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    Global Problem Solving from Covington: Deal with Complex Problems Anywhere in the World

    • Apr 08, 2021

Richard C. Shea

Senior Counsel

Washington +1 202 662 5599

  • About
  • Representative Matters
  • Credentials
  • About

    Richard Shea is immediate past chair of Covington’s Employee Benefits and Executive Compensation practice. Richard is widely regarded as the nation’s leading authority on cash balance, pension equity, and other complex benefit plan designs. His practice spans the full breadth of activities needed to help his clients resolve novel, sensitive, or intractable issues. His approach focuses on developing important new legal insights and ideas, and then combining them into effective litigation, legislative, regulatory, and benefit design strategies for his clients. The representative matters described below offer a sampling of the important and challenging assignments he has handled.

    Before joining Covington in 1991, Richard served as Associate Benefits Tax Counsel at the Treasury Department, where, together with his colleagues at the Treasury Department and the Internal Revenue Service, he was responsible for developing federal tax legislation and regulations governing employee benefits and executive compensation.

    Areas of Expertise

  • Practices and Industries
  • Representative Matters
    • In 1992, several of the nation’s largest manufacturers approached Covington to seek assurances that offering repeated early retirement windows in response to recession and international competition would not risk the tax qualification of their pension plans.  Other major law and accounting firms had repeatedly told the manufacturers that no such assurances could be given.  Richard developed a new analysis that contradicted the prevailing wisdom.  In a collaborative effort between Richard and his colleague John Vine, Covington persuaded the Internal Revenue Service to issue Revenue Ruling 92-66, which adopted the legal reasoning developed by Richard and provided the legal assurances the manufacturers sought.
    • In 1999, Richard assisted Eastman Kodak Company in converting its traditional defined benefit plan to a cash balance plan.  The conversion is frequently cited by members of Congress, regulators, benefits consultants, and the press as the model for a successful cash balance conversion.  The case is just one of the many cash balance and pension equity conversions Richard has assisted clients in implementing successfully and without incident.
    • In 2004-06, on behalf of a coalition of cash balance and pension equity plan sponsors, Richard, together with his colleague Robert Newman, developed a legislative proposal clarifying the legal status of cash balance, pension equity, and related traditional pension plans.  The proposal attracted the endorsement of every major business group, including the U.S. Chamber of Commerce, the Business Roundtable, and the National Association of Manufacturers, and formed the basis of the hybrid pension plan provisions included in the Pension Protection Act of 2006, which was passed by Congress on a bipartisan basis and signed into law by the President in August 2006.

    • In August 2006, the Seventh Circuit also handed down its seminal decision in Cooper v. IBM, the first federal appeals court decision to address whether cash balance and pension equity plans violate federal age discrimination laws.  The decision handed plan sponsors a major victory against a floodtide of class action litigation against cash balance and pension equity plans.  As counsel to IBM, Richard was instrumental in developing the legal arguments advanced by IBM, and, together with his colleagues at Covington and IBM, molded those arguments into the winning litigation strategy that prevailed in Cooper.  The victory in Cooper followed on earlier district court victories in which Richard played a similar, pivotal role, including Eaton v. Onan Corp., the first federal district court decision to address the cash balance age discrimination question.
    • In 2002, at the request of the Treasury Department, Richard briefed the Democratic and Republican staffs of the Senate Finance and Senate Health, Education, Labor, and Pensions Committees.  The staffs were meeting to address legislation passed by the House that would have enshrined the so-called “whipsaw” calculation of lump sums in federal law.  In a detailed briefing, Richard explained to the staff that the whipsaw calculation had an inherent, and disturbing, age discriminatory effect―an effect that had eluded the responsible federal agencies, two federal courts of appeals, and academic commentators.  At the end of the briefing, the staffs unanimously agreed on a bipartisan basis to recommend to their bosses that the Senate not take up the House proposal.  The House proposal died that session and was never reintroduced.
    • In 1996-98, on behalf of a pro bono client of the firm, Richard developed and negotiated a legislative proposal to transfer the unfunded pension liabilities of the District of Columbia to the federal government.  At the time, almost every observer assumed that the District was to blame for its pension deficit, which by the mid-1990’s had reached $5 billion and was growing.  In collaboration with the American Academy of Actuaries, Richard gathered data conclusively demonstrating that the entire deficit was attributable to the period of federal control before the District was granted home rule in 1979.  Richard structured the proposal in such a way that it was scored as cost-neutral for federal budget purposes.  In the end, the proposal gained the enthusiastic support of the White House, the bipartisan leadership of both houses of Congress, and even the previously skeptical Washington Post.  When it was enacted into law, the legislation immediately moved the entire District budget from an annual structural deficit of $200 million to an annual surplus of $100 million and avoided the District’s imminent bankruptcy in the early 2000’s when pension contributions were projected to mushroom. Officials estimate that the legislation saved each household in the District of Columbia approximately $21,000.
    • From 1997-2000, Richard assisted several major employers in refinancing their leveraged ESOPs to accommodate the growth in their stock values and the simultaneous contraction of their workforces during the 1990’s.  To accomplish the refinancings, Richard secured key rulings from the Internal Revenue Service and, together with his colleague Rod DeArment, critical field guidance from the Department of Labor.
    • In 1989-90, while serving at the Treasury Department, Richard developed the idea for a novel plan design that would add a 401(h) retiree medical account to a money purchase ESOP.  He dubbed the new design an “HSOP” and briefed his government colleagues on the idea.  As a result of Richard’s work, when Wall Street subsequently brought the same plan design to market, the government was in a position to respond immediately.
    • In 1993, after joining Covington, Richard traveled to Jamaica on behalf of the Inter-American Development Bank (IDB) to interview key government officials and business leaders regarding the budgetary effects of comprehensive ESOP legislation pending in the Jamaican parliament.  Because Jamaica at the time depended on IDB loans, Richard’s report to the Bank played an important role in determining the legislation’s future.

    Areas of Expertise

  • Credentials
    Education
    • University of Virginia School of Law, J.D., 1983
        • Virginia Law Review, Executive Editor
        • Edwin S. Cohen Prize in Tax Law
        • Order of the Coif
    • Universidad Católica del Peru
        • Fulbright Fellow in Anthropology (1976-1977)
    • Amherst College, A.B., 1976
        • magna cum laude
    Bar Admissions
    • District of Columbia
    Government Experience
    • U.S. Department of the Treasury
    Judicial Clerkship
    • Hon. Carl McGowan, U.S. Court of Appeals, District of Columbia Circuit, 1983 - 1984
    Languages
    • Spanish
    Accolades
    • Institutional Investor "Pension Top 40"    
    • Recipient of the 2012 "Burton Award for Legal Achievement"
    • Top 10 ERISA Lawyers in America, Human Resource Executive Magazine and Law Dragon
    • Top 20 Lawyers in Employee Benefits, Lawdragon
    • Chambers USA - America's Leading Business Lawyers, Employee Benefits & Executive Compensation
    • Lawyer of the Year, The Best Lawyers in America, Litigation-ERISA (Washington, DC)
    • The Best Lawyers in America, Employee Benefits/ERISA
    • The Best Lawyers in America, Litigation-ERISA
    • Legal 500 US, Employee Benefits & Executive Compensation, ERISA Litigation and Tax - Employee Benefits 
    • Top 50 Employment Lawyers in America, Human Resource Executive Magazine and Law Dragon
    • Washington, DC Super Lawyer in Employee Benefits/ERISA
    • Distinguished Volunteer Service Award, DC Appleseed Center
    • AV Preeminent Peer Review Rated, Martindale-Hubbell
    Memberships and Affiliations
    • Member, Pension Research Council Advisory Board, Wharton School, University of Pennsylvania
    • Fellow, American College of Employee Benefits Counsel

    Areas of Expertise

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