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Keller Williams‘ legal worries just got a little lighter. On Friday, the real estate franchisee and the plaintiffs’ counsel in the Mcfarlane suit reached a settlement agreement for the lawsuit related to the firm’s recently abandoned changes to its profit-sharing program.
In an email, Keller Williams confirmed that this agreement settles all of the breach-of-contract lawsuits filed against it by attorneys at the law firm of Humphrey, Farrington & McClain PC. These include cases filed by plaintiffs and former KW agents Eric Mendoza, Jerri Moulder, Jana and Dennis Caudill, Penny Alper, Paul Davis, Kevin Ortiz and Edward Fordyce.
According to the court docket entry, the parties have until mid-October to file the proposed draft of the settlement agreement
In a statement emailed to HousingWire, Keller Williams spokesperson Darryl Frost said the matters were “amicably resolved and settled.”
The Mcfarlane suit, which was filed in early May by James Mcfarlane — who was brokered with Keller Williams from 2004 to 2018 — is just one of more than a dozen lawsuits filed by former KW agents.
The suits began piling up after the firm announced in August 2023 that it was cutting its profit-share distribution for vested “former” KW agents — those who joined the company before April 1, 2020, and left for another brokerage — from 100% to 5%. Prior to this change, vested “former” agents benefited from a 100% profit-share distribution even after their departure.
The changes had been slated to go into effect in July 2024. But in May, the brokerage announced that its International Association Leadership Council (IALC) had made the decision to rescind the changes.
Agents join the profit-sharing program by designating a sponsor when they join a market center. That sponsor then becomes part of the agent’s “profit share tree.”
Once the agent has begun contributing to the market center’s business by closing transactions, they “receive a portion of the market center’s profits, which will be attributed to the associates in their tree.” Keller Williams also allows associated to designate a beneficiary to receive their profit-share distributions upon their death.
In July, the firm announced that its market centers have shared more than $2 billion in profits with affiliated agents though its profit-sharing program, which was first established in 1987. From the start of 2023 through mid-2024 alone, Keller Williams said that its market centers have awarded more than $148 million in profits to associates.
