Thursday, January 4, 2018

Everybody Must Get Sued

I logged into my social media this morning and I noticed a pervasive theme. LinkedIn, Facebook, Twitter -- the trend in their highlights or whatever the particular site is calling that section is that somebody is getting sued. In fact, looking at my top highlights on each of those sites, more than 50% of those highlights is that somebody is suing somebody else. That's a frightening sign of the times.

Suppose instead of those sites, there was a site called BenefitsGram or SnapCompensation, what would they look like? Well, there are sites that are a little bit like that -- there's Plan Sponsor's News Dash and Benefits Link's Benefits Buzz, a pair of news consolidator sites. And, when I look at what's trending there, it's the same -- everybody must get sued.

So, why am I writing about this here?

In these days where many of the pundits talk about risk management and de-risking, is there a bigger risk than getting sued? For many companies, there may not be. A big enough lawsuit can put one of them out of business. I could certainly name some where that has happened (I'll skip that part though as I'm sure you have access to Google search as well).

In my world, it's happening around benefits and compensation programs on a more than daily basis. Somebody is getting sued. And, yes, I will agree, many of those lawsuits are frivolous. And, even among the ones that have some substance to them, an awful lot of those should fail on the merits.

The sad part, though, is that among those that should fail on the merits and even those that should succeed, almost all of them could have been avoided.

Defending a lawsuit is expensive. Even if you win, you probably paid an attorney a lot of money to defend you. And, that attorney likely convinced you (rightfully so in most cases) that you needed an expert witness or two or three on your side and you paid them a lot of money as well. So, even if you won, you lost.

What does real winning look like? It looks like not getting sued in the first place. On the contracts side, the key seems to be to write 100 page license agreements (or similar documents) that you know your customers won't read before they sign off on something that is so one-sided that they have no rights at all. On the benefits and compensation side, it's not so simple. Usually, you have to have things like plan documents and those documents have lots of legal requirements to comply with all the laws that Congress touts, but that are festered with so much junk that makes for great PR, but no sense at all.

So, you write those documents or get counsel to do that for you (probably a better idea). And, back in Section 14.23 of one of the documents, somebody wrote a really long and confusing paragraph. and, they left off an s at the end of a word that would have changed a singular to a plural. Voila! Somebody finds that the s is missing and decides that was always intended and not having that s will entitle an entire class of potential plaintiffs to double their benefits or more.

Will they find a court that will allow them to strike the first blow? Do they win at the District Court level? If they do, you have already spent a lot of money and if you want to appeal, you'll have to spend  a lot more.

So, what's the message here? Do everything you can to make sure that your intent of each of your plans is clear. Explain with examples. While I don't often praise IRS and Treasury for their mastery of the English language, they are well known for using words such as "the provisions of this paragraph (b) can be illustrated by the following examples" and then they give maybe five examples to make crystal clear what they intended.

You can too.

And you should.

But you probably haven't.

And neither have your counterparts at thousands of other companies.

So, here's your checklist:


  1. Address the litigation risks in your plans.
  2. Take steps to fix and problems that you have uncovered.
  3. If you do get sued, make sure your counsel finds great expert witnesses for you.
Otherwise, everybody must get sued ... with apologies to Bob Dylan and Rainy Day Women #12 and 35.

1 comment:

  1. Would it be OK if I cross-posted this article to Writer Beat? There is no fee; I’m simply trying to add more content diversity for our community and I liked what you wrote. I’ll be sure to give you complete credit as the author. If "OK" please let me know via email:

    Autumn
    AutumnCote@WriterBeat.com

    ReplyDelete