Who Does ERISA Litigation Actually Protect?

A Davis & Harman analysis of 27 disclosed ERISA settlements in 2025 found that the median recovery for individual plan participants was $67.79. Attorneys on average received $1.59 million per case and $18,830 for every dollar that class members received.

And this system is worse than merely inefficient because it actively targets plans with the lowest fees while ignoring plans with the highest ones. That is not a side effect. It is a direct consequence of contingency fee economics. Almost all lawsuit activity over the last decade has targeted large plans, which already have much lower fees than smaller plans, especially those with fewer than 100 participants.

I have reviewed thousands of Form 5500 filings since 2009. None of the small plans I analyzed that were paying excessive fees will ever attract a plaintiff attorney. Over 70% have participants losing more than $1,000 per year each in excessive fees. The average is over $2,000 per participant annually. Some participants are losing more than $10,000 per year. These are not edge cases and yet they are invisible to the litigation model because the total damages are too small to generate a meaningful contingency fee.

A small plan with 40 participants paying excessive fees has no prayer of attracting a plaintiff attorney. The math does not work. There is no contingency fee large enough to justify the litigation cost. So those participants, who may be losing thousands of dollars a year each in fees that would never survive scrutiny, have no recourse. The system that purports to protect them has a minimum asset threshold, and they do not meet it. The harm compounds in a way litigation settlements never capture.

Furthermore, participant fees paid through plan assets are paid with pre tax dollars that were supposed to grow for decades. Excessive fees do not just cost what they cost. They cost the compounded value of every dollar that left the plan. A participant losing $2,000 per year to excessive fees does not just lose $2,000. They lose the retirement value of that money compounded over an entire career. No settlement check addresses that loss. Fiduciary liability insurance premiums have also risen, adding employer costs, some of which flow to participants.

Meanwhile the litigation is degrading plan quality at the top of the market while doing nothing at the bottom. Plan sponsors are no longer asking what is best for participants. They are asking how to avoid getting sued. Having reviewed the investment menus of thousands of plans, I can tell you that menus of plans of all sizes are becoming largely indistinguishable from one another. Litigation has accelerated a uniformity that was already the path of least resistance. The workers who need protection most are the ones the system never reaches.

If the goal is protecting participants, litigation is not an inefficient way to get there, but it is a very efficient way to generate legal fees.