As two former Merrill Lynch brokers push for a $40 million settlement for 1,467 employees in their class action suit against their former employer, legal experts disagree on whether it will open the floodgates for other actions. Regardless, it may raise lawyers' antennae to search for other disgruntled brokers.

The ex-brokers of Bank of America's Merrill Lynch & Co. unit on Friday requested a federal judge in New York approve a $40 million settlement in a three-year lawsuit over deferred compensation for former brokers. The brokers alleged in their complaint that they were entitled to cash distributions stemming from a change in control of Merrill Lynch, according to previous reports. Charles A. McCallum III, a Vestavia Hills, Ala.-based lawyer for the brokers, told U.S. District Judge Alison Nathan that the proposed settlement would cover more than 1,400 people, they said.

"I don't think that it in itself signals that other brokerage firms are going to have to follow suit," says Brian Hamburger, founder and managing member of Englewood, N.J.-based law firm Hamburger LLC. "It doesn't distinguish the facts and circumstances from this case. So there's not necessarily a real clear link between all the underlying facts of this Merrill Lynch case -- including the nature of the deferred compensation plans and the actual acquisition -- with the facts and circumstances that would exist at another firm."

Because it would be a settlement rather than a court decision, Hamburger says the case won't set legal case precedent. "It doesn't really build an argument for another attorney to use in another time and say 'Hey, look at this settlement?'" he says. "A judge is not going to look at this settlement and make decisions or be swayed at all by a settlement."

McCallum says there's still other Merrill Lynch financial advisors who were employed at the time of the change of ownership but were not included in the current settlement plan. A group of brokers have looked at the plans and know how they've been specifically impacted by the new compensation plan and have looked for representation individually. McCallum says his firm has received several telephone calls from brokers to review their compensation packages. 

"This should be an eye opener for people who have undergone a change of control to go back and take a look and see what the (contract) language was for their deferred compensation plans to see if there are any triggers available that might give them the right to go back and seek compensation," McCallum says."But I don't know if that is going to spur on a bunch additional litigation or not."

Hamburger says other brokers who still feel that they have a viable claim would be best served pursuing it on their own. "There is really no reason for those brokers to participate in this settlement and they're not part of the included class here."

They'll go ahead and hash it out within Finra's (Financial Industry Regulatory Authority) arbitration channel, Hamburger said, and achieve a favorable outcome of their own, probably more efficiently, probably without having to pay such a significant portion of their deferred comp to the lead plaintiffs and attorneys that brought about the claim.

Hamburger says the settlement may be viewed as a victory by both sides.

"At the end of the day, let's face it, $40 million is a drop in the bucket for Merrill Lynch to get rid of this problem that has been looming overhead for so long and has been the source of so many lawsuits that they can dispense of a large swath of brokers in one shot, it seems like a pretty efficient way for Merrill to deal with it," Hamburger says.

"This is also a nice victory for those guys that would otherwise not be a significant amount of money in order to pursue claims on their own," Hamburger added. "For them, they'll look at this and they'll say, 'You know what, I just got this, but I otherwise wouldn't be able to pursue it at all. It's a nice bonus.'"

-Jim McConville