Plaintiff Lawyers Can Now Use AI To Identify Potential Plan Issues

Artificial intelligence “is not revolutionary, it is evolutionary,” says David Levine, a principal and ERISA defense attorney with the Groom Law Group, when it comes to ERISA plaintiff attorneys bringing lawsuits against qualified retirement plans.

Darrow AI, an AI legal services provider, hosted a webinar focused on the Employee Retirement Income Security Act on June 18 explaining AI’s role in this emerging space. During that session, Shai Silbermann, a legal data specialist at Darrow, explained that AI can be used to help identify funds that underperform in plans more efficiently than humans can.

Many funds in retirement plans “are often not monitored,” by fiduciaries, Silbermann said, and AI can help lawyers identify such funds without having to manually go through plan Form 5500s.

Silbermann explained that their “algorithm highlights the worst underperformers” and can help identify “what plans underperform, by how much and for how long.”

Attorney Levine, who often represents fiduciary defendants, says that the use of AI in this field of law is relatively new, but its use is “very much a data processing tool,” and little else. Fiduciaries should generally follow the same principles as before, he says, but since AI models tend to focus on data procured from Form 5500s, sponsors should consider evaluating their Form 5500 reporting to be sure everything is accurate.

A blog post published by Darrow elaborates on how the firm uses AI to identify potential plan flaws.

“By combining every plan’s data from the past several years, we prioritized leads with the potential for the largest and most egregious damages,” Darrow’s blog reads. “This approach allowed us to identify dozens of highly probable violations and compare recordkeeping and other fees paid by plans of a similar size, highlighting the administrators’ imprudence. Furthermore, to emphasize the severity of the violations, we compare the amount the specific recordkeeper usually charges for plans of a similar size.”

The post also argued that “It has frequently been argued in court that charging $25-$35 per participant for the administration of a pension plan is considered reasonable, and thus charging above this amount could be considered excessive fees.”

Levine takes issue with the range, saying that: “There is absolutely nothing in ERISA that says the reasonable range is $25-$35.”

He adds that this view on fees and costs “disregards level of services, level of support, call center times, a myriad of factors,” that could justify higher fees. These services and their providers are “not interchangeable widgets.”

Darrow was founded in 2020 and is being used by more than 300 attorneys, according to its website. The firm notes more than $10 billion in claimed damages from attorneys using its services.