The firm allegedly misused pension contributions before it closed last year
A US judge has allowed a lawsuit to proceed against the defunct Philadelphia law firm Schnader Harrison Segal & Lewis for allegedly misusing pension contributions to sustain the firm, Reuters reported.
The firm closed last year after nearly 90 years in the business. Schnader Harrison, which once had offices in Pennsylvania, New Jersey, New York, California, and other locations, announced its plans to dissolve in August. Bennett's lawsuit alleges that employee contributions were improperly used to fund the firm's operations and distribute payments to equity partners as the firm struggled.
US district judge John Younge in Philadelphia stated that former partner Jo Bennett’s lawsuit against Schnader Harrison plausibly alleged violations of the federal Employee Retirement Income Security Act (ERISA) and can move forward for now. Bennett, a non-equity partner at Schnader Harrison from 2016 to 2023, filed the lawsuit in February on behalf of herself and other participants and beneficiaries of the firm’s retirement and savings plan.
“Disputes of fact remain that go to the heart of plaintiff’s claims and make dismissal inappropriate,” Judge Younge said. Bennett's attorneys welcomed the court's ruling, expressing their anticipation to advance her claims.
The case highlighted the legal complexities surrounding the use of retirement funds and employers' obligations under ERISA. According to Reuters, as the lawsuit progresses, it will further scrutinize Schnader Harrison's financial practices in its final years of operation and its compliance with federal retirement income law.
In its bid to dismiss the lawsuit, Schnader Harrison argued that the plan contributions were discretionary employer funds, not employee contributions. However, Judge Younge's decision indicated that the case would proceed to address these and other critical factual disputes.
The lawsuit claimed that “at the same time the equity partners were continuing to pay themselves, the firm was struggling to meet its other financial obligations.”
Bennett now leads the labour and employment team at Culhane Meadows Haughian & Walsh, a 70-partner law firm. The decision allows Bennett and her legal team to continue pursuing claims that could have significant implications for former Schnader Harrison employees and for the broader legal and business communities regarding the handling of retirement funds.
