R. Alexander Acosta, President Trump's choice to replaceAndrew Puzder as the nominee to head the Labor Department, will beasked to hit the ground running when he takes over leadership ofthe agency, assuming he is confirmed by the Senate.

How Acosta will interpret the authorityof the Labor Departmentremains to be seen, but his first test could come in the economic and legal analysis of the fiduciaryrule ordered in a recent presidential memorandum.

Related: See more fiduciary rule coverage

Acosta's confirmation process is expected to be much smootherthan Puzder's, who withdrew his nomination less than 24 hoursbefore his hearing before the Senate Health, Education, Labor, andPension committee was scheduled to begin.

A former Assistant Attorney General in the George W. Bushadministration, and U.S. Attorney for the Southern District ofFlorida, Acosta has survived three Senate confirmation hearings forpresidentially appointed positions, the first in 2002 when he wasappointed to the five-member National Labor Relations Board. Hepreviously clerked for Supreme Court Justice Samuel Alito on thethird circuit Court of Appeals.

That pedigree suggests Mr. Acosta will bring a considerableintellect to the Labor Department's review of Obama-eraregulations, says Lawrence Cagney, chair of the firm's ExecutiveCompensation & Employee Benefits Group practice at Debevoise& Plimpton.

Related: Texas court upholds fiduciaryrule

“The previous nominee struck me as someone with zero tolerancefor the fiduciary rule,” said Cagney. “He was a business personthat likely had some experience with wage and hour law, but likelylittle exposure to fiduciary issues.”

While Acosta may not have direct experience litigating claimsunder the Employee Retirement Income Security Act, he would clearlybring a more nuanced view than Puzder to the review of thefiduciary rule ordered by President Trump, given his depth ofexperience as a legal scholar and litigator, thinks Cagney.

Legal scholar and litigator

“The difference is that Acosta is a legally trained scholar, andone would have to assume a very smart guy,” he said. “It can beexpected he will be much more contemplative and thoughtful in hisapproach to the rule than the previous nominee.”

That may prove to be good news for proponents of the rule, whodon't want to see it scrapped, and good news for opponents, whowould like to see some changes.

Like a lot of ERISA legal specialists, Cagney thinks the bestsolution is to make the rule more workable, and not to scrapit.

“There are clear benefits to this rule, and financialinstitutions are not adverse to working with something thatimproves protections for retirement investors,” said Cagney. “Butas it's written it will invite an inordinate amount oflitigation.”

Trump's memorandum specifically instructs the Labor Departmentto assess the degree to which the rule will increaselitigation.

As head of Debevoise & Plimpton's benefits practice, Cagneysaid he's been working with the firm's litigation leaders todevelop best practices for financial institution clients thatreduce litigation risk under the rule to a tolerable level.

“It's difficult to come up with a path that makes the litigationrisk under the rule manageable,” he said. “There is a lot of roomfor improvement—we can have a rule that protects investors, andgives them remedies if they are abused by advisors, withoutinviting litigation in every circumstance.”

Prudent advice does not always result in strong investmentreturns, a reality that Cagney does not believe will deter theplaintiffs' bar.

“The best investment advisor in the world is going to make good,prudent decisions that don't always work out,” said Cagney. “Asit's written the rule puts the burden on the advisor to prove theyhave not acted improperly. They have to prove their recommendationwasn't influenced by a conflict—that's a hard, if not impossible,thing to prove.”

Rulings may not shackle Acosta in addressing rule's privateright of action

 Judges in Washington D.C., Kansas,and Texas federal courts have all upheld the fiduciary rule.

The ruling from Texas may have been the most sweeping, in thatit considered the widest range of arguments from a consortium ofindustry trade groups, including the U.S. Chamber of Commerce andthe Securities Industry Financial Markets Association.

In that ruling, Chief District Judge Barbara Lynn addressed theplaintiffs' claim that the rule will generate a rash ofclass-action litigation, creating costs that will ultimately bepassed on to retirement investors.

“The DOL did not specifically quantify potential class-actionlitigation costs, but it is not required to do so,” wrote Lynn inher ruling.

Moreover, the Labor Department factored potential litigationcosts in its rulemaking, going so far as to craft the Best InterestContract Exemption “to ensure that only allegations of systemicegregious conduct will be litigated via class actions,” accordingto Judge Lynn's decision.

That level of specificity in the decisions upholding the rulewill limit the Trump Labor Department in how much it can change it,says Erin Sweeney, an ERISA attorney with Miller &Chevalier.

“The rulings make it much more difficult for the DOL to changecourse,” said Sweeney. “They all say that the fiduciary rule isconsistent with Congress' intentions when it wrote ERISA.”

Judge Lynn's ruling also addressed the question of whether thecost of investment services will go up under the rule and whetherthe rule will restrict access to advice. The Labor Department's newanalysis is to address those questions, according to PresidentTrump's memorandum.

“It's an incredibly sweeping ruling, and it's going to besignificantly more difficult to reopen the rule and reach differentconclusions than the courts,” said Sweeney. “Proponents of the rulewill be waiting in the wings to challenge any changes with JudgeLynn's decision.”

But Lawrence Cagney says the three decisions, while thorough andwell reasoned, will not necessarily limit what changes can be madeto the rule.

“The courts were assessing questions of DOL's authority, and itsrulemaking process, and whether or not the agency is entitled todeference in crafting the fiduciary rule,” said Cagney.

“What the courts were not evaluating is whether or not Laborwrote the best possible rule,” he added. “The decisions don't meanyou can't go back in, re-evaluate the process that led to the rule,and rewrite portions of it to make it better.”