Compliance June 12, 2003

ASPA Battles North Carolina Bar Association Proposal

December 18, 2002 (PLANSPONSOR.com) - A financial services industry group is battling a recent ruling by the North Carolina state bar that many standard retirement plan services actually represent the unauthorized practice of law.
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The American Society of Pension Actuaries (ASPA) filed a  Memorandum of Law   with the state’s Authorized Practice of Law Committee arguing that the North Carolina Bar’s position as expressed in letters sent to two companies offering plan consulting should be withdrawn, ASPA announced.

The firms implicated were a large financial institution and a smaller plan administration firm.

Specifically, the letters request that the firms “refrain from any future unauthorized practice of law in North Carolina”, including:

  • advising, counseling, or recommending to any entity that a particular profit-sharing, deferred compensation, pension, or other retirement plan is appropriate to that entity’s particular circumstances or that it should adopt and implement such a plan
  • preparing, drawing, drafting, amending, restating, or aiding in such processes of any documents necessary to implement such a plan.

The committee is expected to further consider the issue in a January hearing.

ASPA officials said in their announcement that they fear the North Carolina position might be adopted in other states if it is not overturned.

If the North Carolina bar committee continues to maintain its current position after the hearing, the issue will go to a committee of the full bar, and then potentially to the North Carolina State courts, ASPA said.

“The breadth of this restriction would practically necessitate the involvement of a lawyer whenever a business is considering the adoption of a retirement plan, no matter how straightforward the plan,” said Brian Graff, ASPA executive director in a statement. “In many cases, this would likely add thousands of dollars in unnecessary administrative costs potentially discouraging the adoption of small business retirement plans.”

ASPA got involved in a similar case in Florida to fight virtually the same proposed restriction. The Florida Supreme Court eventually ruled that the Florida Bar lacked the legal authority to impose its proposed restriction on nonlawyer retirement plan services.

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