The recent round of lawsuits against college retirement plans is noteworthy for many reasons: the prominent schools targeted, the billions of dollars at issue and the big-name law firm behind it all.

Somewhat lost in all the coverage, however, is a factor just as significant as the flashy names and big dollars: the idea that a retirement plan sponsor can face legal liability for giving plan participants too many choices.

The colleges sued this month, from Yale to Johns Hopkins to Northwestern, are accused of including too many investment options in the retirement plans they offer to employees. Duke and Johns Hopkins are accused of having 400 and 440 funds, respectively, and the other targeted schools aren't far behind.

This concept—that too much choice in a retirement plan is a bad thing—has been "percolating through some cases for a long time" but "hasn't necessarily come to a head in any one case," Thomas E. Clark Jr., of counsel to Wagner Law Group in Boston and formerly of Schlichter Bogard & Denton, told Bloomberg BNA Aug. 18.

While many feel that having many choices would be good for employees that may not be the case according to the research cited by Schlichter, who argues that an oversized investment lineup confuses plan participants, promotes "decision paralysis" and drives up fees.

"I think it's true on some level that if you have hundreds and hundreds of funds, it's hard to expect your employees to make a rational decision," Pinheiro told Bloomberg BNA Aug. 18. "On the other hand, having more funds than a given employee could reasonably deal with doesn't necessarily mean it's a breach of fiduciary duty. It might not be a best practice, but I think there's a gap between breach of fiduciary duty and what is the absolute best practice in a retirement plan."

In Pinheiro's view, the real risk associated with an oversized investment menu is that it can be difficult for plan fiduciaries to monitor hundreds of different funds at a time.

"As a fiduciary, you're supposed to be selecting and monitoring these funds to make sure they have prudent performance," Pinheiro said. "If you have 500 funds, it's theoretically possible that you're monitoring all 500 funds on a quarterly basis, but in all likelihood that's not happening."

This move toward retirement plan consolidation has been happening throughout the higher education universe, Ballard Spahr's Pinheiro said.

"Some of these plans had 400 or 500 investment options available," Pinheiro said. "That was very common 10 years ago, and I think you still see it from time to time, but more often you see those types of employers trying to get their arms around it and trying to get to a smaller, more manageable lineup of investment options."

Clark agreed that the industry is trending toward simplified investment menus after emphasizing more expansive lineups for several years.

With the industry already trending to more simplified investment menus and Schlichter's litigation blitz, it could encourage more universities to simplify their retirement plans and seek lower fees.

Pinheiro said that Schlichter's prior litigation successes have had a "profound effect" on the 401(k) industry by driving down the market for fees. The same could hold true for the world of higher education, he said.

"Given that history, I think it's certainly possible that we're going to see plans move to have fewer vendors and fewer investment options," Pinheiro said. "Everybody in the higher education world is paying attention to this."