Ldf Trust: Benefiting the Members as a Whole

FRED ROWBOTHAM
LDF Chairman

The PORAC Legal Defense Fund is an ERISA trust. ERISA stands for the Employee Retirement Income Security Act. ERISA dates back to 1974 when it became federal law. ERISA provides mandates in regard to many facets of running a trust. If you take the time to familiarize yourself with exactly what an ERISA trust is under the law, you might also be surprised at the range of things the law does not speak to and leaves up to the judgment of those entrusted to make decisions.

Let’s talk for a minute about who makes decisions at PORAC LDF. The day-to-day operations are handled by the professional staff at a company called Legal Defense Administrators. Cindi Forbes is the director of operations and supervises the office staff. Rebecca Mann is the assistant legal administrator and oversees civil cases. Ed Fishman is the principal at LDA and is our LDF legal administrator. Mr. Fishman handles the bulk of interactions with our vendors.

That covers operations but really does not answer the question as to who makes the decisions at PORAC LDF. The people mentioned above are charged with implementing the policies of the Board of Trustees. Under our plan, the LDF Trustees are what ERISA refers to as the “fiduciaries” of the plan. The buck stops here, plain and simple.

I opened by saying ERISA lays out some things and is silent on other topics, leaving them open for interpretation by the Trustees. The responsibilities of the fiduciaries of an ERISA trust are not left open for interpretation.

In most cases, we know the federal government can take hundreds of pages to speak to any given issue. In this case, the governing body that oversees our activities was able to break down the responsibilities of the trustees into only five mandates:

1. Act solely in the interest of plan participants and their beneficiaries, with the exclusive purpose of providing benefits to them.
2. Carry out their duties prudently.
3. Follow the plan document.
4. Diversify plan investments.
5. Pay only reasonable plan expenses.

The Legal Defense Fund exists for the benefit of the members as a whole. Similar to when your association negotiates a new contract, sometimes what the negotiation team comes up with benefits you as an individual, sometimes it does not; but if the process was pure, rest assured the overall contract was what was best for the group.

This trust, much like each of our local associations, exists solely for the benefit of the members. It is important to have a strong, stable panel of professionals to lean on for advice. It is important that the relationship with those professionals be comfortable enough to allow for a free flow of information. It is even more important that the Trustees never lose sight of the fact that the vendors are just that — vendors — and that these are just business relationships. The interest of the members as a whole is always paramount.

Rest assured, the process by which this group of Trustees operates is pure and is for the benefit of the totality of the plan participants.