$675K settlement in suit against Schnader Harrison over alleged misuse of retirement funds gets preliminary OK
A federal judge in Philadelphia has preliminarily approved a $675,000 settlement in a lawsuit claiming that Schnader Harrison Segal & Lewis used 401(k) contributions to fund operations and make distributions to equity partners when it suffered financial difficulties.
In an Aug. 19 order, U.S. District Judge John Milton Younge of the Eastern District of Pennsylvania certified the class and found that the settlement provides substantial relief. The amount represents 68% of the maximum that the class members would receive at trial, his order said.
Schnader Harrison announced its dissolution in August 2023 after losing about two-thirds of its attorneys.
At least 46 income partners and counsel, as well as their beneficiaries, are class members. The lawyers were assessed nonelective retirement contributions while working at the law firm between February 2018 and June 2023.
Defendants in the suit include the firm, its retirement and savings plan, and former Schnader Harrison lawyers who worked as its fiduciaries.
The lawyer who sued, Jo Bennett, was appointed class representative. She is now the employment and labor chair at CM Law. She did not immediately respond to an ABA Journal email seeking comment. Lawyers from the Groom Law Group representing the defendants also did not immediately respond to a Journal email.
Younge had permitted the suit to go forward in July 2024, saying discovery was needed to resolve factual disputes. One issue was whether the money at issue should be considered employee or employer contributions to the plan.
Younge’s July 2024 opinion said Bennett had “plausibly alleged interrelated violations” of the Employee Retirement Income Security Act of 1974. The law requires employers to segregate from its general assets any amounts withheld from paychecks for contributions to the retirement plan “as of the earliest date on which such contributions … can reasonably be segregated.”
Hat tip to Bloomberg Law and Law360, which covered the settlement before its preliminary approval.
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