A $60 million settlement between Visa Inc. and Heartland Payment Systems Inc. "has many weaknesses," according to lawyers representing Visa card issuers that could have potential claims over the 2009 data breach at the payment processor.

Three law firms, representing various groups of card issuers, are not saying that financial institutions should reject the settlement agreement, but they should analyze whether the settlement offer is worth it, said Richard L. Coffman, an attorney at the Coffman Law Firm in Beaumont, Texas. Coffman is one of the co-lead counsels who represents about 30 financial institutions.

"Each financial institution has to do its own math and evaluate its unique settlement offer," to decide if it should accept the offer, or continue to pursue the litigation, Coffman said in an interview.

"We're not saying don't take the deal," Coffman said. "We're saying scrutinize it."

The three law firms, each with interim co-lead counsels representing card issuers, said in a press release Wednesday that the proposal may hold little compensation for issuers, because they could recover "pennies on the dollar" for the breach-related costs.

Coffman said the settlement offers range from 0.7% of a cent per dollar of loss to as much as 32 cents per dollar loss. Most offers have been between 3 cents and 10 cents on the dollar, he said.

Some banks and credit unions could accept their offers to eliminate the "risk and hassle of litigation," he said. "There are no guarantees."

The law firms also said the settlement does not provide issuers enough time to decide on whether or not to participate, giving them only 15 days to decide. Affected financial institutions were notified of the settlement proposal Jan. 14.

Heartland, of Princeton, N.J., and Visa announced the proposed settlement this month to cover issuer costs associated with the network breach that Heartland disclosed a year ago. Issuers must decide by Jan. 29 whether or not to accept the offers, Heartland said.

A Visa representative would only refer to the Jan. 8 press release about the settlement. Heartland did not respond by deadline.

The proposed settlement may be an attempt to "circumvent safeguards inherent in the judicial process," the firms' press release said. The attorneys said the proposed settlement comes early in the court proceedings.

"It is early in the case and there has been no formal discovery," said Joe Sauder, an attorney and co-lead counsel at Chimicles & Tikellis LLP, a law firm in Haverford, Pa. The third law firm in the case is Caddell & Chapman in Houston.

Most egregious in Coffman's view, however, is the settlement's liability release for Heartland Payment Systems' two acquiring banks: Heartland Bank of St. Louis and KeyBank, a unit of KeyCorp of Cleveland. Accepted offers also release Visa and Heartland Payment Systems from litigation.

"Why do the acquiring banks get a free ride on the deal without putting anything into it?" Coffman asked. His firm filed suit Tuesday against Heartland Bank and KeyBank in the U.S. District Court for the Southern District of Texas for breach of contract and negligence, among other allegations, for their roles in the data breach and its aftermath. Coffman said the suit was not filed in response to the Jan. 14 settlement.

The suit originally had been scheduled for filing around the time of the settlement announcement, he said.

"Why would Visa feel like it could take upon itself to secretly negotiate a deal on behalf of its network members and release the two richest parties?" Coffman said.

"The majority of settlement funds are provided by Heartland, which is downplaying its ability to pay any more money," Coffman said. "Yet, KeyBank has $97 billion in assets and Heartland Bank has over $1 billion of assets, which suggests that there are additional sources of money to compensate the issuers for their damages."

A KeyBank representative said the bank does not comment on litigation.

Meanwhile, the class action against Heartland continues in court. Coffman said additional motion hearings are to be held in the next few weeks.