The fee request is not based on a settlement fund but on the company's theoretical future value
Chicago-based law firm Loevy & Loevy has requested a 39.1 percent share of a potential future settlement with facial recognition company Clearview AI following claims that the company violated the privacy rights of millions of Americans.
According to Reuters, the fee request is not based on an existing settlement fund but on Clearview's theoretical future value if the company goes public or is liquidated through a merger or sale.
Loevy & Loevy, representing plaintiffs in the privacy case, reached an agreement with Clearview in June 2023. The deal stipulates that the law firm will receive a percentage of any future settlement based on Clearview's market value in the event of an initial public offering (IPO) or sale. The firm estimates that the total settlement fund could exceed US$51 million, with their share amounting to approximately US$19.9 million. In its petition, Loevy & Loevy described the settlement as "trailblazing," noting that it offers substantial value for its clients despite the company's financial challenges.
The case, overseen by US district judge Sharon Johnson Coleman, stemmed from allegations that Clearview AI violated Illinois' biometric privacy laws by scraping billions of facial images from the internet without consent and selling the data to law enforcement and private companies. Clearview, which denied any wrongdoing, settled a separate lawsuit with the American Civil Liberties Union (ACLU) in 2022, agreeing to limit its use of facial recognition data for five years. However, that settlement left the company with "few assets" to compensate private plaintiffs, prompting Loevy & Loevy to devise this novel equity-based settlement.
The current agreement between the law firm and Clearview includes provisions for class members to receive compensation, even if an IPO or sale does not occur. Until 2027, a court-appointed settlement master could require Clearview to pay 17 percent of its revenue toward the settlement. Additionally, the master could sell settlement rights to a third party to maximize recovery for class members.
Despite the innovative nature of the settlement, the case has attracted at least one formal objection. A Chicago resident argued that the deal trades class members’ legal rights for "a nebulous promise" of future compensation. The objection is still pending.
As the legal process continues, Judge Coleman will consider the settlement's fairness and the law firm's fee request in the coming months.
