Between the Affordable Care Act and Department of Labor’s proposed fiduciary rules, producers are increasingly focused on helping employer clients address their compliance needs. And that’s not counting the formidable alphabet soup of employee benefit laws and regulations that require ongoing attention.
Given this changing climate, does it make sense for more brokerages to add in-house lawyers rather than partner with an outside firm?
Russ Blakely’s answer is a resounding yes. As owner of the Russ Blakely & Associates benefits brokerage, he decided to recruit an old friend and seasoned corporate lawyer who practiced for more than 30 years before leaving Chambliss Bahner & Stophel in Chattanooga, Tenn. Steve Jett, who thought about retiring, is now his compliance officer.
Rather than rack up billable hours on outside counsel, Blakely’s firm has enough legal work to keep Jett from even contemplating his own retirement. Then again, he has the luxury of pursuing this avenue. His practice is in a state where commissions are higher than many other parts of the U.S., so he decided to earmark fully insured group fees to fund Jett’s position.
But size matters. Hiring in-house counsel just isn’t feasible for brokerages handling smaller groups of fewer than 50 employees, explains Mark Bagnall.
His eponymously named firm has a compliance director and is able to tap the expertise of corporate counsel from United Benefit Advisors as a UBA partner. And while Bagnall isn’t large enough to justify an in-house counsel, the firm contracts with another UBA partner firm in Colorado that has its own in-house attorney.
A middle-market advantage
There’s no denying the advantage of corporate counsel during these times, according to Shelly Hodges-Konys, director of compliance at HORAN. “I think some of the best part of having an internal team is giving you the ability to prevent having the same question being asked of outside counsel by 20 different consultants,” she says, “and allowing you internally to identify team training opportunities and raise the level of your consultants across the board, and saving you some billable hours.”
Blakely believes more brokers and advisers will follow his lead to help middle-market clients to keep up with all the reporting requirements and other provisions under healthcare reform. The reason? “It’s virtually impossible without the help of someone,” he says. Blakely cited a recent survey by the International Foundation of Employee Benefits that showed 73% of respondents saying compliance with benefit laws and regulations is an internal challenge.
I think some of the best part of having an internal team is giving you the ability to prevent having the same question being asked of outside counsel by 20 different consultants.
While Jett’s nose is buried in paperwork mostly related to ACA reporting questions and filling out templates, he’s offering Blakely only advice and opinions, and on occasion, will urge him to seek an outside legal opinion.
The arrangement benefits both parties. “He is really having fun because it’s a very different area where he’s practicing,” Blakely says about Jett. “Steve’s expertise actually was working with the healthcare providers as their legal counsel. So he understood their world from being in business, and now he’s understanding and seeing the healthcare world from an employer side as it relates to compliance.”
