Most class action settlements involve a clear financial payout, but the recent agreement between facial recognition company Clearview AI and the Chicago-based law firm Loevy & Loevy breaks the mold. Rather than a straightforward cash reward, Loevy & Loevy has agreed to take 39.1% of a potential future settlement based on Clearview’s value if it goes public or is sold. This means their payout is tied to the company’s future, making this case a legal choose-your-own-adventure.
The unusual deal comes as part of a privacy lawsuit accusing Clearview of violating the rights of millions of Americans by scraping their facial images from the internet without consent. While other class action cases have seen lawyers compensated with stock or equity, the twist here is that Clearview’s stock is not yet publicly traded. In essence, the attorneys are betting on Clearview’s future success — or failure — to determine their reward.
According to estimates from Loevy & Loevy, a settlement fund could exceed $51 million, which would make the firm’s 39.1% share worth $19.9 million. This proposal, now under review by U.S. District Judge Sharon Johnson Coleman, is being closely watched due to its unprecedented nature.
The origins of this case trace back to a 2020 exposé on Clearview’s use of its facial recognition tool by law enforcement and private entities. It led to accusations that the company violated Illinois’ biometric privacy laws, prompting a lawsuit and, eventually, this novel settlement.
Clearview’s previous settlement with the ACLU in 2022, which severely limited its operations, left the company with few assets to compensate other plaintiffs. Loevy & Loevy’s attorneys devised this unconventional strategy to secure some form of financial recovery for their clients, even in the absence of immediate liquid assets.
As the legal world watches this unusual case unfold, questions remain about the viability of such a settlement structure and the long-term prospects of Clearview AI. One thing is clear: Loevy & Loevy is playing the long game, betting on the company’s future, and taking a bold approach to securing value for its clients in challenging circumstances.
Though only one objection has been filed so far, arguing that class members are being shortchanged in exchange for a vague promise of future compensation, the legal showdown is far from over. All eyes now turn to Judge Coleman as the next phase of this legal adventure awaits.
