ERISA fee litigation is now a permanent feature of the business, and after Cunningham v. Cornell a routine service contract can survive a motion to dismiss on thin allegations. The advisor's main deliverable is shifting from picking funds to building an evidentiary record.
Plaintiff firms filed 155 ERISA fiduciary class actions in 2025, a near record. Ninety-four were excessive-fee or imprudent-investment cases, on top of a sharp jump in such filings the year before. Go back ten years and you get more than 600 of these suits against defined-contribution plans. This level of litigation is the normal operating environment now.
If you advise retirement plans, you know the settlement math is ugly: more than 200 settlements in the past five years, north of $1.3 billion, with 2025 averaging just over $3 million each. Those are the cases that resolve early. The ones that go the distance cost far more, and the legal bills start the day a complaint is filed. The question for an advisor in 2026 is whether the file you built can carry the day when a client gets sued.
Big plans draw most of the suits by a wide margin. About a quarter of plans with $500 million or more in assets have been sued over fees in the past decade, and those plans are under 3 percent of the universe. The plaintiffs' bar is rational: bigger plans mean bigger asset bases, bigger alleged damages, and more settlement pressure. If you are moving upmarket, you are walking into the most litigated corner of the market, where documentation is the cost of admission. If you serve smaller plans, you have a window. The $40 million plan that grows into a $400 million plan becomes a target gradually, and the habits you build while it is small protect it later. Many advisors wait until a plan is big enough to scare them, and by then the bad habits are set.
On April 17, 2025, the Supreme Court decided Cunningham v. Cornell, unanimously. To plead a prohibited-transaction claim under ERISA Section 406(a)(1)(C), a plaintiff need only allege the bare elements of the transaction. The Section 408 exemption for reasonable compensation, the provision everyone assumed would do the heavy lifting, is now an affirmative defense. The fiduciary has to prove reasonableness, and the plaintiff no longer has to prove the opposite up front.
The consequence is easy to miss. A recordkeeping contract is a transaction with a party in interest, and so is an advisory agreement. After Cunningham, a plaintiff can describe one of those ordinary contracts, allege little else, and clear a motion to dismiss. The gate that used to throw out thin complaints now sends more of them to discovery, where defense costs balloon and settlement pressure peaks.
The contemporaneous record, the file you built while the decisions were being made, is now the affirmative case. You cannot reconstruct a prudent process from memory in a deposition two years later. If nobody wrote it down when it happened, you will struggle to prove it happened.
Investment-minded advisors sometimes resist this. Courts and the Department of Labor grade you on whether you ran a prudent process, regardless of whether your fund lineup beat the market. A fund can lag and the fiduciary can still win, if the decision to hold it was reasoned, documented, and monitored. A fund can outperform and the fiduciary can still lose, if the file shows nobody was watching.
A defensible process leaves behind roughly this on paper:
None of that is exotic. It is the routine work of committee meetings, an IPS the committee follows, and minutes that capture why a decision was made along with what it was. The advisors who lose rarely have bad lineups. They have thin files.
The plaintiffs' bar keeps developing new claims. Stable-value-fund challenges jumped more than 500 percent in 2025, attacking crediting rates and the wrapper structure. Forfeiture suits, arguing that using forfeited employer money to offset company contributions rather than cut participant fees is a breach, ran more than 40 cases. Tobacco-surcharge suits over wellness-program premiums on smokers added another batch. The pattern matters more than any one theory. Each starts from a plan feature that was standard and widely used, then asks whether the fiduciary deliberated about it or inherited it. A documented decision is defensible even when challenged. A default leaves nothing in the file to defend.
For a long time the advisor's headline product was the fund lineup: pick good funds, swap the laggards, report quarterly. That work still matters, and it no longer decides whether a sponsor is protected. The deliverable that matters now is the record: the committee minutes, the benchmarking studies, the monitoring logs, the written rationale for each material decision. You are building the file the plan would hand to its lawyers on the worst day of its fiduciary life. That file is also a service you can scope, package, and bill for, separate from investment selection, and sponsors will pay for it because they can see the litigation environment.
One caution, because the tooling here is getting good and is easy to oversell. Software can assemble a record: pull documents together, keep benchmarking and monitoring artifacts in one place, and keep items from falling off the calendar. Much of what PlanSync does is exactly that. Assembling the record is separate from making the decisions inside it. No tool decides whether a fee is reasonable, whether to keep a fund or replace it, or how forfeitures should be allocated. Those are fiduciary judgments, and they belong to the named fiduciary. A person decides. The system remembers.
You can prepare for the lawsuit you can see coming. Many advisors will keep treating documentation as paperwork to finish after the investment work is done. The ones who treat the file as the product will be in far better shape when the complaint lands.
We're onboarding advisory firms now. Apply and we'll reach out, usually within one business day.