I understand the importance of class-action lawsuits.
Even if consumers don’t get large cash settlements, the greater good is supposed to make corporations behave and improve their behavior. That’s the theory.
But in practice, it sure feels like consumers never are made whole.
And let me say this upfront: Having good legal representation is key to a successful outcome in a lawsuit. I’ve worked with some dynamic and extremely capable attorneys who have seen me through some difficult civil matters. I won my cases because I had good lawyers. (One case was an estate battle and the other I was helping my brother fight for disability benefits.)
So I don’t intend to question the skilled expertise of class-action attorneys. Yet it just seems fundamentally unfair that most consumers in such cases get pitiful benefits compared to the payday for the attorneys. Talk about inequitable distribution.
The most recent example is the Equifax settlement. Equifax has agreed to potentially pay up to $700 million as part of a settlement with the Federal Trade Commission, the Consumer Financial Protection Bureau (CFPB) and 50 U.S. states and territories. The settlement is the result of a 2017 breach that exposed the personal data of about 147 million people.
In total, there’s more money going to consumers as a group, according to the settlement, which still needs court approval. The company has agreed to pay $175 million to 48 states, the District and Puerto Rico, as well as $100 million to the CFPB in civil penalties.
Consumer Restitution Fund
Equifax, which did not admit any wrongdoing, has agreed to set up a “Consumer Restitution Fund” of $380.5 million. But with a potential claims group numbering in the millions, the compensation on an individual level pales in comparison to what the attorneys will get, which is the following:
Up to $77.5 million to be paid from the consumer restitution fund. The money is “to pay reasonable attorneys’ fees for work performed by Class Counsel or other counsel working at their direction in connection with this litigation,” according to the proposed settlement.
Up to $3 million for the reimbursement of reasonable costs and expenses incurred in connection with the litigation. This money will also come out of the restitution fund. The attorneys took the case on a contingency-fee basis, which means that they covered all of the case expenses and have not been paid any money in relation to their work, according to the settlement.
The settlement lays out what the four attorneys did.
They “investigated the facts relating to the data breach with the assistance of consultants and experts in cybersecurity and identity theft, interviewed witnesses, reviewed congressional testimony, analyzed the evidence adduced during pretrial and confirmatory discovery, including over a half-million pages of documents, spreadsheets, and other native files produced by Equifax, and researched the applicable law…