“I’m confident that one day this decade a different court of appeals will disagree with one of those Posner opinions, the Supreme Court will take up the circuit split, and then tell us that Posner was right all along,” Frank said.
Do Americans need more lawsuits? They’ll get them if the Consumer Financial Protection Bureau has its way. The CFPB—created by the Dodd-Frank Act of 2010 and still run by an Obama appointee—issued a rule in July barring financial institutions from including arbitration clauses in their contracts with customers. That means disputes would have to be settled by class-action lawsuits, which mostly benefit lawyers. The agency justifies its rule by claiming it…
The too-common scam goes like this. Trial lawyers bring a class action against a business, alleging unfair charges or false advertising and seeking to recover a few dollars each for thousands or millions of its customers. It’s okay if the case is weak, because the defendant still finds it cheaper to settle the lawsuit for a small percentage of the total losses alleged than to fight on.
In class-action lawsuits the threat of astronomical liability drives many defendants to settle — even if the plaintiffs’ chances of success are negligible. But because there’s only so much money that defendants are willing to spend, such nuisance lawsuits often lead to settlements where the attorneys get more than their fair share. It works like a formula: The plaintiffs’ attorneys and the few named representative plaintiffs divvy up the entire cash proceeds, leaving the remainder of the class with a potpourri of worthless window dressing.
"The leading critic of abusive class-action settlements is Ted Frank of the Center for Class Action Fairness, and he is one of the lawyers challenging the Facebook settlement. In testimony in March before a House subcommittee, Mr. Frank said Facebook’s payment to the new charity bordered on a sham."
One of the leading ways for self-dealing class counsel to benefit themselves at the expense of the class is through what are called cy pres settlements.
