Building a benefits practice: Wakelin, Hallock and O'Donovan join Eaton Peabody's Portland office
Photo / Tim Greenway
Left to right: David S. Wakelin, Edward F. Feibel, Leslie C. Hallock, Anne E. O'Donovan, who comprise Eaton Peabody's employee benefits and executive compensation practice group, join David M. Austin, managing partner of Eaton Peabody, in the conference room at the firm's Portland office.
The Portland law firm of Wakelin, Hallock and O'Donovan has joined with Eaton Peabody, creating what both firms say will be the second largest employee benefits and executive compensation practice group in the state after Verrill Dana.
The new practice group, which includes Eaton Peabody lawyer Edward F. Feibel, will be based in Eaton Peabody's Portland office. The consolidation took effect on Sept. 1 and includes moving Wakelin, Hallock and O'Donovan's clients over to Eaton Peabody's practice group.
“We thought it was best for us and our clients to combine with a larger firm that has more of a statewide presence,” says David S. Wakelin, noting that his firm has been practicing independently in Portland for 30 years. “Ed is a longtime friend of our office. Over the last five years [since Feibel joined Eaton Peabody] almost every day we're talking with him or he's talking with us. So it was a natural, when we were looking to join a larger firm, for us to turn to Eaton Peabody.”
Moving with Wakelin to Eaton Peabody are Leslie C. Hallock and Anne E. O'Donovan. Collectively, the three lawyers bring almost 100 years of experience in employee benefits, executive compensation, fiduciary compliance, mergers and acquisitions, pensions and estate planning to the expanded practice group. Eaton Peabody has almost 50 lawyers serving New England and Atlantic Canada from offices in Augusta, Bangor, Brunswick, Ellsworth and Portland.
“It's adding strength and extra capacity to our strengths,” says David M. Austin, a shareholder and managing partner of Eaton Peabody. “This practice group has a lot of other practice groups it can draw upon as additional resources. It's an opportunity for a group of professionals who have worked closely together to continue working together even more closely and efficiently.”
ACA remains challenging
Wakelin has been handling Employee Retirement Income Security Act (or ERISA) and estate planning legal matters for more than 40 years, with clients ranging from large multi-national corporations to self-employed business owners and small corporations. He says employee benefits and compensation issues have emerged as a growing concern for most of his business clients, in part because of the complexity of the federal Affordable Care Act and emerging trends related to whether employers choose to continue providing health care insurance as a “defined benefit” for their employees or as a “defined contribution.”
An ACA-related issue that looms on the horizon, he adds, is the so-called “Cadillac tax” — a 40% non-deductible excise tax on the amount by which employer-sponsored health benefits exceed government-set thresholds. Those thresholds, representing the total premium costs paid by the employer and employee, begin at $10,200 for individual coverage and $27,500 for family coverage.
Although the intent is to reduce excess health spending by employers and employees as well as generate revenue to help pay for the ACA's various programs and reforms, Wakelin says the Cadillac tax poses a particular problem for Maine employers.
“In Maine, our medical costs are substantially higher than the rest of the country, so it's more likely to trigger the Cadillac tax,” he says.
That potentially creates a conflict for employers wanting to provide competitive benefits to attract and retain qualified employees, but in doing so might run the risk of getting hit with the Cadillac tax in 2018 or beyond. And simply moving to high-deductible health plans that require their employees to cover significantly more expenses out of pocket before insurance coverage kicks in doesn't necessarily solve the problem either, since the tax is based on the full cost of the plan, not just the employer contribution.
“It's quite challenging,” Wakelin says, “especially if the benefits are collectively bargained. That's one of the things we're dealing with right now.”
Feibel agrees, adding that a more immediate ACA compliance challenge will be the Internal Revenue Service information reporting requirements slated to take effect early next year.
“That's coming up very quickly,” he says. “For the employer with 40 employees or less, they don't have any ACA problems to speak of. If you go past 40, or go past 50 employees, those employers typically have some problems in making sure they're in compliance. Folks who are at 50 to 100 employees, or who have a lot of part-timers, they're the ones who struggle the most in complying with all of the ACA's requirements.”
A 1982 graduate of the University of Maine School of Law, Feibel acknowledges that a significant portion of his time also is devoted to resolving compliance issues under the Internal Revenue Code and ERISA for businesses both large and small. He particularly empathizes with small business owners whose primary focus is simply making sure their product is selling in high enough quantities and margins to make a profit.
“The person who is the owner, president, CFO and chief human resources person for their company, in general, they have bigger fish to fry than sorting through all the details of their employee benefits to make sure they're in full compliance,” he says, noting that most small business owners simply don't have the time, or know where to turn, to find those correct answers without expert guidance.
But even the larger employers, with full-time HR directors focusing time and attention on the full array of employee benefit issues that may arise, can feel overwhelmed by the complexities of the ACA and other federal benefits guidelines, Feibel says.
Mergers, acquisitions and ESOPs
Hallock, who's been practicing in the area of employee benefits for 27 years, says all of the lawyers in the employee benefits practice group are well-versed in the intricacies of health benefits, retirement plans, profit sharing and executive compensation options. But they also have particular interests, with two of hers being business succession and employee stock ownership plans. “There are a lot of fiduciary considerations involved,” she says of those specialty areas.
Given the complexities involved in designing and implementing ESOPs, Wakelin adds, having lawyers with expertise in that arena provides a valuable resource to Maine business owners considering selling their company to employees for the tax benefits it provides and the opportunity it gives their workers to share in the company's success. Feibel, for example, was involved in the recent ESOP sale of GAC Chemical Corp. in Searsport.
“It would be very difficult for another firm to say 'Let's go out and get some ESOP work,'” Wakelin says.
O'Donovan, a 1991 graduate of the University of Maine School of Law, has staked out mergers and acquisitions as a specialty area. In addition to working with banks, investment managers, actuaries and others who can help make those deals happen, she notes that much of her M&A work is involved in making sure everything is in order to allow the transaction to close. “I get pulled in in two ways,” she says. “Often there's a transactional lawyer already involved and I'm brought in to do the due diligence on the target company. On the seller's side, I'm often asked to review their employee benefits plans to make sure they're in compliance with the ACA, HIPAA, COBRA and everything else.”
Ideally, Feibel adds, that kind of review has already taken place long before an owner decides to sell the company. “But that's rare,” he says, noting that in his career he's only had one business owner ask him to make sure “all the ducks are in a row” before the company was placed on the market.
Another common occurrence, Feibel says, is when a company makes a management change and assumes “the 15-year-old contract that was good enough for Joe should be good enough for Joan.”
“They give it to us to review after it's already signed, asking us, 'Is it good?'” he says. More often than not, Feibel says the answer is “no.”
As a managing partner of Eaton Peabody, Austin says the addition of Wakelin, Hallock and O'Donovan to the law firm's employee benefits and executive compensation practice group enhances its ability to fully meet the needs of Maine businesses. “We pride ourselves on solving difficult issues,” he says. “This is an area of growing complexity and it's an extremely important element in retaining key executives. These issues aren't going away. We're incredibly pleased to have Dave and his group join us.”
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