadth of the opinion makes it a natural vehicle for asking the Massachusetts appellate courts to revisit the key legal issues that led, here, to a massive multiple damages award, under circumstances where an award of half as much (or less) would have still fully served the remedial and deterrent purposes of the applicable statutes.

It’s a lot to ask, given the amount of the judgment and the interest that accrues on a judgment in Massachusetts, but the insurer here should think long and hard about not settling this action and instead prosecuting an appeal for the exact purpose of advancing the case law under circumstances where additional clarity could be obtained on some of the central issues in bad faith law in Massachusetts.

In my discussions with interested and knowledgable observers, many have pointed towards the ratio of the multiple damages award to the original possible settlement ranges in the underlying tort case as a likely target for appeal and as the basis for a reversal. If I were the insurer, though, I would argue that only as the fallback option for the court on appeal.

Where would I focus an appeal instead? On the standards of when and under what circumstances a violation of the claims handling obligations imposed by Massachusetts law can support the findings necessary to trigger a multiple damages award. Over the years, Massachusetts courts have often addressed these standards with amorphous characterizations and phrasings, or else in very fact specific rulings. As a result, an appellate court could easily clarify these standards, without overruling prior decisions, on the facts of this action, by finding that the claims handling in this action may have violated the relevant statutes but was not sufficient to satisfy the standards for multiple damages. In so doing, the court could establish a clear baseline – namely, the facts of this action – for violations that only warrant single damages, and for what baseline has to be soundly cleared to trigger multiple damages.

Because in my reading of the $90 million bad faith verdict, the issue is only secondarily the amount and how that was driven by the statutory rules governing multiple damages awards in Massachusetts bad faith actions, and instead the primary issue is the bar, which is not high enough, for triggering such an award in the first place.

It’s that time of the week again! As some of you know, every Friday I cover five of the many things that have crossed my desk over the week, but which I have not had time to write about yet, in one fell swoop. Here are this week’s five winners.

  1. This is a terrific article about pricing, underwriting, coverage limits and insureds’ knowledge of their coverages with regard to cyber insurance at this point in time. What’s most interesting to me about it is that it reflects that insurers believe they now have their underwriting approach squared away and the positive impact that is having for insureds with regard to cyber coverage. It illustrates how in the best of markets, insureds and insurers both benefit from an informed, well-adjusted market for particular coverages. Over time, neither insureds nor insurers benefit from a poorly priced market caused by the novelty of a developing risk or lack of accurate information. Equilibrium serves everyone better over time, as the article reflects.
  2. About 10 or 15 years ago, I got involved in a blog battle with some scholars of retirement over the financing cliff faced by social security and also by some pension plans (particularly public), when I suggested that one central aspect of any fix would be to raise the retirement age. My adversaries suggested that this was a fine idea for someone like me, a knowledge worker who went to the gym at lunchtime every other day, but that for many people with physical jobs, that wasn’t really a useful suggestion. I had to admit at the time that they had a point. I thought of that long ago debate when I came across this detailed article explaining how the data actually supports the position that later retirement ages are actually better for health and longevity. If you accept the data and the analysis, then it is possible that the proverbial knowledge worker – along with the society that has to bear the costs of health declines in an aging population – is better off retiring as late as possible, and not linking that to the invented construct of 65 as the proverbial age of retirement. And if you accept that, then maybe many of the rules around ERISA – such as required minimum distributions – are ill thought out, as vestiges of a belief that retirement, and the burning off of retirement assets, should occur on some sort of standardized timeline.
  3. I insist so far on remaining neutral on the question of whether the push to put private equity and other alternative investments into 401(k) plans is appropriate or, instead, just the latest version of the old saw that Wall Street sees retail customers as the dumb money. I remain neutral because I still don’t believe I have seen legitimate, confirming data that adding these asset classes into 401(k) plans will benefit participants and increase their returns without excessive increase in volatility or other risks, and until that point is established, any such move by plan sponsors and fiduciaries puts them, more than anyone else other than the participants themselves, at financial risk. At the same time, to be fair, no one has yet convinced me, on data and not just supposition and argument, that there is no possible way such assets could benefit participants. And thus being an evidence-based lawyer (always useful in a litigator) and an evidence-based skeptic in general, I am still waiting to be convinced one way or the other. However, here is a good story on exactly why moving plan participants into these assets may just not work out well for plan participants or others who end up holding those assets when they are moved out of private equity vehicles. And as I have written many times, including in this guide for plan fiduciaries on how not to end up getting sued over this issue, outcomes like these, with potentially serious losses on these types of assets, make it very risky for plan fiduciaries to make the decision to add these classes of assets to plans.
  4. Is there a bigger bane in the backside (to clean up a barnyard epithet) for ERISA plan sponsors and administrators than uncooperative, unresponsive or outright missing plan participants, particularly when required minimum distributions come due? Well, one thing that will make that less of a pain for those who have to work around them is this excellent guide to “Complying with the Required Minimum Distribution Rules When Participants Are Unresponsive or Uncooperative.” Information and knowledge are always power, and so too with this problem.
  5. Nuclear verdicts are here to stay. As I have written before, changes in wealth distribution, housing costs and educational costs, which have reinforced an economic caste system that is obvious to anyone sitting in a jury pool, along with the increasingly public flaunting of wealth, has entirely changed the makeup of jury pools and how jurors value losses when they deliberate. When the lost income component of a case involving long term harm to a worker adds up to less than the jurors know the house down the street from them costs, or wouldn’t be enough to cover state college tuition, or whatever other comparator you want to use, it should not be surprising that juries now put a lot more zeroes in their awards for pain and suffering or other amorphous parts of damages awards than they did twenty years ago. Here is a terrific and up to date article on what that means for insurers and corporate defendants.

So much to choose from to write about this week, but I am, by my own rules for this series of posts, limited to five topics. I noted last week that there was a risk I would beat holiday jokes into the ground this month, and here I go again, starting with an article about Santa, and then moving onto AI generated holiday scenes.

  1. Santa Claus is coming to town. Or maybe not. As this Planet Money article reflects, demand for hiring Santas for the holidays is down significantly. Why does this matter and, more importantly, why does it matter for the purposes of the topics of this blog? Well, we all have our favorite tells about the economy. For me, before the pandemic and the rise of remote work, a clear leading indicator of an upcoming economic downturn was when it started getting easy to get a parking spot for the 8 am commuter rail train into Boston, as you could never get a spot during a boom (you had to instead get there for the 7 am train). On the other hand, once the lot, empty for months or years, began filling slowly up again in the morning, it was a leading indicator that we had hit bottom and it was time to buy the dip. Less Santas almost certainly correlates to less holiday spending, which likewise almost certainly correlates to less financial confidence on the part of employees – as I have written before (including here, in the last item), what harms the labor market reverberates in increased ERISA litigation, including breach of fiduciary duty claims over benefit plans. I have never had more class actions on my docket than within months of the 2008 collapse, and wouldn’t finish off the last of my Great Recession driven lawsuits until more than six years later. So pay attention to the underemployed Santas – they are likely a sign of rising risks for plan fiduciaries.
  2. An angry internet mob bearing pitchforks has come for a McDonalds’ ad featuring AI generated actors and scenes. I don’t know – personally, I think the ad is kind of funny. Watch it yourself here and see what you think. (Me, I love the part where the cat takes out the tree). What’s not funny when it comes to AI, though, is the potential mischief that may come from allowing AI into the claims handling process. As I discussed last week in this post, massive bad faith judgments are being imposed against insurers based on the pattern of errors that can show up in a claim’s history simply because human judgment, which is all claims handling really is, is not infallible. While AI has some real potential to improve claims handling, primarily in ensuring that the information on which judgment calls are made is accurate, well documented and thorough, it is not going to remove human judgment or the fallibility of human judgment from the process, and thus any fantasy that AI will perfect claims handling is just that, a fantasy. But it can improve it. And as insurance broker Mark Flippen pointed out in this excellent post, some states are already passing bills intended to ensure exactly that, namely that AI’s incorporation into claims processing actually improve the process from the point of view of insureds and claimants.
  3. I have seen trade dress from all sides of the insurer’s perspective. My very first argument was in the famous Norfolk courthouse where major historical cases, such as the Sacco and Vanzetti trial and the Karen Reade trial, had occurred, and concerned whether coverage existed for a claim by one competitor that another had ripped off its trade dress (there was no coverage and, in point of fact, it was pretty obvious that the insured had done exactly that). Years later, I would litigate a trade dress dispute over the packaging of competing biotech products, where the defendant received a defense (provided by me) under its insurance policy, after the claims pled in the complaint triggered the duty to defend. While other claims in that case would be tried, the trade dress claim went away on summary judgment. You noticing a pattern here? That trade dress claims sound great but don’t tend to pay off? Yup, that’s the same lesson I drew from decades of experience with them. This article on a trade dress dispute over Uncrustables peanut butter and jelly sandwiches shows why – the element of consumer confusion is a tough bar to hurdle.
  4. Nuclear verdicts are, in my opinion (which is based on decades of studying them for purposes of resolving and, where necessary, trying the insurance bad faith and coverage claims that arise from them), driven by a number of identifiable factors, including changing views of jurors of the world around them. It may be time to think carefully about what a nuclear verdict, including an award of $10 million in punitive damages, in an employment discrimination action, tells us about how jurors are viewing workplace dynamics. For what it’s worth, I predicted the expansion of nuclear verdicts from the personal injury environment to the employment context years before it happened, in this post.
  5. Someone once said that Marx was wrong about a lot of things, but he was right that everything is economics. The impact of rising homeowners insurance premiums, and even more so of the loss of private coverage in some areas, is dramatically changing the makeup and the nature of various neighborhoods across the country. This article does a great job of showing the toll this is taking at street level in America.

For this week’s Five Favorites for Friday, I have a full stocking of gifts (too early for Xmas allusions? Maybe, but I was in New York for work and saw the Rockefeller Center Tree, which inspired that lede). Let’s get right into opening them up (and yes, I will probably beat that gag to death for the next few Fridays – just so you are prepared).

  1. First off, you will likely have seen the news that a congressman, apparently with no prior known interest in retirement plans, has out of the blue offered up a bill to make it tougher to plead breach of fiduciary duty claims under ERISA, particularly with regard to excessive fee cases. Color me non-plussed. The inevitable tightening up of standards for bringing ERISA class action cases is already under way, by means of strict enforcement of standing requirements to dismiss cases early and increasing judicial skepticism of new class action theories under ERISA. The bill, if it ever becomes law, is likely to be targeted at a problem that has effectively resolved itself, to the extent that the goal is to reduce non-meritorious class action ERISA cases. The question will be whether the bill, as and if finally enacted, throws out the baby with the bathwater, in the sense of barring meritorious class actions claims and not just those that – in my IP days – we used to call strike suits, in other words cases filed just to get a small settlement and a fee for the lawyers. Judicial skepticism and an aggressive use of standing are unlikely to have the effect of also precluding meritorious actions, but it wouldn’t surprise anyone if the bill, as finally enacted, does.
  2. And in that regard, here is a good writeup of the recent dismissal on standing grounds in Lewandowski v. Johnson & Johnson, finding that plaintiffs could not definitively enough show harm from mismanagement of health benefits to support a claim. I don’t know about you, but these types of rulings read to me like courts are moving liability issues up to the motion to dismiss stage that they would have, until recently, left open until after discovery and instead decided later on summary judgment motions. And objectively speaking, if you ignore the costs to defendants and their insurers of litigating class action claims that are plausible but end up foundering at summary judgment, they probably belong at the summary judgement stage for resolution in most cases, rather than being advanced up the rules of civil procedure to be decided instead at the motion to dismiss stage.
  3. $90 million is a lot of money. Even the judge who awarded it as bad faith and Chapter 93A damages against Liberty Mutual because she found unreasonable claims handling and believed the case law to leave her with no discretion in this regard, thought it was a disproportionate award. On the flip side for Liberty Mutual and other insurers who are presumably looking at the ruling in horror, if there was ever a decision perfectly written to allow an appeals court to revisit various aspects of bad faith law in the Commonwealth and rein in some of its most debatable aspects, this is the one. And I don’t mean that in a negative way with regard to the opinion itself – the decision is an excellent analysis and presentation of the totality of a complex area of law and of decades of case law (the judge actually goes so far back that she cites a decision from the first Chapter 93A case I ever tried, back in 1995). Instead, I mean that the Court’s scholarly treatment of the issues presents the perfect trial court decision for testing the appropriate scope of recovery in such cases. I discussed the opinion here.
  4. I have always been quite happy to work out alternative fee agreements with clients, including hybrids, flat fees and contingencies. Clients, however, often prefer hourly billing – and sometimes in my own practice they have been right to stick to it, spending less on cases I have won than they would have ended up paying out as a success kicker or on a pure contingency, for instance, had they elected that route instead. As someone in the insurance industry pointed out to me the other day, not all cases are susceptible to valuation using alternative fees, and sometimes hourly billing is in fact as close as you can get to rough accuracy in pricing in those instances. I liked this opinion piece to this effect, addressing the idea that AI is more likely to supercharge lawyering that is done by the hour than it is to eliminate the billable hour. Not sure the author is right, but time will tell.
  5. Every lawyer I have ever met has used the movie line “I do not think that word means what you think it means” at various times. In the insurance coverage world, we often throw around the terms “tail” and “runoff” somewhat indiscriminately. I was pleased to come across this explanation of the terms in the context of D&O risks and exposures.

About 24 years ago I won a trial on behalf of Liberty Mutual in an insurance bad faith action in which plaintiff’s counsel sought to multiply an underlying multimillion dollar judgment against the insured based on an alleged bad faith failure by the insurer to settle the tort claim. At the time, it represented – as best as I could tell – the first and best effort by a leading Massachusetts plaintiffs’ firm, Keches Law Group, to treble, based on bad faith under Massachusetts General Laws Chapter 93A, an underlying large judgment against an insured defendant. Had I lost, at the time it would have resulted in the largest Chapter 93A judgment against an insurer for bad faith failure to settle a claim in Massachusetts history, as well as established new theories of liability in this regard that would instead not be established until many years later, in a major case by a leading Big Law firm against a different carrier.

I bring this up because the wind brings news now of a $90 million bad faith verdict against Liberty Mutual obtained by the same Keches firm, pursuing the same goal, decades later, of having a trial court treble a large underlying judgment against an insured. Under Massachusetts law, an insurer that violates the claim practices statute in bad faith is subject to an award of damages equal to double or treble the verdict entered originally against the insured – that verdict here was over $26 million, well above the commonly accepted threshold to qualify as a nuclear verdict. The best sources I have found for reading about the verdict are this LinkedIn post and this PR distribution by the Keches firm.

As you can tell from this history, the plaintiffs’ bar in Massachusetts has clearly gotten better over the past quarter century at prosecuting these types of claims. Have insurers and their lawyers gotten better at defending these types of claims over that time period as well? I am not so sure about that. One of the things the plaintiffs’ bar has done a very nice job of over the past couple of decades is deciding which cases to press forward with in the interest of creating new law favorable to claimants on bad faith, as opposed to which ones to simply settle. I am not convinced that insurers and their counsel have successfully matched them in that regard, as many of the decisions that have created poor law for insurers over the years on bad faith in Massachusetts involve cases that, looking closely at their facts, probably should not have been presented by insurers to appellate panels with the power to craft and shape the law in this regard – they likely should have been settled long before that could occur. There are at least two or three that jump out at me in this regard even as I write this, and I suspect other lawyers would have their own list of different cases in this regard.

To be both fair and clear, I should note that much of this is only apparent in hindsight, after the appellate decisions have been issued. And more importantly, the current state of play in this regard is not all (or even mostly) attributable to insurers and their counsel allowing bad cases, with bad facts, to be used by the plaintiffs’ bar and the courts to make bad law for insurers – with the result that a nuclear verdict can now be multiplied into an additional $90 million verdict against the insurer itself. Much of it is instead due to the fact that, in the end, there is no and cannot be perfect claims handling on any claim, if you define perfection in this regard as being devoid of any decisions or omissions that a judge or claimant could later criticize as erroneous and harmful to the claimant in some way. Claims handling is an inherently human activity, involving an endless series of judgment calls made in circumstances of incomplete information, in the context of an adversarial relationship with a claimant who typically has no motivation to be completely open with an insurer on the facts or other issues of a claim.

There’s an argument to be made that we have reached a point where Chapter 93A and Massachusetts bad faith law penalize insurers, to a disproportionate extent, for routine and typical errors in claims handling, treating them too often as representative of subjective bad faith sufficient to justify massive bad faith judgments. It is probably well past time for the pendulum to swing back the other way, towards accepting that mistakes will routinely occur in claims handling and that a series of errors is not enough to justify a large bad faith award, absent evidence sufficient to fairly demonstrate a subjective intent on the part of an insurer to lowball or refuse, for nefarious reasons, to settle. At this point in the history of bad faith and Chapter 93A law in Massachusetts, large bad faith verdicts can be and are granted based on much less than that.

This is not intended to necessarily be a criticism of the decision itself or the Court’s deep analysis of the evidence and thorough consideration of the relevant case law (in fact, the court cites three or four of the decisions from my own cases over the years, and my understanding of the nuance of those cases makes me confident in commenting on the high quality of the Court’s analysis of existing law). It is more intended to suggest that the current state of the case law, which the Court accurately explained and applied, may have swung a little too far in one direction over the years.

Indeed, the Court itself acknowledged that the size of the award it was required under existing law to enter raises questions and concerns about the current state of the law in this regard. And so perhaps, on appeal, this decision may be the right lever for redirecting the course of the case law on these issues.

I wasn’t quite sure what to do about Five Favorites for Friday this week, given that today is an unofficial holiday, Black Friday. I couldn’t move it up a day, as that would require publishing it on an actual national holiday, Thanksgiving.

And I didn’t want to move it up to the middle of the week, to Wednesday, because then it would be Five Favorites for Wednesday, which lacks the alliteration that is central to my interest in writing it! See here.

I was stuck until one of my favorite newsletters, from NPR’s Planet Money, landed in my in-box this week, and showed the way – this week, it used a theme of identifying articles for which its writers were thankful. And once I saw that, I knew how to handle this week’s Five Favorites for Friday post. So here, to give you something to read while waiting in line on Friday at the mall, are five articles or podcasts I am thankful for this week and why.

  1. For the first, I go right to the inspiration for today’s list, NPR’s Planet Money newsletter, and its very first article, which is about an economics paper addressing the correlation between the cost and requirement of having car seats and the number of children in a family. The story points at the extent to which the underlying financial costs of family size directly impact family size. Why is this relevant to the subjects of this blog? Because the question of being able to fund and afford a secure retirement many decades down the road plays much the same role in determining family size and parental preference in that regard, particularly as pensions have vanished and the burden has shifted to the employee to amass the capital needed to fund retirement income at the same time the employee has to incur the long tail costs of raising children. Family size and retirement security are not unrelated, just as child car seat regulations and family size are not unrelated. Those of you who have read my posts about borrowing from the concepts of behavioral economics for use in lawyering, know that I like interesting and not obvious lessons from economics – and I am thankful for coming across this one during the three days running up to the holiday.
  2. I am very thankful for this recent WTW publication explaining the current status of pension risk transfers. I have worked on them and think, in the right circumstances, they have a lot of value and are an appropriate fiduciary action, but in other circumstances and given certain variables, that may not always be the case. There is an awful lot of litigation, potential litigation, transaction volume and potential future systemic financial risk at play in them at this point, however, so having a functional understanding of the transaction and the issues is important. I am thankful for this article as it provides any interested reader with a fairly substantive understanding of the transaction.
  3. But where in the world did pension risk transfers even come from? And what market forces and regulatory changes were necessary to give rise to them? It’s a fascinating question and one that would require a deep historical dive to figure out. And so I am thankful for this great piece by Steve Keating tracing the entire 50 year history leading up to the current state of play on this issue.
  4. Litigation around pension risk transfers, and theories of how or why liability could exist in such a transaction, is robust. The primary concern or argument is whether the loss of ERISA protections once the pensions have been replaced by annuities places the former plan participants at financial risk in a manner that holding a pension under a plan did not. One way of looking at this question is to consider the existence of PBGC protection, and whether it continues after the transaction turning the pensions into annuities. There is a good argument that PBGC protection should remain in force and I am thankful for this excellent paper by Ivins, Phillips and Barker attorneys Kevin O’Brien and Spencer Walters that makes the case as to why.
  5. It’s behind a paywall (which isn’t something I am thankful for, but I happen to be a subscriber) but I am thankful for Bloomberg’s series of articles and a podcast raising the question of whether the role of private equity and insurers in the handling of retirement funds, including in pension risk transfers is safe or instead poses systemic risk. I am thankful for it because, frankly, you should read the whole series and then decide for yourself what you think about it.